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The Business Times | Sat, Mar 10 2012

A day after announcing that it had been given the green light by Australian aviation regulators to almost double its flights in the country, Tiger Airways Australia unveiled Sydney as its second base in the country. Tiger's Sydney base will commence operations from early July 2012, adding to its first base at Tullamarine, Melbourne.

On Tuesday, the budget carrier said it had received approval from the Civil Aviation Authority of Australia to operate a maximum of 64 sectors per day from October 2012. This represents an almost doubling of services from the current limit of 38 sectors per day. The increase will be implemented immediately but progressively, Tiger said.

The two developments are critical for the airline, which has been struggling amid massive capacity overhang following its six-week forced groundings in July-August last year.

Following the lifting of the groundings, the airline still did not have enough routes to deploy its 10 A320 planes. As a result, only seven planes were flying. The result was massive losses, with Tiger Australia posting operating losses of $59 million for the nine months to end-December 2011.

In its announcement yesterday, Tiger said three A320 aircraft will progressively call Sydney home from July 1, creating over 150 new jobs and providing up to 10 additional daily return services through Sydney Airport.

Tiger Airways CEO Andrew David said the latest developments heralded a new era for the troubled airline to progress with its 2012 business growth plan. 'Three aircraft operating from our second Australian base will provide up to 3,600 extra seats a day through Sydney Airport,' he said. 'We are continuing with our future Australian expansion as planned. The business goal was to have all 10 aircraft operating in Australia by the second half of 2012 and today's news proves we're on track. An 11th aircraft will be deployed to Australia by August 2012 and further network developments will be announced in due course.'

The CEO of Sydney Airport, Kerrie Mather, welcomed the news. 'We are delighted that Tiger is setting up a base in Sydney and will operate up to 38 services a day in and out of Sydney, compared to 18 currently,' Ms Mather said. 'This will cement Sydney's status as Australia's number-one destination and Sydney Airport as the nation's gateway airport. Low-cost carriers are driving growth in aviation right now and Tiger adding 3,600 seats to its Sydney schedule - including a new Sydney-Brisbane route - means there will be more competition and more choice on key corridors.'

News of the latest development perked up Tiger's share price on the Singapore bourse, where it gained three cents to 78.5 cents.

Analysts were sanguine about the news, with DMG Research upgrading the stock to a 'buy' with a target price of 87 cents. 'The ease of restrictions is comparable to having the restrictions completely lifted, hence Tiger's Australia's turnaround to profitability could be earlier than forecast,' the investment house said in a report yesterday.