Eu yan sang annual report 2018

Strategic Marketing Report

C:\Users\User\AppData\Local\Microsoft\Windows\INetCache\Content.Word\VH-VNR-Tigerair-Australia-Airbus-A320-200_PlanespottersNet_428908.jpg

BACHELOR OF BUSINESS (MARKETING)

MKTG1275_1720 Strategic Marketing

Lecturer: Param Alahakone

NAME

STUDENT ID

May Thazin

S3565683

Htoo Htoo Aung

S3590990

Lo Yu Xuan

S3565661

Eugene Tan Jian Cai

S3504412

Contents 1.0 Introduction 1 1.1 Tiger Airways’ History. 1 2.0 External Environment Analysis 2 2.1 Context 2 2.1.1 PESTLE 2 2.1.2 Industry Life Cycle 3 2.1.3 Industry Driving Forces Analysis 3 2.1.4 Industry Key Success Factors Analysis 4 2.1.5 Industry Outlook 4 2.2 Competitors 5 2.2.1 Porter’s Five Forces Model 5 2.2.2 Competitors Analysis 7 2.2.3 Positioning Map 8 2.3 Customer Analysis 8 2.3.1 Size of Market 8 2.3.2 Market Segments 9 2.3.3 Trend and profitability of Market 10 2.3.4 Influences of Buyer Behavior 10 2.4 Collaborator Analysis 11 2.5 Company 12 2.5.1 Porter’s Value Chain 12 2.5.2 VRIN Framework 15 2.5.3 Product Life Cycle 16 3.0 SWOT Analysis 17 4.0 TOWS 18 5.0 Corporate Strategy 19 6.0 Current Business-Level Strategy 20 7.0 Recommended Business-Level Strategy (Analyzer) 21 8.0 Marketing Strategies 22 9.0 Implementation Plan 25 10.0 Conclusion 26 11.0 References 27 12.0 Appendices 34

rmit-logo.png MKTG1275 - Strategic Marketing

rmit-logo.pngMKTG 1275 Strategic Marketing

1.0 Introduction
TigerAir was established in 2004 by Singapore Airlines (SIA) to compete against Low-Cost-Carrier (LCC) competition that had entered the region. It owned 5 sub-brands: TigerAir Singapore, TigerAir Australia, TigerAir Mandala, TigerAir Philippines, and TigerAir Taiwan. Some have ceased operations due to continuous unfavorable financial results, while others are performing barely. TigerAir is enduring fluctuating financial results and is struggling to stay relevant in the market.

1.1 Tiger Airways’ History.
Initially adopting an expansionist strategy, mass ordering of airplanes and acquisition of multiple internationally based LCC-airlines were untaken to accomplish its ambitious expansion of overtaking SilkAir and SIA for short-haul routes.

In 2010, mass pilot resignation and technical faults caused flight cancellations, affecting up to 2700 passengers. TigerAir Australia was also grounded in 2011 due to safety violations. Canceling flights to an earthquake stricken location further aggravated already negative consumer impressions. In 2011, total expenses rose by 22%, resulting in operating losses of $83.4m for TigerAir Singapore, and $69 million for TigerAir Australia in 2012. Furthermore, TigerAir Mandala ceased operations due to low profit margins.

Overall, minimal profits and massive losses were registered throughout 2008-2016 resulting in plummeting consumer confidence.

2.0 External Environment Analysis
2.1 Context
2.1.1 PESTLE
Economic

· Forecasted growth in travel demand in emerging Asian markets fueled by rising disposable incomes across the Asia pacific region (Chan 2000; Ngoo, Tey & Tan 2015).

· Increase in travel between Asian countries due to heightened economic development has increased demand for short-haul flights (Goyal & Negi 2014; IATA 2013).

Social-Cultural

· Global population is set to increase from 7.3 billion to 8.5 billion in 2030 - Asia to contribute 500 million (United Nations 2017).

· Mass Globalisation has influenced more consumers from emerging markets to travel out of their communities.

Technological

· As reported by TrendWatching (2017), consumer trend of increasing desire for online connectivity has led to many airlines establishing online communities to improve brand image (Michael 2016).

