Tiger’s future after Tony Davis looks familar
Singapore’s Tiger Airways is at a crossroads now that its founding CEO, Tony Davis, is leaving the low-cost carrier on 1 November.
His position became untenable after Tiger’s Australian operations were grounded on 1 July due to safety reasons. Tiger’s shareholders Singapore Airlines and Temasek – Singapore’s national investment arm – were increasingly unhappy at both the bad publicity and the fact that Tiger’s Australian arm had dropped the ball on something as important as safety.
That Davis was appointed CEO of Tiger Airways Australia – effectively a demotion – after the grounding and SIA seconded former Silkair CEO Chin Yau Seng to Tiger Holdings as acting CEO attest to that.
After a contrite Tiger resumed its Australian operations on 12 August, it came as no surprise when the board announced almost two weeks later that Davis would leave and Chin would become the permanent CEO. Tiger now has some hard decisions to make.
First up, it must consider its Australia strategy. The bad publicity has hurt the brand, although low fares will go some way towards restoring loads. The bigger issue is that Tiger never made a profit from its four years in Australia. While Davis was adamant that Tiger would take the fight to Qantas and Virgin Australia, Chin must decide if it is worth staying on. The hard, but right, answer may well be no.
Next, under Davis, Tiger made a hash out of its plans to start franchises in the Asia Pacific – and was most notably pushed back in South Korea and the Philippines. Its proposed joint venture with Thai Airways appears to have hit a major roadblock and may be killed off. In comparison, its Malaysian rival AirAsia has successful franchises in Thailand and Indonesia, and will do so in the near term in the Philippines and Japan (and possibly Vietnam).
Chin and his team inherited Davis’s plans to take a stake in Indonesia’s Mandala and the Philippines’ Seair. The large captive market in those countries means that the ventures could be very successful. More, however, needs to be made to ensure that politicians get on board and opposition from competitors gets snuffed out before they get louder. These were issues Davis and his management struggled with.
Finally, in Singapore, Tiger needs to figure out how to grow amid increasing competition from AirAsia – which considers the city a virtual hub – and Qantas affiliate Jetstar Asia. Here, Tiger could draw some lessons from AirAsia, which uses its regional affiliates to both grow the market and provide a feed to long-haul low-cost affiliate AirAsia X in Kuala Lumpur.
Tiger’s increasingly close relationship with SIA could be the key here. When SIA starts up its still unnamed long-haul low-cost subsidiary next year (it could be called Scoot), Tiger and its potential regional affiliates could do for it what the AirAsia franchises do for AirAsia X -provide feed to and get traffic from the new airline in Singapore. That could make both brands competitive against the AirAsia group.
It was no secret that Davis and AirAsia CEO Tony Fernandes did not always see eye to eye. Yet, in a bitter irony, Tiger’s post-Davis future may well be becoming more like its bitter rival. And that may not be a bad thing.
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