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Table of Contents
1. Establishment...................................................................................................................... 3
2. Territory .............................................................................................................................. 4
3. Strategy ............................................................................................................................... 5
a. Low cost pricing.............................................................................................................. 5
b. Strong partnership ........................................................................................................... 8
c. Product enhancement and customer service improvement ........................................... 10
4. Operating activities ........................................................................................................... 13
a. Corporate system........................................................................................................... 13
b. Whistleblowing policy: ................................................................................................. 14
d. The lastest operating statistics....................................................................................... 15
5. Tactic level activities ........................................................................................................ 16
Tiger Airways Singapore Pte Ltd, operating as Tigerair, is a low-cost airline
headquartered in Singapore.
1. Establishment
Tiger Airways was incorporated on 12 December 2003 and began ticket sales on 31
August 2004. Services commenced on 15 September 2004 to Bangkok. Scheduled
international services are operated from Singapore Changi Airport. The airline is a subsidiary
of Tiger Airways Holdings, a Singapore based company. Another associate company of Tiger
Airways Holdings is Tigerair Australia, which provide domestics flight in Australia.
In 2006, the airline flew 1.2 million passengers, a growth of 75% from the previous
year. The airline was the first to operate from the Budget Terminal at Changi Airport as part
of its cost-saving operations structure, similar to Ryanair's. Despite regional competition, the
airline has reiterated its current intention to remain focused on flying within a five-hour
radius from its Singaporean base. As of 25 September 2012, Tigerair Singapore operates
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from Singapore Changi Airport Terminal 2 due to the demolition of the Budget Terminal to
make way for Terminal 4, due to be completed in 2017.
2. Territory
With a fleet of Airbus A320-family aircraft, Tigerair Singapore operates services to
regional destinations in Southeast Asia, Australia, China and India from its main base at
Singapore Changi Airport. It currently flies to destinations within an approximate five-hour
radius around Singapore to more than 60 destinations in many countries around the region
(this does not include countries with airports that are only operated by Melbourne-based
sister airline Tigerair Australia and partners Tigerair Mandala and Tigerair Philippines).
Australia
Bangladesh
Cambodia
China
Hong Kong
India
Indonesia
Macau
Malaisia
Maldives
Myanmar
Phillipines
Taiwan
Thailand
Vietnam
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3. Strategy
Mission and Provision
Tiger Airways’ mission is to address the needs of budget-conscious travelers looking for
a reliable and fun low-fare service in the Asia Pacific region.
Keeping its strategy simple, Tiger has worked to remove as much cost as possible from
flying, whilst providing safe, reliable and convenient point-to-point air travel to Asian
destinations.
a. Low cost pricing
Bus ine s s Leve l Strategy: The purpose of business- level strategies is to create
differences between the firm’s position and those of its competitors. To position itself differently from
competitors, a firm must decide whether it intends to “perform activities differently” or to “perform
different activities”.
Cost Leadership Strategy: Tiger Airways has chosen the former and is exploiting a
cost leadership strategy. It has an integrated setof actions taken to produce services with features that
are acceptable to customers at the lowest cost relative to that of competitors. Tiger’s costs structure
follows the short-haul low-cost model of Ryanair.It targets a broad customer segment and
concentrates on finding ways to lower its costs relative tocompetitors by constantly rethinking how
to complete its primary (inbound and outbound logistics) andsupport activities to reduce costs even further.
Like most other carriers, Tiger Airways uses a number of methods to reduce costs.
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Keeping operating expenses low
In Singapore, Tiger Airways’ hub is at the Budget Terminal in Changi Airport.