· New aircraft technologies such as the Airbus A320neo reduce fuel consumptions by 20%, which reduces cost (CNN 2016).

Legal

· Airlines must attain ICAO’s standard of air travel rules and regulations before operating in participating nation’s airspace (International Civil Aviation Organization 2017).

Implications

Overall, the external environment of low cost carriers is opportunistic for TigerAir. Specifically, technological advancements and the rising power of the Asia market are advantageous for TigerAir.

2.1.2 Industry Life Cycle
Industry_Lifecycle.jpg

As reported by Brons et. al (2002), due to increasing air travel demand and consumer price sensitivity, the LCC industry was in growth stage. However, the LCC industry is currently in its late growth stage as competitors have become highly competitive and product offerings are homogenous.

2.1.3 Industry Driving Forces Analysis
Based on the analysis done in Appendix 7, the key determinants of the drivers of industry changes are:

· Accelerated Connectivity Growth – Future growth includes an all-in-one mobile app tracking system in response to growing consumers needs for connectivity (CNN 2016; NZ Herald 2016).

· Evolving technological landscape – As reported by CNN (2016), 3D printing is growing in aviation manufacturing. Also, airlines manufacturers are focusing their efforts into sustainable aviation technology (Airbus 2017).

· The changing traveler– OAG (2016) reported that consumers are increasingly keen to explore new destinations within Asia pacific.

2.1.4 Industry Key Success Factors Analysis
Soomro et al. (2012) stated that consumers purchase low-cost carrier offerings based on price, convenient access, and branding. Thus, the industry key success factors are:

· Strong network of distributors - to get Tiger Air’s offerings displayed

· Strong Branding - to induce travelers to buy Tiger Air’s offerings

· Cost Advantageous – to cut costs such as full utilization of aircraft capacity

Implications

The collective impact of driving forces heightens competition as all industry members are able to tap into technology advancements. Also, for TigerAir to be competitively advantageous, they must strive to achieve the key success factors.

2.1.5 Industry Outlook
The low-cost carrier airline industry is overall not an attractive industry. The combined high power of suppliers, buyers, and competitive rivalry lead to intense competition within the industry, which outweighs the opportunities presented by external factors and the driving forces.

2.2 Competitors
2.2.1 Porter’s Five Forces Model
porter-five-forces-resized-web.jpg

Based on the analysis conducted in Appendix 5, below is a summary of the five forces.

Power of Suppliers – High

· No readily available substitutes - Duopoly dominating large commercial aircraft manufacturing market (Olienyk, J & Carbaugh R 2011).

· High switching costs for highly specialized aircraft support, equipment, components, and machineries

Competitive Rivalry – High

· High level of competition – 200+ LCC brands registered under ICAO (International Civil Aviation Organization 2014)

· Similar products/services between LCC brands – minimal difference by service levels

· High fixed cost due to the nature of industry assets – Airplanes

Power of Buyers – High

· Knowledge through technology keeps buyers well-informed of best choices – immunity to price fluctuations

· Low switching costs due to other brands offering similar products/services

Threat of New Entrants – Low

· High capital costs of industry assets lead to incurring high exit costs in event of market entry failure

· Knowledge and expertise not easily acquired due to the level of industry sophistication – large economies of scale by existing players

· High barriers to entry via governmental rules and regulations (Civil Aviation Authority of Singapore 2014)

Threat of Substitutes – Low

· Air travel still essential as substitutes cannot perform better or similarly due to inability to travel impassable terrain – e.g. oceans.

Implications

Concluding, the overall industry profitability will be low due to the intensity of competition and high power of suppliers and buyers.

2.2.2 Competitors Analysis
Michael Porter’s competitive analysis model and competitive strength assessment models were used to determine AirAsia and LionAir’s likely strategic moves and analyze TigerAir’s performance against them based on key attributes.

AirAsia

AirAsia will likely continue its low cost model through lean distribution systems. As reported by AirAsia (2015), they plan to expand their operations into leisure travel destinations.

LionAir

LionAir will likely continue its expansion strategy in its domestic markets. Pressures from Indonesia’s civil aviation authority could force them to focus on improving their safety management.

