o such funding problems confront today's price leader Tiger Airways, which is half-owned by industry giant Singapore Airlines. But, if Grey had financed his airline better, it's likely Tiger would never have thought twice about bringing its brand to Australia.
Even with just five planes and none of the outsourcing of costs popular today, Compass achieved a nominal operating cost of just 7.5¢ per available seat kilometre (ASK), marginally more than Jetstar (6.9¢) and cheaper than Virgin Blue's 8.5¢ or Qantas's estimated 11¢. At the time, it cost Ansett and Australian Airlines (taken over by Qantas in 1992) about 15¢ to fly a seat one kilometre.
But with seat rows of just 29 inches, the only ''metric'' that matters to Tiger Airways is lowering its costs, which are now about 4.5¢ per ASK, according to its most recent performances figures.
On an average-length route, such as Melbourne to Brisbane, that's a little more than $60 one-way. This enables the airline's pricing formula: ultra-cheap introductory fares at or just below cost, with much higher fares for those booking closer to the date of travel.
According to the Bureau of Transport, Infrastructure and Regional Economics, the cheapest fares this year have been lower than at any time since they were first measured in 1992 and are 45 per cent lower than when Tiger arrived in 2007.
Tiger hasn't yet made a full-year profit in Australia but it has two more A320s arriving early next year, taking its Australian fleet to 12 and further lowering its operating costs.
''If folks think they've had a low-cost airline [already], they haven't seen anything yet,'' Tiger's Australian managing director, Crawford Rix, says.