It is a single-storey terminalwith no travellators, escalators and aerobridges. The operating
costs at Budget terminal are lower thanothers. In general, low cost carriers always tries to
look out for secondary airports with lower fees andless traffic where aircrafts find it easier to
get landing priority and terminal space and the groundoperations tend to be more efficient.Tiger
Airways is also a typical no-frill airline. Its fleet consists of 26 A320 –200 aircrafts with
narrowbodies and the ability to turn around fast. Each aircraft offers 180 single-class
economy seats with smallleg room, which is 20% more than a typical dual-class model. By
using single aircraft type from the A320family, Tiger Airways can enjoy economies of
scale in areas such as pilot training and maintenance costsvia greater commonality of parts
and spares. All non-core activities, such as maintenance, groundhandling and parts of
administration are outsourced. At the same time, it insists on the strategy to flywithin a five-hour
radius from Singapore. In this way, Tiger Airways can have the same cabin crew to flyback the same
day, which allows Tiger Airways to hire fewer staff and avoid significant expenses
onovernight accommodation for crew members. Tiger Airways is also a strictly point-to-point
carrier, withno connecting flights offered, hence no interlining and connecting services.
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Keeping labour cost low
Tiger Airways does not spend much on advertising or marketing. Its flight booking is all
through itsonline portal or call centre. It does not engage agency in ticket distribution in order
to minimize the costespecially that of labour.Tiger Airways also reduces labour costs by using a
streamline fleet that reduces the training and re-training expenses. Employees are generally paid according to
their performance and generally less thantraditional airlines. Tiger Airways also tries to keep its employee size
at a minimum requirement. Re-training opportunities are limited. This leads to shortage of qualified pilots in
high-demand periods.
Moreover, the company does not have a “cadet pilot programme” (CPP) like
many other airlines such asSIA; thus Tiger Airways does not have pipeline of pilots for the near future.
No frills services and revenues
Tiger Airways has managed to price its tickets at competitive prices by providing no frills services.
Thatsaid, Tiger Airways also recognizes that the willingness to spend might vary among its
consumer baseand actively tap onto that. In
the financial year ended 31 March 2011, 26% of Tiger Airways group’s
revenue comes from ancillary revenue, which was at $127.6 million as compared to the total
revenue of $494.6 million. Tiger Airways charges for many optional extras. These extras can be related
toalternative services like method of payment when buying tickets. It also charges for extra services like
luggage fee (several weight ranges with different fees, and Different charges for special types
of luggage like sports equipment) and seat fee (charge incurred if passengers opt to select their preferred
seat).lTiger Airways also offers food and beverage for purchase as part of the “Tiger bites”
buy-on-board programme at above-market prices.
Business Level Strategy for the Future : General observation reveals that the current
cost leadership strategy is working well for Tiger Airways incertain aspects and Tiger Airways
might stick to them in the near future. However, with the rise indemand, some of these strategies may
pose certain risks to operations, such as the shortage of qualifiedpilots. In addition, with the
average fare being derived from air ticket fare and ancillary charges, anincreasing price competition or slower-than-
expected economic growth could result in lower-than-expected average fares, which has a profound
impact on the net profit.
On the other hand, switching to a differentiated strategy is not practical because it
would mean thatTiger Airways will be competing with major airlines. As brand loyalty might
exist within such majorairlines, it is hard to wrestle market share away from them. Also,
consumers perceive Tiger Airways as alow cost airline and it will be hard to change the brand
image in the minds of consumers should theydecide to compete on differentiation strategy.
That said, Tiger Airways still has to constantly adapt to changes in industry trends and
consumerpreferences in the future. In the near future, it is foreseeable that many services, both ground and in-
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flight, will be provided by most airlines. Ability to provide such services will lead to
competitive paritybut the inability to do so will severely affect their profits. It can be seen
that many airlines, with similar cost leadership strategy, are attempting to deliver better consumer
satisfaction through additional services and also better services such as reduction of flight delays
and cancellations. Thus, in the future,simply providing competitive prices is not sufficient.
