Australian Budget Carrier Replacing CEO, Promising Refunds

For the first time in Australia's history, the nation's regulators have grounded an entire airline to look into serious questions about its safety culture. The French News Service AFP reports that the Civil Aviation Safety Authority (CASA) barred Tiger Airlines from operating domestic flights Saturday for a week, but has now determined it will need the rest of this month to complete its investigation into the safety issues, and the airline's response to its inquiries.

CASA was scheduled to be in Federal Court in Melbourne on Thursday to seek the extension.

Tiger Airways Australia is a subsidiary of Singapore's Tiger Airways, which has sidelined its Australian CEO, Crawford Rix, and sent group President Tony Davis to Australia from Singapore to take charge of working with CASA's investigators. Rix is reportedly out of the company effective July 31. CASA's action was triggered last week when a flight approached an airport too low, and after expressing its concern to the airline over pilot proficiency, training, fatigue and other management issues. CASA spokesman Peter Gibson said more questions were raised when investigators looked through the airline's records.

AFP reports the grounding is costing Tiger the equivalent of $1.6 million a week. In an official statement, the airline says it is not opposed to CASA's review, and is refunding fares to customers through the end of the month, but remains intent on returning to service. The markets aren't so sure that will be possible. The grounding coincides with what is normally a profitable season for domestic airlines as Australian schools close for vacation. Shares in Tiger Airways Holding, the parent company, which have traded as high as $1.85 in the past year, fell this week to well under a dollar. Competitors Virgin and Qantas have both seen significant share price gains.

Virgin's Sir Richard Branson says he hopes his smaller rival can survive. "I think it's going to be tough to come back from that, but obviously for the sake of all the staff let's hope they manage to get their act together and be back in a month's time." But Gibson promises CASA will be thorough. "We have to make sure we fully understand the reasons why these problems have occurred -- if they are systemic problems, problems with process and problems with safety systems."

FMI: www.tigerairways.com/au/en/disruption.php