Virgin to Shake Up FIFO Market

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  • Wednesday, 07 November 2012 19:49
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Fly-in-fly-out workers could have access to cheaper airfares and more flight options as a result of Virgin Australia’s bids for control of Skywest Airlines and Tiger Airways last week.
The Skywest deal – worth 98.7 million – will see Virgin take over the entire Skywest business and absorb the Singapore-controlled, Western Australia-based regional airline into its brand.

Virgin bid for Tiger

Meanwhile, Virgin has also made a $35 million bid to purchase 60 per cent of shares in budget carrier Tiger Airways.
According to The Age, the deal with Tiger will see the discount carrier keep its brand for at least another 20 years and expand its fleet in Australia from 11 aircraft to 35 by 2018.

This will also lead to more attractive flight offers through Tiger to customers – particularly if they start offering services to mining destinations.

Both deals have been viewed as a direct attempt by Virgin to take on Qantas’ QantasLink services around regional Australia and the lucrative FIFO market which is developing from the mining boom.

Skywest currently holds contacts with several mining companies to supply transport services for FIFO workers.
Virgin Australia Chief Executive Officer John Borghetti said both deals would provide significant benefits to consumers and the business alike if they were approved.

“The acquisition of Tiger Australia and Skywest provides Virgin Australia with a strong presence in the budget, Fly-in Fly-Out (FIFO) and regional markets, enabling us to fast-track our expansion in these areas and become a stronger competitor,” Mr Borghetti said.

“These transactions will bring important benefits to Australia, driving growth in jobs, tourism and competition.”

What does it mean for mining?

Tourism Council WA Chief Executive Officer Evan Hall said while the organisation would “warmly welcome an airfare war, as Qantas and Virgin slug it out over regional WA” – he is concerned about non-mining towns missing out on a slice of the action.
“Airfare competition will be fierce for flights to regional mining towns, but non-mining towns in the south may not see much change.” said Mr Hall.

“The state government must still take responsibility for ensuring regular and affordable passenger services to smaller non-mining towns”.
Virgin Australia Group will expand to 139 aircraft and over 9,000 employees if both deals are approved.  The business has promised to “keep the market updated regarding progress on these transactions.”


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