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Feb 3, 2017

Virgin Australia unlikely to take over Tiger's cancelled Bali routes

Virgin Australia's low cost brand Tiger has given up on Bali after another rebuff by Jakarta

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Bali, beautiful but at times stormy for airlines

Those routes to Bali that Virgin Australia handed over to its low cost brand Tigerair Australia won’t be handed back to the parent company.

Flights to Denpasar from Melbourne, Adelaide and Perth by Virgin Australia were declared unsustainable for Virgin Australia’s full service operations last year when Tiger took them over.

That hasn’t changed now that Tigerair has retired wounded from the routes after the latest bruising disagreement with Indonesia’s aviation authorities.

A spokesperson said, “Virgin Australia has no plans to operate the Bali routes from which Tigerair Australia has withdrawn.”

The end for Tiger in Bali came swiftly, with the airline making it clear it saw Indonesia as being to blame for going back on its word several times in relation to approvals to operate the routes in place of Virgin Australia.

Tigerair’s statement says:

“Tigerair Australia has been informed that Indonesian authorities will not be providing Tigerair with the final approval needed to operate to and from Bali from today, Friday 3 February 2017.
 
The Indonesian authorities have informed Tigerair that they require an alternative regulatory solution for Tigerair’s operations to Bali. This solution would take at least six months to implement and would compromise the airline’s ability to offer low-cost airfares to travellers to Bali.
 
As a result of this development, Tigerair Australia has today made the difficult decision to withdraw from flying between Australia and Bali permanently, effective immediately.
 
Tigerair Australia’s Chief Executive Officer Rob Sharp said: “We understand the impact that this situation will have on passengers booked to travel to and from Bali with Tigerair, and we sincerely apologise to all affected passengers.
 
“We have been advised by Indonesian authorities that in order to continue operating our flights to Bali, we would have to transfer to a new operating model that would take at least six months to implement and would compromise our ability to offer low-cost airfares to Australians.

Tigerair had been operating the Perth, Adelaide and Melbourne services to Denpasar using three 737-800s drawn from the Virgin Australia fleet. It thought that it had approval to operate flights to Bali using A320s from its own fleet from today.

The low cost carrier will now seek alternative shorter haul international routes for the three 737s.

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15 comments

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15 thoughts on “Virgin Australia unlikely to take over Tiger’s cancelled Bali routes

  1. Deano DD

    Ben
    One thing that I am not understanding
    If Virgin deemed the routes unsustainable how is it sustainable for Tiger
    Same aircraft with same seats (take out business and replace with cheaper economy)(seat pitch is the same VA and TGG)
    Were VA attendants and not sure if it was VA crew
    Tiger would have been selling tickets cheaper
    So my question is, where is the cost savings for TGG to make the route viable ? ….

    And on the flip side, VA could easily cover Bali by connecting into Darwin, a hub and spoke
    A combination of Darwin passengers along with Bali passengers should ensure fullish flights to Darwin, then they only need one of those frames to carry on to Bali and return

    Cheers

  2. Dan Dair

    Deano,
    I would assume that Tiger crew get paid less than VA’s.
    I would also assume that base costs are lower as there’s no inclusive service, so less is carried by way or food & drink. Very little is carried which is perishable, so little or no waste. If you sell-out, you’ve run out. Tough-monkeys, that’s low-cost for you.!
    The other assumption is that they are expecting higher load factors at the reduced price, which would improve profitability if they can achieve it.?

    Who’s actually to blame for the state of affairs isn’t so obvious, but it was pretty clear from the reports a couple of weeks ago, that Tiger thought they had a done deal to secure their business through into March.
    (& presumably also, they believed that the deal was done or at least solidly on the table, to advance beyond the March expiry of the current ‘deal’.?)

    It’s something of a shambles, to say the least. (probably closer to a disaster for the ticket-holders, who’re badly let-down by this situation)
    Neither Tiger, Virgin or the Indonesian authorities come out of this looking anything but foolish, possibly worse.?

    1. Deano DD

      Tiger Crew paid less than VA ….
      Lets say $100k per year less pilot and FO this equates to about $500 per sector

      Base costs are lower as there’s no inclusive service
      Better to sell more $10 snacks (cost about $1) and $5 drinks (cost about $1)
      A full flight sector would cost about $500 to feed and water on an inclusive fare

      Higher load factors at the reduced price
      My point exactly, nothing stopping VA from doing this too…

      Again I’m not seeing any real difference between flying a TGG 737 verses a VA 737 to Bali
      Even if the cost was $5000 more for a VA crew for a return sector, this is only about $15.00 per seat for a 75% full flight

      Again VA could hub via Darwin or pull 3 frames from holiday markets like Gold Coast or Sunshine Coast and transfer those flights to TGG and use those frames for Bali (same same) Why give up on the route??

      1. Dan Dair

        Presumably, VAH want to keep their aircraft operating ‘full-service’ routes.?
        Maybe it’s about business profile or perhaps it’s at the insistence of one of their airline-shareholders.?

        If they can’t profitably run full-service on Bali, I assume that they don’t want the route,
        which, in-turn is presumably why they transferred it to their Tiger brand.?

      2. Letterboxfrog

        Virgin couldn’t fly its 737s full from Sydney (and I’m assuming Melbourne too) as the leg was too long for a full aircraft. Formerly living in Darwin it did intrigue me that the VA metal didn’t pass through Darwin for refuelling, passenger exchange (people do fortnightly commutes DRW-DPS) before pushing onto DPS, or even CGK and other parts of Indonesia where there are no connections to Australia, such as Ambon.

  3. Ken Borough

    There is something very. very odd in this saga. After all, airlines seek and obtain regulatory approvals day in, day out. Carriers from the world over operate to and from Indonesia. What is so different about what Tigerair Australia are trying to do? And what is the “new operating model that would take at least six months to implement …….”.

    If Tigerair Australia are now looking for new destinations, let’s hope that their experts cross the Ts and dot the Is in good time and don’t fail their passengers, if they have any.

    1. Dan Dair

      Perhaps the Indonesians were absolutely insistent upon the original aircraft type operated by Virgin, being maintained by Tiger.?

      Were that to be the case,
      it might explain why it would “take at least six months to implement”, since VA might not have any A320’s they could transfer across for that long.???

  4. comet

    Indonesia is the biggest loser.

  5. Ben Sandilands

    At the risk of compromising a future career in diplomacy the episode seems to be much more about Jakarta telling Tiger to get stuffed, because they aren’t going to approve anything. Tiger may have made mistakes in not resolving potential AOC issues at the very outset, but it’s biggest failing may be in pointing out the petulant and inconsistent behavior of the Indonesian authorities. You can be right at times, but also ‘fatally wrong’.

    1. Giant Bird

      Maybe Tiger were not prepare to pay the correct bribes. Don’t bother to accuse be of being racist as I worked for companies doing business with Indonesia for many years.

  6. jon t

    Virgin international is a separate company from Virgin OZ so is that the same for TIGER international. The story is getting a bit silly.

  7. Bill

    Just curious: I went to the Scoot website, keyed in PER to DPS on a date well in the future. The system said “wait a tick”. That was three hours ago.

    1. JW (aka James Wilson)

      Scoot doesn’t fly to DPS from PER; you’d have to go via SIN. Given the flights don’t connect, it would take about 15 hours to get there and 24 hours to come home. Surely there are better options!

  8. Martin Doyle

    Batik Air has received Australian regulatory approval to do the Bali route just recently and so I guess it’s merely just a matter of passing the football to another player.

    1. Dan Dair

      Perhaps Batik decided that the brown-envelope they needed to include on their first flight was actually worth their while.?

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