SWOT Analysis Tiger Airways Singapore Tourism Case Study

Dissertation Writing Help on Singapore Tourism-Tiger Airways SWOT Analysis Case Study

 

 

SWOT ANALYSIS of Tiger Airways-  Focus on Singapore Tourism

 

 

Tiger Airways was founded in September 2004 and is one of Asia’s leading budget airlines. Singapore Airlines holds a 49% stake in the company, with the remainder being held by Indigo Partners LLC (24%); Irelandia Investments Limited (16%); and Temasek Holdings (11%).

The airline operates out of Singapore and a second hub in Melbourne, Australia. It has based its business model on the successful Irish airline

Ryanair, whose founder, Tony Ryan, holds a 16% stake via his Irelandia Investments company. To that end, it seeks to promote internet sales to keep ticketing and distribution costs low (85% of flights on Tiger are booked via its website and e-Tickets are then issued for the flights), charges passengers for any food or entertainment on the flight and operates out of secondary airports to reduce operating costs.

At the present time, Tiger Airways Singapore operates a fleet of 12 aircraft with a network of 19 routes across 18 destinations in the Asia Pacific region. The airline services China, India, Indonesia, the Philippines, Thailand, Vietnam and Australia. In January 2008, the airline announced a new routing, to Bangalore, which will commence on June 1 2008 and operate four times a week. The airline is based at the budget terminal at Changhi Airport, and flew its four millionth passenger during December 2007.

Tiger Airways Australia started operations in the second half of 2007 with a fleet of brand new Airbus A320 aircraft. Based out of Terminal Four at

Melbourne Airport, the airline is to offer budget travel within Australia. In June 2007, the airline signed a Memorandum of Understanding (MoU) with Airbus to purchase a further 30 A320 aircraft, with an option for 20 more. This comes on top of an existing order for 11 aircraft, which are to be delivered by 2010.

The airline unveiled its first-ever profit in FY07/08, it was reported in the Australian media in August 2008. The airline was reported to have made a

net profit of SGD37.8mn, reversing a loss of SGD14.3mn in the previous fiscal year. Revenues increased by 56% y-o-y, to SGD271mn. Tiger CEO Tony Davis remains confident in the long-term success of both his Singapore and Australian-based airlines, He was quoted in Australian media

outlets as saying he sees ‘strong demand’ for the company’s low air fares and that he is committed to expanding the airline’s operations in both

Australia and Singapore.

There have also been reports that the airline intends to carry out an initial public offering (IPO) of stock sometime in the next year or so.

 

 

Strengths

• Dominant position in the low-cost segment.
• Business is diversified over several countries across Asia.

Weaknesses

 

Recorded a loss for FY11/12

• Danger that the company is arguably expanding ‘too far, too fast’ and could be vulnerable in the event of a sharp economic slowdown.
• Grounding of Tiger Airways Australia fleet for six weeks during July-August could carry a sizeable ‘reputation cost’ for the airline

Opportunities

Asia represents a huge growth market for air travel.

 

Investing in regional partner airlines to boost its growth

Threats

New Singapore Airlines low-cost offshoot could pose a threat on Asian long-haul routes.

High oil prices are a concern for all airlines operating in Asia.

Any resurgence of a pandemic (such as bird flu) would affect all airlines operating in

Singapore.

Company Overview

Tiger Airways, founded in 2004, is one of Asia’s leading budget airlines. Its major shareholders are Singapore Airlines, with a 32.9% stake, The Capital Group of Companies with 8.1%, Dahlia Investments with 7.4% and Schroder Investment Management Group with 5.05%.

The airline operates out of Singapore and a second hub in Melbourne, Australia. It operates a fleet of 21 aircraft for its Singapore-based operations. The airline flies to China, India, Indonesia, Malaysia, the Philippines, Taiwan, Thailand, Vietnam and Australia

Company Strategy

In August 2012, Tiger Airways completed an investment in 405 of Philippine carrier South East Asian Airways for US$7mn. The investment is Tiger’s second joint venture investment of 2012, having previously acquired a 33% stake in Indonesian carrier Mandala Airlines in January. Both

investments are part of Tiger’s aggressive regional expansion strategy. Tiger Airways reported disappointing FY11/12 results in May 2012, with the airline posting a net loss after tax of SGD104.3mn, compared to a net profit of SGD39.9mn the year before. Revenue or the period totalled SGD618.2mn. The airline attributed high fuel prices and underuse of the fleet caused by the temporary grounding of the Tiger Australia fleet in July 2011 for the poor performance. Shortly after the release of the results, it was announced that Chin Yau Seng wil step down as CEO. Koay Peng

Yen was appointed as the new CEO.

In December 2011, Tiger Airways and its partners Thai Airways and Ryanthai said they would no longer be setting up the low-cost airline Thai Tiger Airways. The companies said that Thai Airways ‘has been unable to obtain the necessary investment approvals from the relevant

government authorities in Thailand’ and that consequently they have ‘decided not to proceed with the incorporation of Thai Tiger’.

SWOT ANALYSIS of Tiger Airways

In July 2011, Australia’s Civil Aviation Safety Authority grounded the entire Tiger Airways Australia fleet, citing safety concerns and calling into question the ability of pilots. Although the suspension was lifted in August, it had an impact on passenger demand, with the airline

struggling to make an impact in the competitive Australian market so far. Initially, Tiger was to relaunch services on the Melbourne (Tullamarine) to Sydney route. At the same time, it has agreed to scale back its operations in Australia, reducing its operating fleet of Airbus A320 aircraft from 10 to eight. The airline has also decided to base all of its crews and staff at Melbourne (Tullamarine) and is closing its Adelaide base and temporarily suspending its Melbourne (Avalon) operations.

To try and boost its market share, in December 2011 the airline released 45,000 discounted tickets for travel in February and March 2012.

 

 

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