Tigerair sees overseas revenue, Scoot as key to survival

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Tigerair sees better overseas sales and its yet-to-be-approved tie-up with Scoot as the cornerstone of achieving profitability.

Tigerair, which has heretofore marketed itself as a traditional point-to-point low cost carrier, needs to develop new revenue bases overseas, says chief executive Lee Lik Hsin.

Lee made the comments in a call with journalists following the release its fiscal first quarter earnings for the three months ended 30 June. It posted an operating loss of S$16.4 million ($13.2 million), nearly tripling its S$6.2 million operating lost in the previous corresponding period.

“We want to increase the overseas revenue contribution,” says Lee. “Today we are very reliant on Singapore, but there is opportunity for us to improve the revenue content from overseas.”

Lee, a veteran of Tigerair's 40% shareholder Singapore Airlines, says that for the carrier to succeed it needs to market itself like a network airline, offering connections through its Singapore hub.

“The widening of distribution channels is a recognition of the need to target overseas markets,” he says. “Simple direct web distribution works very well for Singapore, but is not as effective in many of these overseas markets. To increase overseas sales, we will need to spend more resources on specific market actions.”

In addition to generating more revenue outside of Singapore, Lee underlined the importance of strategic alliances for Tigerair’s future.

“Strategic alliances allows us to provide better connectivity across our network and the network of our partners, thereby increasing connecting traffic.”

In March Tigerair completed the sale of its Philippines unit to Cebu Pacific Air, setting the stage for the pair to focus on a new alliance. The two airlines plan to operate common routes between Singapore and the Philippines. They also plan to launch other joint sales and marketing efforts across their respective networks.

In the call, however, Lee placed even greater hopes on working with Scoot.

In December 2013, Tigerair announced an agreement with Scoot to expand their interline agreement at Singapore’s Changi airport.

Pending regulatory approvals in Singapore, areas of collaboration “could potentially include the joint operation, sales and marketing of parallel routes, which will offer customers increased flexibility and flight options,” said Tigerair at the time. “It could also include alignment of policies, conditions, pricing, and scheduling, to pave the way for a seamless integration of systems and improved connectivity.

In May, SIA chief executive Goh Choon Phong also spoke of the importance of closer ties between the two units.

Regulatory agreement from the Singapore government is, however, still pending. Lee said he is not sure as to when this will be received.

Flightglobal’s Ascend Fleets database shows that Tigerair operates 27 Airbus A320-family aircraft. During the call, Lee said that the carrier plans to cull eight aircraft from its fleet.