Tiger’s Demise Would Hit Domestic Tourism

Should Tiger Airways not return to the skies over Australia, it will have a profound affect on domestic tourism.

Regional tourism operators, already experiencing a horror year, could be affected if the grounding of Tiger Airways extends into weeks, the peak national tourism body says.

Tourism and Transport Forum CEO John Lee said the week-long grounding wasn’t having an immediate impact on the tourism sector because other airlines had stepped in to help the 35,000 affected passengers. But if Tiger’s grounding went on longer, regional operators would be concerned.

Mr Lee said many of Tiger’s customers were families on a budget or people who had saved for a long time for a holiday.

“They’re the type of people that regional leisure destinations really need to keep their own businesses viable. To lose that segment of the total tourism market is of concern.”

Should Tiger not continue in Australia, air fares will undoubtedly climb, probably by an immediate 15%.

AMP Capital Investors’ head of investment strategy Shane Oliver said airfares were certain to rise should Tiger end up leaving the Australian market.


Tourism & Transport Forum CEO John Lee

“I think if Tiger leaves, prices will just shoot back up again,” he said. “They may not be as high as they previously were but I think they’d still go higher,” said Dr Oliver.

The airline safety regulator could make a decision on the immediate future of Tiger Airways as early as tomorrow as officials continue talks with the troubled low cost carrier.

Peter Gibson, spokesman for the Civil Aviation Safety Authority, said it was working as quickly as possible to bring clarity to the position. “We expect to make a decision about whether extension of the suspension will be required by Thursday [7 July].”

In Australia CASA has the job of ensuring that airlines meet the required standards and through its ongoing audits to identify patterns of deficiencies. Grounding Tiger carries a strong message that CASA has lost confidence in the ability of Tiger’s management to meet these standards.

Curiously, Qantas that had a disturbing number of maintenance incidents earlier this year did not attract the same attention from CASA. Tiger’s woes have been added to by CASA applying to extend the grounding until 1 August as the agency struggles to cope with the sudden workload. In the meantime, Crawford Rix, Tiger’s Australian CEO has quit.

Mr Lee said regional tourism destinations like the Whitsundays and Cairns were experiencing their worst year in 20 years with more Australians holidaying overseas on the back of the strong Australian dollar and external factors affecting inbound tourism from a number of countries.

“To actually then lose an airline, or lose capacity for seats into those markets, is a worrying sign,” he said.

There is strong speculation that should Tiger Airways leave the Australian market, other Asian budget airlines would enter Australia’s domestic market. Air Asia, Indonesian carrier Lion Air and Philippine carrier Cebu Pacific were thought possible contenders.

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