View Full Version : Open Skies at its best!

13th Jul 2007, 08:28
Tell me why they let other countries airlines in again?

TIGER Airways is to offer one-way fares between Perth and Melbourne for $59.95 in a move that has prompted Jetstar to abandon its vow to remain Australia's lowest priced airline.

The Singapore-backed low-cost carrier announced yesterday that the tax-inclusive fares from Tullamarine to Perth would begin on December 1.
But Jetstar refused to match the deal, saying the fares were unsustainable. Jetstar instead launched a $99 one-way sale fare. The Qantas offshoot had vowed not to be undercut but spokesman Simon Westaway said the airline did not believe it could justify a fare lower than $99 one-way, even though it had the lowest costs in Australia.

Tiger chief executive Tony Davis said the fares would save travellers $258, compared with the lowest equivalent return fares currently available on other airlines.

Tiger yesterday also launched Melbourne- Alice Springs flights from $49.95 one-way inclusive.

13th Jul 2007, 08:38
ML - DN, roughly 4.2 hrs
A320 burn roughly 2400kg/hr
ML - DN burn, call it 10 ton
Fuel ( humour me here ) 1$ a kg
fuel cost ML - DN $10000

Assuming a full load of pax at $60 = $10,800

$800 left to pay taxes, a/c running costs, landing charges, wages, etc etc..........

Any rocket scientists out there care to speculate on how long this can go on for :hmm:

For gods sake, we have seen this with every new start since jesus was a boy, why do people always get sucked into thinking this will be the norm ??

Maybe Tony Davis could comment on how long he can afford to lose 100s of thousands a week

13th Jul 2007, 08:55
If you don't understand revenue yield control and load management don't speculate.

Assuming a full load of pax at $60 = $10,800

Don't assume a full load at the base fare! With a managed fare class structure they may well be at least breaking even.

Promotional fares don't last forever. Enjoy whilst available - even if in very limited numbers! :ok:

13th Jul 2007, 09:39
cheers torres...i was going to say something similar but i am at the brown bottle PNR and it was going to hurt my brain to make a sensible comment :}

13th Jul 2007, 10:06
Mmmm. Yes, one shouldn't assume anything, especially related to the arcane methods by which bean counters calculate yield management.

However, I always say, beware of an airline where your taxi fare to the airport is greater than your airline ticket to cross the continent.(Please, no comments on Sydney taxi fares!!):)

13th Jul 2007, 10:52
I'm with you too Torres. I was wondering what those first two posts were on about. sheesh!
Troppo, beautifully stated.....wish I'd said it.

13th Jul 2007, 11:10
Without delving into the complexity of revenue yield management, if some passengers are buying a fare

....between Perth and Melbourne for $59.95....

...they are the very lucky few. The rest of the ship are paying somewhere between $59.95 and full tote premium odds.

Collectively that passenger revenue = aircraft operating costs + on costs and over heads + profit! :E

Put simply, if a passenger in Row 58 is paying $50, not getting a free coffee and paying exorbitant, rigidly applied excess baggage rates, a passenger in Row 1 is paying $1,000. And what does he get for his extra $950? A higher baggage allowance, free booze and a meal with wine, probably costing $30 at best!

That is the name of the game. And the Singaporeans are no fools - they are experts at that game.

I guess it is now up to Qantas, Virgin and Jetstar to play a more innovative tariff game if they wish to compete? :D

Tell me why they let other countries airlines in again?

Because PT6A-67, we live in and enjoy the benefits of a globalised, free enterprise economy. If you drive a Ford, Toyota or Nissan, agree with BHP controlling mines on every continent, enjoy the benefits of Australian financial institutions owning banks in Europe and Asia and accept the Packers owning casinos in Macau, what is the problem with a foreign airline operating in Australia and offering Australian travelers air fares they can afford?

The Two Airline Agreement is dead and buried. The opportunities pilots enjoy today are the product of burying that absurd agreement, once and for all!

Long live free enterprise. May the best team win! :ok:

Troppo, my best posts are generally after at least the third brown bottle! :}

Yusef Danet
13th Jul 2007, 11:34
Ever heard of a "Loss Leader"?

if Woolies advertise and sell a pack of toilet paper at 10c less than it costs them, it will

* attract customers to their store, who will buy other, more profitable goods
* stop said customer from spending a dollar at the competitors' stores
* leave the customer with the impression that Woolies sells stuff cheap
* encourage said customer back if the experience was a positive one, even if the bogroll is no longer on special

Basic economics, my good people. No one is suggesting that anyone intends to establish an airline that fills 4 hour flights with $59 fares ad nauseum.

