Tigerair will find Canberra-Melbourne tough going

Angus Kidman 23 August 2016


Can a no-frills airline succeed in a city where "budget" is often a dirty word?

Yesterday, Tigerair announced the latest addition to its flight roster: flights between Melbourne and Canberra. Because this is the Internet age and even airlines have to pretend to create teasers, we haven't been told the actual schedule, which we're promised later this week. That means we can't pass full judgement, but if history is any guide, Tigerair may find this route tough going.

I'd never want to bet against an airline that offers $20 seats during sales, because there will always be people wanting to fly cheaply. Whether that's a sustainable business model is an entirely different question. And it's especially germane in Canberra, where the vast bulk of flights are booked by public servants who are used to full-service airlines.

Even when you're flying on a Qantas Dash 8 between Sydney and Canberra, one of the shortest domestic hops on the books, you'll get a glass of wine. Canberra is the only city in Australia where the Qantas Business lounge (the super-posh one) is the same size as the comparatively plebeian Qantas Club. It's not uncommon for more people to be waiting in the lounges than at the gate.

Service frequency also matters. Government travellers expect to be able to switch. That's an option Tigerair only supports in a very lukewarm way with its MoveMe option, and that doesn't seem likely to extend to Canberra.

Tigerair says it will provide 2,500 extra seats a week to the capital. Its current Airbus A320 planes each seat 180 people, so that amounts to at best 14 flights a week, or two a day. The timing of those flights will also matter: demand is going to be lower if everything leaves very late at night (a common phenomenon with cheap flights, though at least Canberra isn't a 24-hour airport).

The real challenge, though, will be winning the government and corporate accounts that dominate in Canberra. Virgin Australia has found it tough going to break Qantas' hegemony in this area, and it is a full-service airline. Politicians might be fond of making other people cut costs, but they're also fond of chartering helicopters when a train would suffice. I don't think being able to pay with PayPal is high on the list of priorities.

I'm all for choice and competition, and I'm enough of an aviation geek that I'll probably try and get on one of the first Canberra-Melbourne services simply to say I did it. But I also won't be surprised if Tigerair gives up after a year and diverts its aircraft to more profitable routes.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on finder.com.au.

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