Tiger Airways have to improve on its existingservices, increase customer satisfaction and also pre-empt
its rivals in introducing new and practical services so as to stay ahead of competition. A more
detailed evaluation on its possible solutions andstrategies for the future will be discussed in the later
sections.
b. Strong partnership
Strategic alliances have become a key feature in many sectors of the economy, from
manufacturing to service industries. Forces in the global marketplace increasingly require
companies to collaborate with local and overseas partners for market efficiency and
responsiveness (Bartlett and Ghoshal 1987, Ohmae 1989).
This trend is echoed in the development of alliance activities within the airline industry -
airlines alliance, is an agreement formed by several airlines to establish cooperation in the
global aviation industry. Nowadays most airlines participate in some form of strategic
alliance (Gallacher 1999a, O’Toole 2000). This cooperation helps the airlines better their
performance with respect to air transport and customer service.
Alliances have generally been formed to get around bilateral route and capacity
constraints. These strategic alliances are usually limited to marketing agreements and
technical cooperation and include activities such as code sharing, shared use of computer
reservation systems, coordinated schedules, frequent flyer programmes, management
contracts, joint-ventures in catering, ground handling and aircraft maintenance.
Tigerair has entered into strategic alliances with four airlines to expand its network and
commercial cooperation. These initiatives form part of its strategy to accelerate business
growth in the key Asian markets of North-East Asia, India, and Singapore without over-stretching
its resources. These latest strategic alliance initiatives comprise:
A joint-venture agreement with China Airlines to establish a Taiwan-based budget
carrier
Tigerair is set to extend its footprint in North-east Asia through the signing of a joint-venture
agreement with China Airlines to establish Tigerair Taiwan, a Taiwan-based budget
carrier. The new carrier will operate under the Tigerair brand and be independently managed.
Tigerair will initially hold 10% of the start- up, and Tigerair’s website will be the main sales
and distribution platform.
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The new Joint-Venture will allow both Tigerair and China Airlines to extend their
presence into the new, untapped markets of Taiwan, Japan, and Korea. There is vast potential
for growth in these markets and also areas of synergy to be explored between the two airlines.
An interline agreement with SpiceJet to enable greater connectivity between
flights operated by both carriers
Tigerair – A Singapore’s largest no- frills airline, has signed a three-year interline agreement
with SpiceJet Ltd, India’s preferred low fare airline, paving the way for greater connectivity
between flights operated by both carriers. Starting from 1 January 2014, customers travelling
on SpiceJet’s domestic network from 14 Indian cities can enjoy seamless connection through
Hyderabad’s Rajiv Gandhi International Airport Ltd onto Tigerair’s Singapore-bound flights.
Therefore, through this interline partnership with SpiceJet, Tigerair looks forward to expanding
its footprint by building a win-win partnership and delivering even more travel options to its
customers.
An alliance agreement with interline partner, Scoot, to expand and deepen their
collaboration in commercial activities and network coordination.
In October 2012, Tiger Singapore signed an agreement with Scoot on a wide-ranging
partnership to offer joint itineraries that greatly expand travel options. Customers may
purchase a single itinerary for travel between destinations served by the two airlines. These
could potentially include the joint operation, sales and marketing of parallel routes, which will
offer customers increased flexibility and flight options. It could also include alignment of
policies, conditions, pricing and scheduling, to pave the way for a seamless integration of
systems and improved connectivity.
Tigerair and Cebu Pacific to enter into wide-ranging strategic alliance
Tigerair and Cebu Pacific Air, the largest budget carriers based in Singapore
and the Philippines respectively, have announced plans to enter into a strategic alliance.
Both parties will collaborate commercially and operationally on international and
domestic air routes from the Philippines, thereby creating the biggest network of flights
to the region. Subject to regulatory approval, the interline partners will jointly operate
common routes between Singapore and the Philippines. As part of the strategic alliance,
Tigerair will divest its 40% stake in Tigerair Philippines to Cebu Pacific.
