Tiger seemingly unaware of its own grounding extension as it declares “nobody’s perfect”

It was a somber experience to listen to Tiger Airways Holdings acting chief executive Chin Yau Seng on Thursday night reiterate the group’s commitment to safety and the Australian market, its desire to resume services as quickly as possible, and the “demonstration of commitment” Tiger made by appointing a former Qantas chief pilot as a safety advisor, when hours earlier Australia’s safety regulator decided there were “deficiencies” so great in Tiger’s re-submitted paperwork that it would take a few weeks to sort out, during which time Tiger would remain grounded.

During Tiger’s first quarter earnings call Chin made no mention of the grounding extension the Civil Aviation Safety Authority plans to seek, saying instead Tiger had “made good progress with CASA” and “hopefully tomorrow we’ll make another announcement”.

When asked about the grounding extension, Chin said, “We can’t comment on that.” He added that “discussions are on going”.

Whether Chin was ignorant or trying to spin the situation by avoiding it all together is debatable, but far more important is Tiger’s paperwork failure, the sequence of which needs to be put into perspective.

CASA said it gave Tiger on 28 July “a notice listing a set of conditions it is proposing to impose on its air operator’s certificate which may form the basis for the airline resuming operations. The notice also set out what Tiger Airways needs to do before CASA would even consider imposing the conditions.”

Four days later on 1 August, CASA said Tiger had responded and CASA would consider the response. Advance three days to today and the response has so many “deficiencies” that it will take weeks to sort out, despite the response only being compiled in four days. It leaves the mind to wonder how Tiger in four days created a mess so great it will take weeks to sort out.

Clearly Chris Manning, the former Qantas chief pilot appointed as Tiger safety advisor, is not working out–but it remains to be seen if it is his doing or Tiger management not fully embracing his recommendations. Chin said Thursday evening that Manning “brings onboard a difference perspective”. Chin said Tiger was willing to improve its safety. “Nobody’s perfect,” he said.

But not everybody is grounded, and then faced with an extended grounding after botching an opportunity to return to service.

A$18m loss for first quarter

On top of that, Tiger Australia for the first quarter had a “disappointing” S$23.2m (A$18m) operating loss, much of which Tiger attributed to higher fuel costs and decreased revenue from volcanic activity. Despite the Singapore arm posting an operating profit of S$7.5m, down from S$13.5m for the corresponding quarter last year, the group posted a S$20.6m loss, down from a S$1.9m profit for the first quarter last year.

Chin expected the current grounding, which occurred over the popular July school holidays, would see Tiger Australia post a financial loss for the year to 31 March 2012.

Annual earnings for the group would be “significantly affected” because of Tiger Australia’s loss and grounding, Chin said. Bookings in Singapore, however, were strong, Chin said.

Here some say Tiger should call it quits in the Australian market. The carrier disclosed that as of today it had refunded S$17.7m in ticket sales and S$1.7m of ancillary revenue since the grounding. Those figures, however, are not in addition to the S$2m the carrier previously reported it was losing each week of the grounding.

Tiger confirmed it is in discussions with the South Australian government over the A$2.25m the government granted, with conditions, to Tiger to set up a base at Adelaide that is now expected to close. “These discussions are ongoing and a conclusion has yet to be reached,” Tiger said in a statement.

No plans to leave Australia

“It is a major setback but I think we will get over it,” Chin said. He added that there was “money to be made” in the domestic market, and Tiger Australia has in the past come close to break-even. Tiger’s board and investors were “nowhere close to that tipping point” of pulling the plug down under, Chin said.

Re-branding not ruled out

If and when Tiger resumes services it will likely do so under its existing brand, but the carrier has not ruled out a re-branding exercise in the future. “When we resume services we intend to keep our brand,” Chin said. He added that the group was working on a “number of initiatives”.

No direction on service resumption plans

For nearly a week now Tiger’s booking engine has showed that it only flies from Melbourne to five destinations. Asked if this was an indicator of reduced services, as expected, once the ban was lifted, Chin remarked it would be “premature to comment on what resumed services will look like”.

“It doesn’t mean it’s restricted to that,” Chin said, explaining he was “not yet in a position to say what the resumption plan is”.

Aircraft basing flexible

A cut in services could yield surplus aircraft. While there were reports last month leasing agreements would make it prohibitively expensive to re-locate aircraft from Australia to the group’s Asian bases, Chin said there were no such financial restrictions.

Chin, a former executive with Singapore Airlines, who has an approximately one-third stake in Tiger, disclosed the Tiger board approached him to lead the company while then-chief executive Tony Davis went to Australia to lead the operation here. Chin received clearance from Singapore Airlines to take up the opportunity.

The future management structure of Tiger is unclear, although Chin lightheartedly remarked “Tony [Davis] is not banished to Australia”.


One Response to Tiger seemingly unaware of its own grounding extension as it declares “nobody’s perfect”

  1. my ex September 26, 2013 at 8:09 am #

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