Tigerair: Virgin takeover sparks improvement in budget airline performance

BUDGET airline Tigerair was snapped up by Virgin Australia for $1 in October last year — and now the airline is making a comeback.

Supplied Editorial TIGERAIR - PICTURES BY JAMES MORGAN

BUDGET airline Tigerair, which was snapped up by Virgin Australia for $1 in October last year appears to have made a marked turnaround since its horror fleet grounding in 2011.

Once dogged by safety risks, flight cancellations and service complaints, industry watchers are now saying the airline has dramatically improved under Virgin’s reign.

“The business is really performing a lot stronger over the last 12 months and Virgin should be congratulated for how quickly they’ve managed to achieve this,” said Morningstar analyst Ross MacMillan.

Tigerair posted a $42.7 million improvement to its bottom line on Friday, taking its full year posting to an $8.7 million loss. Virgin chief executive John Borghetti said Tigerair was on track to a profit next year.

“People were saying its losing $60-70 million a year, the brand is damaged, you’ll never turn it around,” he said at Virgin’s full year results call.

“Well here we are, we only bought it in October, satisfaction has gone up 11 per cent, and it had the best on time performance of low-cost carriers in Australia.” Mr Borghetti also announced that the no-frills carrier would fly internationally for the first time as it takes over Virgin’s underperforming Bali routes from Melbourne, Perth and Adelaide in 2016.

The venture is both a cost-cutting move for Virgin’s struggling international business and a boon for Tiger’s market competitiveness and reputation.

“Tiger was a little bit of a basket case previously but now people are seeing a significant improvement on their ontime flights and all sorts of issues,” said Mr MacMillan.

This year Tiger led Jetstar on on-time departures and its customer satisfaction rate rose 11 points to 75 per cent.

Phased in perks like check-in kiosks and a mobile app, as well as payment options for queue-jumping, picking seats and receiving food in-flight have also added to the passenger experience.

“I think that where previously a lot of budget airline passengers had second thoughts about travelling by Tiger, they would now certainly consider it,” said Mr MacMillan.