President and CEO of Cebu Pacific Mr Lance Gokongwei s aid, “This strate gic
alliance will allow both Cebu Pacific and Tigerair to leverage our extensive networks
spanning from North Asia, ASEAN, Australia, India, all the way to the Middle East.
Our customers can expect an even wider range of travel options, and seamless travel
connections while enjoying our trademark low fares.”
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Highlights of strategic alliance
Common route: Both carriers will jointly operate common routes between Singapore and the
Philippines.
Connectivity: Both carriers will jointly sell and market their routes using interline
arrangement, thereby expanding their network coverage and enhancing connectivity.
Corporate identity: Both carriers will brand themselves as partners in their respective
communication materials. Upon completion of the divestment, Tigerair Philippines will
initially continue to operate under the Tigerair brand.
Alliances between airlines have become a dominant feature in air transport, and a new
global phenomenon unfolding relatively quickly through multiple collaborative business
arrangements.
Partnerships and business alliances allowed Tigerair to access a large air network and
provision of necessary services. One of the most important benefits of alliances is the
decrease in ticket prices when linking cities to each other. The big number of passengers on
these flights allows for an increase in aircraft load factor, lowering thereby trip costs and
serving interests of both passengers and carriers. These alliances also helps Tigerair be able
to provide passengers with varied flight schedules and a wider choice of take-off and landing
times, which lead to reduced travel time.
However, on the other hand, airline alliances were criticized on a number of points
including: (1) alliances may not respect antitrust rules. They can result in the exclusion of
some companies from the market, and violation of fair competition standards (2) due to their
control of many key points and their competitive and marketing powers, (3) alliances could
lead to the collapse of some companies that have to compete as low-cost companies; and
alliances have grown dramatically, making their partnerships increasingly complex.
c. Product enhancement and customer service improvement
Improving Customer Satisfaction and Safety
As explored in the earlier sections, Tiger Airways had been receiving a lot of customer
complaints anddissatisfaction. This is detrimental for the company in the long run. Additionally, marketing
theorieshave explained that it is less costly and more advisable to retain 100 existing customers instead
of looking at 100 new ones. As such, Tiger Airways should look into strategies immediately
to improvecustomer satisfaction.
Flight Delays and Cancellations
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One main issue regarding customer service is flight delays. Earlier in the internal
environment analysis,Figure 3, we saw that Tiger Airways Australia is the airline having
the highest percentage of flight delays.This clearly indicates that flight delay is an issue that
has to be addressed. Flight delays can be caused bya variety of reasons such as poor weather
conditions, security or technology problems, air clearanceissues, delays in incoming flights,
delays due to passengers and delays in cleaning the airplanes. TigerAirways has to explore which
of these factors contribute significantly to their current situation and see if it is a factor within its control.
Then, Tiger Airways could take appropriate measures to address theissues.Meanwhile, there are
other ways to address this problem without incurring too much cost. The surveythat we conducted among 100
people between the age of 20 and 40 indicated the following results.
Survey Results, See Appendix Question 50%20%40%60%80%Departs andarrives
perscheduleIf there is delay,there isimmediatenotificationIf there is delay orcancellation,
thereis a quick refund.
From the survey results, we can clearly see that the respondents are not happy with the way that
TigerAirways currently deals with the delayed flights situation. Most customers would like to
be informed assoon as possible when there are flight delays. Therefore, Tiger Airways can adopt the system
of informing their customers quickly about any flight delays or cancellations and providing
them the reasonso that customers’ disappointment maybe somewhat reduced. Furthermore,
for flight cancellations, Tiger Airways should refund their customers quickly. The average
time taken currently is about 6 monthsand this is way too long. It creates uncertainty among customers
as to whether they will receive theirmoney back and this contributes to further unhappiness. Tiger
Airways should try and adopt a system of refunding within 20 to 30 days and sending an email to
customers once it is done. These solutions candirectly address the issues mentioned by our
survey respondents.Additionally, Tiger Airways can consider offering some benefits during the delays.