Competitive Strength Assessment

Based on appendix 9, TigerAir is overall competitively weaker against Airasia and Lion Air. TigerAir is vulnerable to price cuts by AirAsia and Lion Air due to their weak cost position.

Implications for TigerAir

TigerAir should consider defensive moves to protect its current market share while looking for opportunities to enhance its value proposition as is does not have any distinctive advantage.

2.2.3 Positioning Map
TigerAir is positioned against AirAsia and Lion air along the dimensions of safety perception and brand relationship with consumers.

Perceptual Map.JPG

As identified in the perceptual map, TigerAir has significantly less brand relationship as compared to its competitors. Thus, TigerAir should seek ways to close this gap to remain competitively advantageous.

2.3 Customer Analysis
2.3.1 Size of Market
International Air Transport Association forecasts that air-travel will double over the next 20 years (IATA 2016).

Asia Pacific, where TigerAir’s operations are focused, holds the highest of the global market, hinting that growth there will be the highest (IATA 2016).

2.3.2 Market Segments
Deriving analysis from the segmentation table in appendix 6, the market segments are evaluated.

Market is segmented by age:

Age 20-24, Generation Z

Age 25-39, Generation Y

Age 36-50, Generation X

Age 51-70, Baby Boomers

Market Size

The segment sizes of Generation Z, Y, X and baby boomers are 603 million, 1.66 billion, 1.44 billion and 616 million respectively in 2015 (United Nations 2017).

Market Growth

Generation Z population will be declining while generation Y, X and Baby boomers will be increasing in segment size of about 100 million each (United Nations 2017).

Market Segments Purchasing Power

Generation Z consists of students; thus, they have low purchasing power.

Generation Y consists of middle-income professionals. They hold moderate purchasing powers.

Generation X has high earning and company positions. They wield high purchasing powers.

Baby boomers have middle income and are semi-retired. However, they wield high purchasing powers.

Market Segment Profit Potential

Generation Z has low profit potential due to their declining market size and low purchasing power.

Generation Y has the highest profit potential as they are the largest segment. They have high purchasing power, and their psychographics and behavior are correlated to air traveling.

Generation X’s profit potential is significantly below Generation Y, due to their commitments to their social and professional life, they lack time to travel.

Baby boomers have moderate profit potential due to their age lifecycle. They are mainly semi-retired with low income, thus preferring not to splurge unnecessarily.

2.3.3 Trend and profitability of Market
Consumers increasingly prefer Low-Cost-Carriers. This is an indication of increased profitability in the budget air travel segments.

2.3.4 Influences of Buyer Behavior
Internal Influences

External Influences

· Rising cost of living lead to preferring low-cost options

· Memory of past-purchases and social review/feedbacks

· Constant advertisements and use of opinion leaders to advertise for Low-Cost-Carriers lead to acceptance reaction

· Word-of-mouth recommendations from friends

Implications

TigerAir should leverage onto the forecasted increase of global air travel within the emerging markets. The segment to target should be generation Y as they are the most profitable market segment.

2.4 Collaborator Analysis
Collaborators are known as external stakeholders who help and work together with the firm in marketing the product to targeted customers.

Airbus (Vertical)

Tigerair purchases its aircrafts from Airbus Commercial Aircraft, which exports with strict policy compliance (Airbus 2017). This agreement and close relationship with Airbus contributes to the competitive strength of Tiger Airways.

Lateral Relationships

TigerAir cooperates with Scoot in areas such as network partnership, scheduling, sales and marketing. This helped reduced TigerAir’s cost structure through cost sharing.

TigerAir can also leverage on the resources of its parent company, SIA. Being included in the Krisflyer program entitles customers to co-use flyer miles within partner airlines in exchange for a variety of rewards (Tiger Airways 2017).

Distributors (Vertical)

TigerAir operates its own website, which acts a direct online distribution channel to customers. TigerAir also collaborates with selected online and offline travel agencies to access more market segments.

Implications

Wide network capabilities with downstream and lateral networks allow Tigerair to leverage on the competencies of its networks members, which translates to an internal strength.

