Tiger Airways today announced $9.95 one-way flights from Adelaide to Melbourne as part of their market-penetration strategy.

There has been much speculation of Tiger Airways’ introduction strategies into the Australian market but price-wars are nothing new in the aviation industry.

If I recall correctly Virgin Blue did it. Jetstar did it. What has been the product of this serious undercutting? Fierce competition!

To clarify for those spectators that sit there and wonder how this sort of behaviour is sustainable, I shall go over penetration-pricing.

Penetration-pricing means setting a low entry price to gain market-share and then increasing to a level that is realistic and within what the market is willing to pay. I see this as what Tiger Airways is doing.

I see them as wanting to gain market-share by creating an irresistible buzz which will ultimately lead to brand-loyalty.

They’re making their product accessible so people can see ‘what they’ve got’ and will hopefully choose them again when it comes to booking low-cost airfares.