Tiger bares its teeth
Geoff Easdown
July 28, 2007 12:00am
TIGER Airways has been promised however many aircraft and funds needed to fight against cashed-up rivals Virgin Blue and Jetstar.
Tiger's third biggest shareholder, Declan Ryan, yesterday dismissed claims by the carrier's critics that Tiger would exhaust its cash reserves before it was profitable.
Tiger will be supported, Mr Ryan declared, adding that its four major stakeholders were prepared for the risks.
"Sure we would" Mr Ryan replied, when pressed on the issue of whether it would support the carrier. "This is a very capital intensive business".
As a member of the family that launched Ryanair, the world's most successful low-cost carrier, Mr Ryan should know what's needed to make an airline profitable.
When Tiger begins domestic operations in December, the airline will have a fleet of five 177-seat Airbus A320s.
Depending on demand, it will be able to draw from a fleet of 50 new A-320s ordered at the recent Paris air show.
Questions about Tiger's looming cash needs and the limited size of its start-up fleet arose this week at an aviation summit when Tony Davis, Tiger's chief executive, spoke to regional airline chiefs.
Yesterday, after a meeting of the Tiger board in Melbourne, both Mr Ryan and Mr Davis dismissed as a "fallacy" that Tiger was likely to burn tens of millions of dollars before turning a profit.
"We are going to bring the business public, " Mr Ryan said.
Would Tiger float here?
"I'd love to float in the Aussie market," Mr Ryan replied, adding that it was probably better for the company to list in Singapore.
"When we listed Ryanair, we didn't have to list in Dublin, but if you don't list in your home market, you can get a good kick.
"I think the Australian market does need some good aviation stocks."
What would Tiger take from the Ryanair model and bring to the Australian market?
"Low fares, simplicity, punctuality and on-time departures and arrivals.
"The average Ryanair fare in Europe is about 47 euro a head and we make another 8-to-10 euro on auxiliary revenue.
"That's from Budweiser," said Mr Ryan, noting that "there's only one bar at 35,000 feet."
"We are going to commodotise the air market here.
"Tony has been saying that if we took $25 off the average price of air fares in the country, the good Australian people would save in the order of $1 billion a year."
Mr Ryan said it was too easy for low-cost offshoots to operate by drawing a comparison with their parent airline's budget.
"And because of that, you haven't seen low fares in Australia".
Mr Ryan ventured a suggestion about running Jetstar to Qantas chief executive Geoff Dixon.
"The guys at Jetstar shouldn't take phone calls from Geoff Dixon."
"He should leave them alone and tell them to report just once a month."
According to Mr Davis: "That's very much the relationship we have with Singapore Airlines.
"There is no day-to-day contact," he said.