2.5 Company
Internal Environment Analysis

Company analysis is conducted to identify Tiger Airways’ internal strengths and weaknesses.

2.5.1 Porter’s Value Chain
Porter’s value chain analyzes business activities of an organization to evaluate its competitive strengths (Recklies 2001).

Porter's Value Chain.JPG

Primary Activities

Supply Chain Management

TigerAir has 23 registered aircrafts with CAAS (Civil Aviation Authority of Singapore 2017) and has no plans to buy more.

Operations

TigerAir conducts regular internal audits and crew refresher courses and adheres to safety and security procedures (Tiger Airways 2015). In-addition, a 10 years’ contract with Airbus was entered in early 2016 for aircraft maintenance, spares pooling, component repair and overhaul to maintain its capital assets.

Human Resource Management

Cabin crew and staff with diverse ethnics are employed to serve customers on an international level. Also, remuneration, recognition, and rewards have also been constantly given out to motivate staff’s performance.

Service

TigerAir has been infamous for its flight delays, cancellations and poor customer service. With the proliferation of Internet access in global economies, there has been increased negative word of mouth circulating across multiple customer review channels, resulting in poor corporate image. Furthermore, TigerAir does not provide optional in-flight entertainments and self-check in kiosks.

Secondary Activities

General Administration

Tiger Air’s organizational infrastructure is co-linked to SIA’s management, which represents a source of internal strength. However, the establishment of the executive and risk management committee in response to the pressure for improved corporate governance by the Civil Aviation Safety Authority indicates that TigerAir has a internal weakness in its management.

Marketing

TigerAir has utilized popular social media platforms such as Facebook, Twitter, Instagram, and Weibo, as their main marketing channels (Manjur 2015). Their official website also regularly advertises and update promotions. However, TigerAir does not conduct large-scale advertising and promotions, leading to low brand awareness.

Distribution

Since its’ establishment, TigerAir has maintained its’ own distribution channel – official website and industry clients. TigerAir has extended its distribution channel to major online flight/travel platforms such as SkyScanner, Expedia and Ctrip.

Implications

Overall, Tigerair has insufficient internal competencies for it to use as a base for competitive advantage. Primarily, its weaknesses lie in its management, marketing activities and poor corporate image.

2.5.2 VRIN Framework
Based on the internal company and collaborators analysis conducted, VRIN analysis is performed to determine if a resource can be a source of sustainable competitive advantage.

Description of Resource and Capability

Test 1:

Valuable

Test 2:

Rare

Test 3:

Inimitable

Test 4: Non-substitutable

Alliances with lateral network partners

✓

✗

✓

✓

Alliances with distributors (downstream network)

✓

✗

✗

✓

Physical resources: Airbus A319-100, A320-200, A320neo

✓

✗

✗

✗

Brand strength

✓

✗

✓

✗

Employee incentive system

✓

✗

✗

✗

Implications:

As identified in the VRIN framework, TigerAir does not have resources and capabilities that are competitively superior. However, their relationships with their lateral network partners prove to be a potential source of sustainable competitive advantage.

2.5.3 Product Life Cycle
Screen shot 2017-03-21 at PM 10.06.59.png

TigerAir has been experiencing financial losses for 4 consecutive years. Coupled with decreasing passenger bookings, and closure of TigerAir Mandala, TigerAir is currently in the maturing stage of the product life cycle. Furthermore, being in an oligopoly market structure, TigerAir faces fierce competition from its’ competitors (Rubin & Joy 2005).

3.0 SWOT Analysis
Strengths

Weaknesses

· Network capabilities with downstream distributors

· Synergies, joint operations, and resources sharing between lateral networks

· Small fleet size

· Poor customer satisfaction from minimal optional add-ons and services

· Poor safety reputation

· Minimal brand interaction with consumers

Opportunities

Threats

· Shifting consumer preference to Low Cost Carriers

· Global GDP is forecasted to grow which is positively correlated to air travel demand

· Growth of emerging markets

· Growing demand for short haul flights across Asia

· Decreased consumer confidence in airline industry due to major aircraft accidents