These benefits maybe:
Free meals or simple refreshments
Free telephone usage to local places
Clean places to spend the time with simple amenities such as television or newspapers
These services would surely increase Tiger Airways’cost by some amount although by not
much.However, the possible benefits to be gained by Tiger Airways such as an increase in customer
retentionand possibly new customers would help to offset the increase in cost.
Customer Service
Customer services within aircrafts may be improved significantly with almost negligible
increases in cost.The pleasantness in how the air stewardesses serve customers can go a long way in
improving customers’ journey experience. The staff should make it a policy to do simple
things such as directing the passengers to their seats, offering assistance to elderly and those
with young children and using the right tone and language when communicating with customers. Such
things may be improved by TigerAirways with staff training that focuses on
these aspects.Customer services within airports are also important. On issue that causes much
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distress amongcustomers is that of baggage damage. Tiger Airways staff should take the initiative to help
locate the baggage for customers quickly and aid them in solving cases of missing or damaged
baggage.Customer services outside airports are essential as well. Ideally, customer service
offices should be setup in major cities to answer queries from customers and to serve as a venue for
manual ticket bookingsand claiming of refunds. However, given the high operating costs
involved in establishing physical offices, we suggest that Tiger Airways should have more
calling help lines which customers can call tomake such queries. Therefore, to improve customer
services, constant training of the staff is needed to improve theircommunication skills when attending to
customers and problem solving skills when entertainingcustomer complaints
Tiger Airways Seeks to Improve Call Centre Services
• Advanced talks with outsourced call centre service providers
• Focus on improving customer service while keeping costs low
• Part of Customer Task Force initiatives to give even more value for low, low fares
Singapore, 4 March 2010. Tiger Airways today announced plans to enhance its call centre
service later this year. To give Tiger passengers a better experience, the airline has continued
to engage customers for their feedback and introduced further initiatives to implement their
suggestions.
In this new phase of customer service improvement, Tiger Airways is looking to ink a
new deal with a call centre service provider that offers greater customer satisfaction, while
keeping costs low. Rosalynn Tay, Managing Director of Tiger Airways Singapore said, “This
is our latest Customer Task Force initiative to enhance customer experience. Through the
Task Force, we had received customer feedback and suggestions on how to improve call
centre services, such as shorter waiting times. We are in advanced talks with potential
partners who can help us achieve this while keeping costs low so that customers can continue
enjoying our famous low, low fares. “We look forward to announcing details soon. Going
forward, we will continue to find other low cost but effective ways to enhance our customer
experience.” said Rosalynn Tay.
Customer Task Force
Tiger Airways created a Customer Task Force in July 2009, following an online contest
that invited the public to suggest improvements. Three winners with the best entries were
given S$500 Tiger vouchers each, and roped into the Task Force together with Tiger staff.
“Unlike full-service airlines where the cost of providing quality service is covered by high
airfares, we sought the help of consumers and found ways for them to have a better
experience while still enjoying our low, low fares. Instead of paying research companies
hundreds of thousands of dollars, we want to engage our consumers directly. This way, we
get the raw, unfiltered facts that will help us find value- for-money solutions for passengers.”
said Rosalynn Tay. The first customer service improvements were to the web interface,
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which started in August 2009. The immediate effect was a drop in the number of queries
regarding the web storefront. Since then, www.tigerairways.com has been the top airline
online. Despite a lower promotional spend, the Tiger site attracts the most number of hits in
Singapore compared to all other airlines. This was followed by Service Excellence courses
for cabin crew. The courses, which started in January 2010, were partially funded by
government grants awarded for skills upgrading and development.
