Four airlines, two cities, and a big cat fight

Qantas and Virgin Blue lose a significant amount of control over domestic fares and scheduling from today when Tiger lifts its frequency on the Sydney-Melbourne route to nine times daily each way.

For example, contrary to everything said publicly by Qantas CEO Alan Joyce, Jetstar during this month goes to 7.10 am, 8.35 am, 3.30 pm and 6.15 pm departures from the main Melbourne airport to Sydney.

Head to head within minutes with the Qantas Cityflyer schedules.

From Sydney Jetstar will have 6.30 am, 7 am, 9.20 am, 10.35 am, 4.10 pm and 6 pm departures to Tullamarine on some days, rather than to the miserably inconvenient Geelong (Avalon) airport as seen from the point of view of those who want to fly to Melbourne instead of a forlorn shed beyond the edge of the map.

October is when the fur really starts to fly, if nothing else, and Jetstar inevitably begins to consume Qantas to contain the Tiger attack.

A month too when many of the assumptions about domestic competition in Australia get tested by the drawn out trench war fare of cashed up carriers trying to see who will bleed to death first, to paraphrase comments recently made by Virgin Blue CEO, Brett Godfrey.

Sydney-Melbourne is just the beginning of the real Tiger onslaught, and Qantas has already played a hand that says it will ‘eat its own’ as in its full service Qantas operations, to protect its profitable and expanding Jetstar operation.

In the near future, unless Tiger is driven out of business, or some sort of accommodation occurs, the same strategy will be enforced by Tiger across the Cityflyer domains.

Several questions beg answers that only time can provide.

One is ‘Does Qantas care?’ Those who believe that Jetstar exists to destroy the legacy work practices of mainline Qantas will argue that it doesn’t care.

Others might look at the promised move by Virgin Blue to a single branded, dual premium/ultra low fare network and ask if a completely different external threat to Qantas is not in the works.

Or Qantas might decide to emulate the Virgin Blue ‘airline of the future’ concept with a two category Jetstar domestic cabin , or even more radically, the Singapore Airlines controlled Tiger might decide to also go the Virgin way.

All of these things are possible.

In the meantime, is this new domestic cat fight going to be all about Tiger advancing at the expense of the Virgins and the legacy Qantas brands?

Probably not, because attack always leads to counter attack.

And there needs to be a further revolutionary departure by Tiger from the Ryanair/Jetstar model to really tap into a profitable market for good value, frequently available domestic air fares.

Its current revenue model is to only make the cheap fares available well into the future, and then try to charge even more than the best fares on offer from its competitors for flights purchased at shorter notice.

Tiger has not invested (yet) in booking and inventory processes that are compatible with travel management booking tools.

Many businesses, government departments and other institutions use such processes to record and reconcile travel and entertainment expenses. These systems track unused fares, enforce compliance with official travel policies, provide automated GST and FBT reporting functions and generate enormous account keeping savings.

As a consequence, Tiger at this stage is limiting itself to the attractions of incredibly cheap flights outweighing punitive conditions, and to people who may only be able to afford one or two leisure or visiting-family-and-relatives types of trips a year.

It often costs two to three times a Tiger bargain fare to park for a day at Sydney Airport, and similarly, the taxi or rail fare from many parts of the city will cost far more than the one way flight.

For Tiger to prosper, it clearly has to be relevant to most travellers, not a close-to-zero-yield sub set.

But it has smart owners. They know all of these things. Will they choose to use Tiger to grow a viable and relevant franchise in Australia?

Or is the plan to force one of its major competitors to merge with them on favourable terms as part of the eventual trans border rationalisation of air transport in this hemisphere?

That has been the question everyone paying any attention to the situation has been asking since Tiger began operations nearly two years ago.