· Intense competition among industry members

· Homogenous market with few product/service differentiation

· High supplier bargaining power

4.0 TOWS
Strengths:

Weaknesses:

Opportunities:

1. Leverage downstream network capabilities to reach out to emerging markets

2. Leverage lateral network competencies for resource sharing to accommodate air travel demand

1. Procurement of additional plane to cater to increasing demand

2. Increase marketing activities to establish brand presence and interaction with emerging markets and price sensitive consumers

3. Increase marketing activities to convince and re-affirm brand’s commitment to customer’s satisfaction

4. Implement additional in-flight add-ons and services to improve customer satisfaction

Threats:

1. Lateral networks provides positive reputational spillover and added value

2. Sharing of resources with lateral networks to reduce dependence on suppliers

3. Network capabilities provide added benefit differentiation

1. Increase marketing activities to convince and re-affirm brand’s commitment to customer’s satisfaction

2. Implement best practices for safety operations and communicate safety value through marketing activities

3. Strive for long term supplier contracts to achieve quantity discounts

5.0 Corporate Strategy
TigerAir’s Mission and Goals

TigerAir's mission is to be the leading airline connecting people in Asia Pacific through affordable fares. Its goal is to make travel as stress free and easy as possible (TigerAir 2017).

The core strategy used is strategic lateral and vertical integration. Laterally, TigerAir has partnerships in Value Alliance and Krisflyer offering one-for-all benefits with other airlines. Vertically, TigerAir has partnerships with hotels, car rentals, and travel agencies.

Core values

Tiger Airways has three core values revolving around the core strategy of improving customer satisfaction.

1. “We value our environment" relating to environmental practices which TigerAir has implemented by utilization of aircrafts with emission that meet international standards and the use of best practices.

2."We value our community" expresses their community commitment. Achieved by initiating activities that incorporate and benefit the communities they operate in.

3."We value our people" demonstrates the trust on TigerAir staffs. Placing trust in its employees, they are empowered and effectively deliver quality services.

TigerAir has developed its core corporate strategy focused on customers. Based on this strategy, TigerAir entices the market by creating a wide dimension of benefits through horizontal and vertical integration. In addition, the core values support the strategy to achieve the intended objectives.

6.0 Current Business-Level Strategy
TigerAir‘s current business-level strategy is a defender (Miles and Snow). This is attributed to the lack of poor brand interaction, perception and customer satisfaction. The inability to achieve constant breakeven and profits has forced TigerAir to cancel orders, lease out and retire some of their aircrafts. Underperforming routes were also removed, suggesting weak profits from the intense competition in the industry. Furthermore, any sub-brands were sold off to reduce additional losses. These evidences indicate that TigerAir is currently trying to consolidate and prevent greater losses.

The defender strategy would not be advantageous in the long-term. Due to external factors, TigerAir will eventually lose its market share to competitors as they become stronger. As the opportunities identified suggests, there is increased demand in low-cost carriers and the growth of emerging markets and short-haul flights across Asia proves lucrative. Thus, TigerAir should not miss the opportunities and allow competitors to acquire this growing market, causing them to be more difficult to compete against in the future.

Concluding, TigerAir should adopt an analyzer strategy where both defending and prospecting actions are conducted. This allows TigerAir to reduce its current weaknesses and leverage growth opportunities.

7.0 Recommended Business-Level Strategy (Analyzer)
It is recommended that TigerAir adopts an analyzer strategy - whereby adaptable actions are made to maintain a stable line of products and services while carefully following a selected set of opportunistic new developments (Yusuf & Saffu 2009).

In this case, several environmental factors indicate a need for TigerAir to adopt this strategy.

First, the LCC industry is in a late growth stage, thus TigerAir should defend their current market share. Secondly, TigerAir should defend its current market share because of the large number of competitors to maintain its market relevance. Furthermore, economies in Asia are emerging and TigerAir should take advantage of opportunities in emerging markets.

Hence, TigerAir should adopt an analyzer strategy by defending to stabilize its internal financial situation and also prospecting to increase profitability to stay competitive.

