Tiger Airways’ Australian Flights Grounded by Regulator on Safety Concerns

Tiger Airways Holdings Ltd. (TGR), the Singapore-based budget carrier, was ordered to ground Australian domestic flights for a week on air safety concerns.

The carrier, part-owned by Singapore Airlines Ltd., has been barred from flying until July 9 while the Civil Aviation Safety Authority investigates two operational incidents, Tiger said in an e-mailed statement today. The safety agency has been undertaking surveillance on the airline this year and earlier imposed conditions, including improving pilot proficiency and maintenance control, CASA said in a separate statement.

“CASA believes permitting the airline to continue to fly poses a serious and imminent risk to air safety,” the regulator said in the statement. “CASA no longer has confidence in the ability of Tiger Airways Australia to satisfactorily address the safety issues that have been identified.”

The grounding will affect 35,000 passengers this week including 7,000 who were due to fly on Tiger today, according to Transport Minister Anthony Albanese. It is a further disruption for Australian travelers who have grappled with flight cancellations since the Puyehue-Cordon Caulle volcanic complex in Southern Chile erupted on June 4, sending an ash cloud billowing around the globe.

Melbourne, Adelaide

Tiger began domestic Australian flights in November 2007 and has hubs in Melbourne and Adelaide. The airline has kept costs and fares down since entering the market through steps including charging extra for food, airport check-in and reserved seating.

With a fleet of 10 Airbus SAS A320 planes in Australia, it’s the smallest of three airline groups flying domestic routes.

Virgin Australia operates 86 aircraft while Qantas Airways Ltd. (QAN), Australia’s largest airline, and its budget carrier Jetstar had 252 planes and operated about 5,600 domestic flights per week as of September, their websites show.

Qantas, Jetstar and Virgin Australia added additional flights to their schedules to cater for Tiger passengers. Qantas engineers today canceled industrial action scheduled for next week, said airline spokeswoman Emma Kearns. The stoppages would have affected a “small number” of domestic flights, Qantas said July 1.

Singapore Airlines owned 32.9 percent of Tiger as of March 31, according to the Tiger website. The Capital Group Companies Inc. held an 8.1 percent stake while Dahlia Investments Pte had 7.4 percent.

“We are not involved in any way in their operations and their management,” Nicholas Ionides, a spokesman for Singapore Airlines, said by phone today.

Extend Grounding

CASA may apply to the Federal Court to extend the Tiger grounding, to give it more time to investigate the safety concerns, according to the regulator’s statement.

“Tiger Airways continues to cooperate fully with the industry regulator and safety underpins our operations at all times,” the airline said in its statement.

Two Tiger flights dropped below the minimum safe altitude while coming in to land in the past month, the Sydney Morning Herald newspaper reported on its website today, without saying where it got the information.

Tiger’s shares have slumped 36 percent in Singapore trading this year as its profit plunged in the first quarter on tax charges and a slowdown in demand at its Australian unit.

Tiger’s net income fell to S$1.3 million ($1.1 million) in the three months ended March 31 from S$22.3 million a year earlier, the carrier said in May.

Qantas delayed flights between Sydney, Buenos Aires and Johannesburg today due to the ash cloud, while domestic routes are operating as scheduled, according to its website.

To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net.

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net.

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