Top managers at Qantas/Jetstar and Virgin Blue had another “I thought I saw a pussy cat” moment this morning.
Tiger Airways has sprung an extra 50 Airbus A320s on them with an order that could take the Singaporean revenge for the Jetstar Asia provocation to 70 jets by 2012.
But that is just the minor part of a more troubling issue for the Australian carriers who will find the first five Tiger jets in their patch before year’s end.
The other is the near certainty that Tiger will also pick up wide body jets, making it the 49 per cent Singapore Airlines’ owned answer to Qantas’s Jetstar not just on shorter domestic routes but long haul to London, or wherever it fancies in the context of Canberra’s as yet incomplete embrace of open skies.
To stay in metaphor, today’s Tiger order of 50 new Airbus A320s gives big teeth to its ambitions to gut the Australian domestic market with a bare bones Ryanair type ultra cheap service.
And like Ryanair, Tiger vows to make its real money out of driving the more-profitable-than-flying activities such as holiday packages, insurance, and eventually in-flight telephony, out of traditional retailing and onto its internet booking and sales site.
But it is not for nothing that Virgin Blue has already let slip its plans for an ‘ultra’ Virgin brand, to “stay relevant” as its chief executive officer Brett Godfrey says, and chase Tiger with as many ultra cheap fares as it takes to kill it.
(And there are concepts for an ‘Extra’ Virgin brand being kicked around in its internal think tank, just to rip into Qantas business class as well.)
Australia is only part of the bigger battle being fought by the low cost models of Asia. Tiger’s biggest adversary is AirAsia, based in Kuala Lumpur, and flanked by Indonesian and Thai divisions. It has already spawned a wide body long haul entity Fly Asian Express, which is coming to Avalon Airport with 396 seats in Airbus A330s which makes the jet as amenable as spending half a day in a phone booth stuffed full of a few dozen people.
AirAsia is now sitting on 200 orders or options for A320s plus 15 A330s for the long haul division. Tiger is now sitting on up to 70 single aisle jets. Jetstar in Australia alone is on 33 A320s plus around 10 interim A330s and unspecified dozens of long range Boeing 787s.
QED. Tiger will go wide body soon, just to stay a hunter instead of a hunted, and to bolster the shrinking relevance of Singapore’s Changi hub in the face of airport competition from KL (the intended low cost airline capital of Asia) and Dubai and Abu Dhabi.
Jetstar’s chief executive Alan Joyce had an inkling of what Tiger was up to this week, and late last night put out an announcement of a large expansion of Melbourne and Sydney flights to the Gold Coast from this December, which is coincidentally the target month and ‘focus city’ for Tiger’s domestic debut.
Whatever was Qantas thinking back in 2004 when it decided to base its Jetstar Asia venture in Singapore? It has been given a right royal working over ever since, and surprise, surprise, Asia based low cost carriers like the AirAsia group and Tiger have returned the compliment, with what looks like being one hundred jets between, as well as to, Australian cities by around 2015.