TigerAir’s resources are able to support their analyzer strategy as their strong inter-organizational relationships with distributors can help them gain wide market access and a base of customers to defend to maintain its market share (Barney & Griffin 1992). However, as identified in the value chain analysis, TigerAir has a weakness in its customer satisfaction, corporate image and brand interaction. Thus, focuses should be made across these three functions to achieve the strategy.

8.0 Marketing Strategies
The background analysis has outlined 2 business objectives that could be chosen for TigerAir:

1. Rebrand corporate image to strengthen relationships with current users to maintain market share and expand profit at the same time.

2. Rebuild brand awareness to increase customer satisfaction and market presence to remind, reaffirm and be noticeable to current and prospective users.

As the industry is in late growth, each objective utilizes either a maintaining or extending volume growth strategy.

1. Rebrand Corporate Image

Strategy: Extended Use

Current Situation: Overall services are deemed below par in the market, past-customers have spread negative word-of -mouth regarding flight delays, cancellations, and poor customer services.

Method: Increase frequency, encourage a wider variety of uses for current customers, and improve customer service.

Tactics: As the basis of product/service offering is highly undifferentiated, TigerAir should first close the gap of service standards towards competitors. Two ways of doing this is by offering what TigerAir’s competitors have been offering: optional in-flight entertainment and self-check-in services. Also, long-term customers or repeat purchasers should also be taken care of by offering extra value through network capabilities with hotels, car rental companies and travel insurances. This promotes a wider dimension of benefit to loyal/repeat customers. Further augmenting this, prospective partnerships should be sourced - example, the renown “Star Alliance” membership entails that partner airlines co-share ticketing, airports, infrastructure, and communication initiatives (Star Alliance 2017). This partnership model allows customers to enjoy other airline’s promotions and service incentives. Lastly, flight delays and cancellation should also be reduced to highlight TigerAir’s renewed commitment to customer satisfaction.

Rational:

Weak perception of brand

Individual air travel frequency rising

Advantages:

Deficiencies are reduced/eliminated

Extra value for customers through network capabilities

Eliminate past negative WOM and reputation

Resource sharing eliminates and reduces excess expenditure

Disadvantages:

Tactics reactive in nature, always behind competitors

Complicated network development and maintenance

Strategic Partnerships are not easily formed

2. Rebuild Brand Awareness

Strategy: Increase Penetration

Current Situation: Poor consumer brand perception and awareness of TigerAir due to lack of interaction and relationship building.

Method: Increase and utilize marketing activity to educate and stress brand presence and value.

Tactics: Due to the lack of brand interaction, consumers in current markets have developed a lack of satisfaction and confidence leading to avoidance. Also, TigerAir has not established brand interaction with consumers in emerging Asian countries, losing out valuable opportunities. Thus, to acquire larger market shares, marketing activities should be increased in both current and emerging markets to convince and remind consumers. With importance, marketing activities should emphasize on the safety improvements that would be undertaken in view of the decreased consumer confidence. For example, advertisings would highlight the professionalism of every aspect of operations and showcase the best practices adopted for safety processes.

The magnitude of marketing activities should match up or be more than competitors to display sincerity to consumers leading to positive brand interaction, ensuring TigerAir to maintain and acquire a larger market share.

Rational:

Lack brand relationship

Consumer shifting to LCC

Growth of emerging markets

Advantages:

Tap growing demand

Market presence established

Greater relationships with consumers

Brand Education

Disadvantages:

High marketing and promotional costs

Implications

Overall, Option 2 is better as it proposes to both strengthen current customer bases and tap into new opportunities, leading to a higher expansion of market share.

However, TigerAir’s has insufficient resources to support the high costs of marketing activities needed, thus, option 1 is chosen.

9.0 Implementation Plan
Objectives

To increase frequency of use of our current customers by 40% by the end of the 2 years plan in Singapore.

Timing

The implementation plan is planned for June 2017 to June 2019.

Market Targets

Our plan will primarily target Gen Y customers due to their purchasing power and frequency in traveling.

Positioning Strategies

Top management should communicate TigerAir’s positioning as a brand that values its customers by continuously seeking value added customer experiences.