13th Jul 2007, 11:45
Yes, Yusef, I'm sure the Coles CEO would confirm your anology! :}

And that $59.85 air fare - or Jetstar's reputed 10,000 $1 air fares - enjoy them whilst you can because when Tiger carves out it's market share, they will be gone - at least until the next LCC decides to break into the market! :E

chimbu warrior
13th Jul 2007, 22:52
Torres for PM!!

At last a pragmatist. Get that man to Canberra ASAP.

What's that you say? You can bear being called a GA operator, but not a politician? Good point.

Ah well, I guess we will continue to suffer.......

13th Jul 2007, 23:08
Youare all missing the Elephant in the room - the ACCC.

While the ACCC is slow, dumb and relatively placid, it is not completely stupid.

Thats why Jetstar is going to have to answer questions if it matches, let alone undercuts, Tigers fares.

There is a section of competition law that relates to predatory pricing

From Wikipedia

Predatory pricing (also known as Destroyer pricing) is the practice of a firm selling a product at very low price with the intent of driving competitors out of the market (http://en.wikipedia.org/wiki/Market), or create a barrier to entry (http://en.wikipedia.org/wiki/Barriers_to_entry) into the market for potential new competitors. If the other firms cannot sustain equal or lower prices without losing money, they go out of business. The predatory pricer then has fewer competitors or even a monopoly (http://en.wikipedia.org/wiki/Monopoly), allowing it to raise prices above what the market would otherwise bear.

Predatory pricing is illegal in Australia, and in my opinion, Qantas has engaged in it for a very long time, but not continuously.

From memory, and not being a lawyer, I think it is illegal for a company with a substantial market share, which Qantas undoubtedly has, to price a product at less than its cost of production to the company.

The trouble comes howevr when you attempts to prove it, since I no of no forensic aviation accountants available that would want to blight their employment prospects by helping the ACCC pin this on Qantas.

Cactus Jak
13th Jul 2007, 23:18
Thanks for posting what most of us (bar a few "rocket scientists") :rolleyes: understand to be plain common sense. We owe you an ale or 2.

With the point about the low fares staying around for the long term with this mob. From what i can gather from all their propaganda, these low fares are here to stay. There may be only a handful or so on each flight but they'll be there up for grabs. We Won't have to wait for the sales.

And the next level of fares available on these flights are not the exorbitant 3 or 4 times as much but surprisingly more reasonable. (ML-DN $80, and $139 for example, when i checked).

14th Jul 2007, 03:15
"...these low fares are here to stay."

Now, where did I hear that before? :confused:

Oh, that's right - it was back when Virgin commenced operations and again when JetStar commenced operations! :ok:

I'm sure I heard JetStar are offering 10,000 air fares at $1 plus taxes?? The way yield control works is that the carrier ensures a low fare is only available on the Thursday "red eye" special via multiple ports - when you want to travel direct at Monday lunch time!

Try walking up to the airport ticket counter with a buck in your hand and see if you can get a ticket on the next flight! :E

The name of the game is to maximise load factor and aircraft utilisation. Qantas, with a majority market share, must lose something to Tiger. With Qantas recent aircraft orders and claims of a 200 aircraft fleet, it will be interesting to see if they can sustain both their load factors and utilisation in a more competitive market place.

CC. I did my thirty plus years in airline management and three years in politics and enjoyed both. These days I enjoy watching. Both! :}

14th Jul 2007, 04:31
tiger so far has never produced any profits!!!!!!!!!!!!!!!
fullr subsidised by parent companies including temasek, which is the sin governments investment arm. fair play, yeah right. another pig flew by the

14th Jul 2007, 05:05
These days I enjoy watching.
Always thought that you were a perv... even way back when!!!

14th Jul 2007, 09:11
One must not forget that Temasek Holdings holds over 40% of Jetstar Asia, which competes with SQ in its own backyard. (Compared to 19% of Tiger). Also, SQ has to share its air traffic rights with Jetstar Asia, which is technically a Singaporean airline.

14th Jul 2007, 23:55
Thanks very much to everyone for pushing my point, which was:
Tiger are not the saviour of Oz aviation for the punters, the fares wont ( cant possibly )last and wont be available for every seat of every flight which is what has been alluded to on this and other threads about Tiger.
Sorry I did'nt spell it out in black and white , just thought pilots where brighter :ugh:

15th Jul 2007, 08:47
That is what has been ahppening in Australia for years.

15th Jul 2007, 09:36
Behave Animal or I'll click on the "Report this Post" icon and get a Mod on your case! :E

cunninglinguist. "Tiger are not the saviour of Oz aviation for the punters..."

Neither are Woolworths, General Motors, BHP, any bank you care to pick, your corner store or any other company in Australia the savior of the Oz punter!! It may surprise you, but Australian company law dictates that their primary mandates are to pay their debts and dividends to their shareholders, in that order.

I don't have a problem with that corporate philosophy! :ok: It is a fundamental precept of business, despite many airline pilots thinking the corporate world revolves round their remuneration expectations.

