Domestic Capacity is not being cut too heavy from my info, just capacity and schedule being repositioned more productively. The other guys do a better job of seasonal scheduling, Virgin runs to one schedule.
You will find less Tiger flights departing close or on top of Virgin flights. In the past they have sent in Tiger alongside Virgin routes, but they had the flights departing at the same time, rendering both loss making. The idea is to have Tiger depart at the undesirable times that people still pay for, and the Virgin flight commands the price schedule premium. Backpackers don’t care about departing Cairns to Sydney at business hours, send them back at 8pm or 6am.