The maiden profit by Tiger Airways Singapore is up from a $S14.3 million loss for the previous year and saw the company's trading margin swing from -7.8 per cent to 8.8 per cent.

Revenue rose 56 per cent to $S271 million while the cash balance rose from a thin $S3.9million to $S19.6 million.

Tiger chief executive Tony Davis said the airline's first profit three years after start-up came as it achieved economies of scale that allowed it to offset low fares.

"I think a three-year period from start to profitability is reasonable and certainly that was our target," Mr Davis said.

"And we're delighted that Tiger Singapore has delivered a very robust set of figures for the last financial year, which was it's third full year of operations. I think the other thing to reinforce is that Tiger Singapore is an entirely independent carrier.

"Unlike the relationship Jetstar has with Qantas, we didn't benefit from passengers being forcibly moved from one airline to the other, we didn't inherit routes and we don't network plan our services with (majority shareholder) Singapore Airlines or anyone else."

Mr Davis described the profit of almost $S40 million as a "very solid set of numbers, which bodes well for future growth and future profitability".

Asked about Australia's contribution to group profitability, he said Tiger Australia was still in the investment phase, as demonstrated by announcements this week of a second base in Adelaide and increased services between Perth and Melbourne.

Tiger Australia announced it would base its two Airbus A319s aircraft in Adelaide and that it now expected the planes to enter service early next year, rather than later this year.

The move to establish the second base comes after recent announcements that the airline would pull out of Darwin and Newcastle and an admission that its expansion had been slower than first touted.

Tiger is also boosting flights between Melbourne and Perth to twice daily from November 1. It will fly an extra three flights a week between October 2 and November 1.

Mr Davis expressed confidence about the group's continuing success, despite challenging market conditions and high oil prices.

He said the airline's low-cost model remained the purest of any carrier in the region and said it remained absolutely disciplined about costs.

"I think we are definitely focused on delivering our product, which is the lowest fares in the market," he said. "And I think the decision we made last week to suspend services to Darwin, which was a very difficult decision for us, is indicative of how focused we are on that cost base.

"We are not going to just increase airfares because of the high operating costs at airports like Darwin ... we're focused on delivering low fares and if we can't do that at certain airports then we won't be able to serve those airports.

"So we are absolutely focused on delivering sustainable profitability for all our businesses and I think that with Tiger Airways Singapore now profitable, obviously our intention is to keep it that way."

While Tiger Australia may not yet be contributing to the group's profits, its four aircraft made a substantial impact operationally in the first three months of the 2008-09 financial year.

Tiger Aviation, parent of the Australian and Singaporean operations, reported a 73.7 per cent increase in passengers for a 64.9 rise in capacity, pushing up load factors by 4.1 percentage points. Revenue was up 57.8 per cent.

Mr Davis said the result showed the group was still delivering impressive year-on-year performances. He expected Australian load factors to increase as brand awareness rose with the expansions in Adelaide and Perth.

Tiger estimates its decision, which it says was long-term but still subject to consumer demand, will bring at least 10 million additional passengers to Adelaide Airport over the next eight years.

Mr Davis said the 144-seat 319s would give the airline the flexibility to develop capital city airports and serve regional destinations unable to take an A320.

by Steve Creedy - Aviation Writer

SOURCE | News.com.au | The Australian Business