Tiger paranoia is gripping Qantas and Jetstar.

In March Tiger said it was coming with five jets before Christmas. By yesterday it had announced routes which look like taking 10 jets, routes it will operate more than a month before Christmas.

And it has forced Jetstar into the deadly zone of negative fares. Fares like the tens of thousands of $1 and $29 offers that don’t cover the taxes, levies and airport charges they must include by law. After which Jetstar has to pay the full fixed costs of fuel, wages and leasing to carry those fast enough the accept its “we-pay-you-to-fly” giveaways before the airline’s server collapses under the burden of pouring millions of dollars down the drain.

And on the side line, Virgin Blue, which Jetstar was designed to neutralise, isn’t even blinking, filling its jets with real fares for hundreds of dollars more than Jetstar and, crucially, for hundreds of dollars less than typical Qantas prices.

It is a very ugly situation for Qantas and Jetstar, which have even more reasons to fear Tiger:

  • Reason 1 – Tiger is planning even more route and fare announcements in the coming weeks.
  • Reason 2 – It is talking to Australian and other pilots about flying wide-bodied jets in the near future, able to carry almost twice as many passengers as its 180 seat A320s.
  • Reason 3 – Tiger recently ordered an extra 50 jets.
  • Reason 4 – Singapore Airlines, which shares a combined majority stake in Tiger with Temasek Holdings, Singapore’s cashed up superannuation arm, isn’t hunting profits in Australia, but mounting a full scale long term invasion of the domestic market for whatever it costs and however long it takes.
  • Reason 5 – There is nothing to stop Tiger deciding to take on Qantas and Virgin Blue as a full service but lower cost base carrier whenever it chooses.
  • Reason 6 – Singapore Airlines has smouldered with resentment over its disastrous flirtation with Ansett and Air New Zealand for six long and bitter years, and it wants revenge.
  • Reason 7 – There are no rules in Australia that can stop it expanding a loss making operation for as long as it likes, or takes, and the ACCC will do the same for Qantas and Jetstar as it did for Impulse and Virgin Blue back in the heat of the four-way airline battle of 2001, which is precisely nothing.

Of course there is a reason not to fear all of the above, and that is the fact that the Singaporean camp was easily outsmarted by Qantas last time, which had it known how bad things were at Ansett, might well have cheerfully let it proceed with its original plan to take it over via a 49% investment in its then owner Air New Zealand.

But this time around, there is no sign of the same confidence with which Qantas saw off the Singaporeans in 2001. The Tiger has arrived, and is as free to run amok in Australia as Jetstar Asia is from its Singaporean spring board.

Peter Fray

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