Having said that, I suspect Frank Ball, Reg Ansett, Don Kendal, Jack Masling, Max Hazelton and even Junior Buchanan were the last self made airline executives in Australia to understand their staff were their greatest assets! I learned much from their unique corporate governance skills and in these days of political correctness, very street wise philosophies!

Tough bastards, always wanted their pound of flesh but rewarded productivity and loyalty. :ok: I admire them and their great achievements.

Sadly, they are gone from the scene and I'm very glad I'm out of the airline game! The philosophies I learned from these great men guide me in management of the 500 employees I manage!

15th Jul 2007, 13:31
Their fuel is purchased by SQ at the lowest price in the world, THEY ARE very smart people, THEY ARE positive thinkers and THEY ARE in for the long haul...pardon the pun. Do not underestimate the organisations behind Tiger Airways...some of the most successful airlines in the world. And they are offering seats today from Singapore to Thailand for three cents (Sing$) oneway and this is after carting 3 million passengers. SO whoever says the low fares will not last are ill informed. At the end of the day why should we be ripped off by a red tail plane that was until a few years ago one of the most Government subsidised airlines in the world.....Good Onya Tiger...go for it!!!!!!!!!!!!!!!

20th Jul 2007, 17:05
More like a Cassoary than emu?:}:ugh:

24th Jul 2007, 09:57
if you cannot post a sensible reply....go somewhere else ol mate

25th Jul 2007, 02:56
Why don't you explain how they will make a profit on 3c tickets!
If no profit then they will NOT be in it for the "long haul":ugh:

otto the grot
25th Jul 2007, 03:25
No one makes a profit on 3c seats. What it does though is fill a seat that would normally be empty with someone that may have flown on J* or VB and if that person is happy with the service and the near free ride, they may just come back as a paying pax on their next trip.
One less punter for the opposition.

25th Jul 2007, 03:56
Emu. You amaze me. You slam QF for being one of the most Government subsidized airlines in the world, yet praise SIA which would be absolutely nowhere without government backing!!!!!!

Wake up and smell the coffee pal, Tiger is here simply cos SIA cant get acces to the Pacific. Oh but wait, yes they can from THEIR OWN COUNTRY DIRECT TO THE US!!!!!!

I'd suggest you have never been to Singapore, because you are missing a far more accurate "THEY ARE ......" than the ones you chose to type.

And it ain't a complimentary one.


25th Jul 2007, 06:26

"and they are offering seats today from Singapore to Thailand for three cents (Sing$) oneway..."

I know how to make a profit on "three cents (Sing$) oneway" air fares ... but you first.......

Is it possible to purchase a return ticket between Singapore and Thailand for S$0.06 cents, unconditional, on any flight?

If not, what is the lowest price for a return sector air fare........ :E

A major investor in SQ and I assume Tiger is the Singapore Superannuation Fund. They are not in there to accrue losses..........

And if SQ gets the cheapest fuel in the world - which I doubt - just goes to show how smart they are as Singapore has no oil wells to my knowledge.

It really begs the question why Australians have to pay very high "world parity prices" for fuel pumped out of Aussie oil wells? Maybe because it is sent to Singapore for processing? :}

25th Jul 2007, 07:04
"It really begs the question why Australians have to pay very high "world parity prices" for fuel pumped out of Aussie oil wells? Maybe because it is sent to Singapore for processing?"

It's because the soon to be well and truly kicked up the ar5e at the next election Kim Il John tied it (petrol pricing) to world parity pricing isn't it??? It must have been during that period whilst he was treasurer, when he did such a good job according to his current treasurer, when interest rates began to soar, and we are now heading for our 9th (?) since 2001!:ugh:

Thread drift to gratuitous government bash - thanks I feel a little better now :p

30th Jul 2007, 11:55
Anybody with half a brain will tell you Tiger Airways WILL survive and remain very competitive and will continue offering specials at the same time providing Australians a chance to fly on a genuine Low Cost Carrier.....Virgin blue has basically replaced Ansett and the Jetstar is just an attempt by QF managment to dismantle QF and get the company out of the unions stranglehold!

Sorry if you don't like the idea of a TRUE LCC but its coming and its coming to stay.

And for all you wondering about JETA1....its under 70cents Australian per litre in the middle of the Indian Ocean......so if you use your brain and start to realise the purchasing power of the SIA Group you will start to understand the Tiger finance model....and with 50 more A320's on order.....watch out QF and VB and the other one

And for mmmbop yes i have been to singapore thousands of times and Iam currently working in the Northern Hemisphere

Good onya Tiger.....give the ozzies a choice of price and style instead of just being ripped of by big fat bloated kangaroo carcass...and i use the word carcass because thats all thats going to be left of them!!