A contract is a contract and in circumstances where there is no possibility for one party (in this case the passenger) to seek or obtain changes to stated terms and conditions, the courts generally require said t&cs to be reasonable. This is generally the case with airline T&Cs, and they normally include a specific clause that says that no agent or employee is authorised to amend such T&Cs.
Reading this Tiger has the opportunity to get out of their obligations just by deciding that they want to (i.e. "where we reasonably consider this to be justified by circumstances beyond our control or for reasons of safety or commercial reasons."). However (I expect) that a similar opportunity is not afforded to the passenger to get out of the contract. Even in circumstances beyond the passenger's control (traffic jam) or for reasons of safety (being ill) or commercial reasons (can't really afford it) they can't get out of the contract.
Is this reasonable? I suspect that the courts would rule that it is not. However the actual reason behind the cancellation will be key to decide if a court challenge would be successful. If it was simply a commercial decision then I expect they could win. If it was for safety ..., that might be more difficult.
II suggest the passengers should write a nice polite letter to Tiger asking them to cover their costs and if they decline, pass the correspondence over to the ACCC who have the authority under the TPC to force Tiger to amend their T&Cs.
I am not an expert in Australian (or any other) law and I would recommend that your rellies take legal counsel before doing anything.