virgin poised to take bite of tiger's market

JOHN Borghetti has spent a lot of time building a relationship with Singapore Airlines chief Goh Choon Phong in recent months as he nutted out an alliance for Virgin Australia with the Asian carrier.

It wouldn't be a stretch to suggest that the pair might have had some other topics to discuss as the Singapore Airlines-backed Tiger Airways remains grounded in Australia, where it has carved out a 6 per cent market share since its entry in November 2007.

Tiger, 33 per cent owned by Singapore Airlines, is losing $1.5 million each week its planes remain grounded, and its future in Australia is in doubt.

Under the circumstances, Borghetti, who has watched as Tiger's entry to the market slashed best discount fares by 10 per cent a year, would be mad not to explore a deal with the cut-price carrier, which interestingly has directed stranded passengers to rebook with his airline.

After all, it's Virgin -- given its exposure to leisure travel -- that stands to benefit most should the environment revert to disciplined capacity growth and higher yields.


While Borghetti has been focused more on taking business travellers from Qantas, it would make sense for Virgin to operate a lower-cost service under a similar model to that run by Qantas and Jetstar.

No advanced discussions are under way and there's no certainty anything will happen, but Borghetti will certainly explore the possibility of a deal with Tiger, which after three years of losses decided in May to halt its growth plans in Australia until the operation turned profitable.

It's worth remembering that there's more than one way to skin a cat and Virgin could just end up taking over Tiger's air operating certificate without buying its fleet of 10 Airbus A320-200s.