4. Operating activities
TigerAir really cares about the operation activities and corporation activities to
operate all the departments inside the company:
a. Corporate system
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b. Whistleblowing policy:
Tiger Airways Holdings Limited ('Tigerair') is committed to a high standard of
corporate governance. Employees and external parties, such as suppliers,
customers, service providers and other stakeholders, may report actual or suspected
wrongdoing or concerns relating to matters such as:
What to Report
Negligence or malpractice
Breach of laws and regulations
Board of
Directors
Audit Committee
Executive
Committee
Nominating
Committee
Remuneration
Comittee
Risk
management
Committee
Company
Secretary
Bankers
Registered Office
Share registrar
and Share
transfer office
Auditors
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Abuse of position or conflicts of interest
Acts which compromise the health and safety of customers and employees
The Whistleblowing Channel is for reporting wrongdoings only. If customers’
concerns are related to any of the following below, they may submit their feedback
via Customer Service Portal or contact its call centers.
What not to report under Whistleblowing
Feedback on service
Feedback, queries or assistance related to flights or bookings
Tigerair encourages the whistleblower to identify himself/herself when raising a
concern or providing information, as reports made anonymously may hinder
investigations. Nonetheless, anonymous reports received will be given due
consideration and investigated on the basis of their merits. As it is essential for
Tigerair to have all critical information in order to be able to effectively evaluate and
investigate a complaint, the report made should provide as much detail and be as
specific as possible. Where such information is available, the report should include
reasonable details such as the nature of the concern, parties involved, dates, and any
evidence substantiating the complaint.
Confidentiality and Non-Retaliation
The Group shall ensure the strict confidentiality of all whistleblowing reports and the
anonymity of the person making the report, to the extent practicable within legal
requirements. The Group shall not retaliate, and shall not tolerate any retaliation by
management or any other persons or groups directly or indirectly, against anyone who
in good faith makes a whistleblowing report or provide assistance to the Management,
Audit Committee, any governmental, regulatory or law enforcement authority in the
investigation of the reported incident.
c. Shareholder Meetings
There are 2 kinds of shareholder meetings in TigerAirways Operation Activities:
- Annual General Meetings
- Extraordinary General Meeting
d. The lastest operating statistics
For the month of August 2014, Tigerair Singapore recorded a 3.9% year-on-year
(y-o-y) increase in traffic to 806 million revenue passenger-kilometres (RPK),
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while capacity decreased by 1.8% to 970 million available seat -kilometres (ASK).
Consequently, y-o-y passenger load factor increased by 4.6 percentage points to
83.1%. The number of passengers carried grew by 1.9% y-o-y to 427,000.
For the 12 months to August 2014, Tigerair Singapore recorded a 11.9% y-o-y
increase in traffic to 9.7 billion RPK, while capacity increased by 17.6% to 12.3
billion ASK. Consequently, passenger load factor was 4.0 percentage points lower at
79.1%. The number of passengers carried grew by 12.2% to 5.3 million, compared to
4.7 million in the previous period.
5. Tactic level activities
Alliance agreement with Scoot
The two carriers have been granted anti-trust immunity, which will allow closer
cooperation in scheduling, pricing, sales and marketing and other matters.Scoot is a
wholly owned unit of Singapore Airlines (SIA) while Tiger lists SIA as its largest
shareholder. Tigerair focuses on shorter-haul journeys, while Scoot's emphasis is on
medium to long haul routes. The two carriers first announced a partnership in October
2012.
Sell Tigerair Philippines to Cebu Pacific Air (Manila)
They have plans to enter into a strategic alliance.
Tiger Airways shut loss-making Indonesia airline (June 2014)
Singapore budget carrier Tiger Airways Holdings is shutting its loss-making
Indonesian operations, a casualty of intensifying competition in Southeast Asia’s largest
domestic airline market. Tigerair Mandala will stop operations from July 1, said Tiger,
which owns 35.8 per cent of the Indonesian low-cost airline.
Tiger Airways’ low fares strategy: Tiger Airways’ strategy of keeping entry fares low,
while profiting on the ancillaries looks to be working very well for them. Their low entry
fares enabled them to consistently keep load factors high to reduce their unit fix cost.
