Fox lures Tiger to Avalon
* John Beveridge
* From: Herald Sun
* February 03, 2010 12:38PM
Fox lures Tiger to Avalon | Herald Sun
LINDSAY Fox will have a broader smile on his dial than usual after successfully wooing Tiger Airways down the Geelong Road to Linfox's Avalon Airport.
While the deal is still being kept under wraps, my usually reliable spy tells me it is set to be announced later this month, barring any last-minute problems.
Under the proposed deal, Tiger would start to hand back its terminal space at Melbourne Airport and progressively move all of its operations and flights to Avalon later this year.
The attraction for the recently floated Tiger is much lower flight costs -- the same reason fellow budget airline and Qantas offshoot Jetstar originally decided to base many of its flights out of Avalon.
With Jetstar now offering flights from both Avalon and Melbourne airports, Tiger has struggled to profitably compete on the main Melbourne/Sydney, Melbourne/Coolangatta and soon to launch Melbourne/Brisbane route against the combined juggernaut of Qantas/Jetstar and Virgin Blue.
With very frequent flights and the ability to compete strongly on price, the larger airlines have made it very tough for Tiger to continue with its aggressive growth plans and become a profitable airline in Australia.
While the move will help Tiger contain costs and expand its flight schedule, Linfox is the biggest winner because the move cements Avalon's position as effectively Melbourne's low-cost carrier airport.
Many other countries have successfully run low-cost carrier airports despite larger distances from city centres.
Passenger movements at Avalon could now rise dramatically from the current million a year to several times that, depending on Tiger's successful expansion.
While Tiger only operates seven A320 aircraft in Australia at the moment, most of the $200 million it raised in its recent float on the Singapore stock exchange is earmarked for an aggressive Australian fleet expansion.
Managing director Tony Davis hopes to expand Tiger's international fleet -- including Australia -- to 68 A320s by 2015.
A move to Avalon also allows Tiger to really push its "bargain fares" model to include cheaper airport parking, although the greater distance from Melbourne will be a sticking point for some travellers.
While Tiger has lost more than $70 million since launching in Australia in 2007, Davis has claimed that the airline is here for the long haul and is already cash-flow positive.