Action programs

Customer relationship management should target all current customer accounts, with the aim of achieving 85% awareness of Tigerair rebranding through direct mail and SMS by the 2nd month of the implementation plan.

Marketing should communicate promotions and events through social media channels and achieve 30,000 ‘reposts’ by the first year of the plan. Also, they should organize customer events every 6 months.

Accounting should do a periodic audit every 6 months to ensure financial objectives are met.

Procurement should seek to increase in-flight entertainment by 10% of what is currently offered through outsourcing by the 6th month of the plan.

Operations should implement 5 self-service check-in kiosks in Changi Airport terminal 2 by the 3rd month of the implementation plan.

Human resource should implement internal marketing programs for employee 2 weeks before the implementation of any service/ process changes.

10.0 Conclusion
In conclusion, due to external factors and TigerAir’s limited resources, they will not be able to maintain their competitive advantage using a defender strategy in the long run. Also, the industry driving forces is shifting competition towards TigerAir’s competitors’ favor.

Hence, TigerAir should conduct an analyzer strategy by defending their current market base while looking out for new opportunities. The two years implementation plan is aimed at securing TigerAir’s foundation and accumulating resources to venture into new developments once the right opportunities appear.

Word Count: 3989

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12.0 Appendices
Appendix 1: Tigerair Timeline Breakdown (1)

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Appendix 2: TigerAir Timeline Breakdown (2)

Appendix 3: TigerAir Timeline

DATE

EVENT

Dec 2003

Tiger Airways incorporated

Jan 2004

Patrick Gan appointed as CEO who was previously from pharmaceuticals industry

August 2004

Planned to launch its first flight in 2004

Began ticket sales

15 Sep 2004

Inaugural Singapore-Bangkok flight service

Jan 2005

Anthony Davis becomes CEO (was the founding managing director of low-cost British carrier BMIbaby, 2002 - 2004)

Jan 2005

Informed by indonesian authorities that Tiger Airways would not be able to land in major Indonesia cities

2006

Announcement of expansion plans (fleet size to 20 by 2010 from current of 12) in order to surpass the seat capacity of SilkAir and SIA

2007

Tiger Aviation formed

2007

Appointment of new SG chairman, Daniel Ee

2007

Ordered 50 airbus 320 aircraft

March 2008

Profit of S$ 37.8 million was made by Tiger Airways Singapore after 3 consecutive years of start-up losses

March 2009

Its profit dropped to S$12.2 million

22 Jan 2010

Tiger Airways listed on SGX (Initial Public Offering, IPO $1.50 per share) and company raised S$247.7 million.

2010

Releases first financial statement

Aug 2010

Approx. 30 pilots resign and a number of flights cancelled due to remuneration issues

Aug 2010

It had 40 flights cancelled due to technical faults which leads customers to ask about their preparedness in emergency situation management.

June 2011

Davis (CEO) divests 1 Mil Tiger Airways shares at $1.42, 8 cents lower than IPO price.

2 July 2011

Australia's Civil Aviation Safety Authority (CASA) grounds all Tiger Airways Australia Flights

Nov 2011

It raised S$158 mil through rights issue.

Total expenses had increased by 22% to S$701.6 million.

27 Jan 2012

Tiger Airways acquired 33% of PT Mandala Air

Mar 2012

Tiger AIrways increased acquisition of Mandala Air to 35.8%

Aug 2012

Tiger Airways acquire 40% of SeAir (renamed to TigerAir Philippines) for US 2.5Mil

Oct 2012

All restrictions of Tiger Airways Australia lifted

April 2013

It raised S$297 mil through rights issue

July 2013

Virgin Air Australia acquires 60% of Tiger Airways Australia for $35mil, renamed to TigerAir Australia

July 2013

Mandala Air changes name to TigerAir Mandala

Dec 2013

SIA announces 40% ownership of Tiger Airways after two subsidiaries sold their shares to SIA

2014

Received “Top airline by absolute growth in passenger carriage (Singapore) at the Changi Airline Awards 2014”

1 Mar 2014

Tiger Airways sold TigerAir Philippines to Cebu Pacific (amounted to loss of $29 Mil)

1 Jul 2014

TigerAir Mandala ceased operations, filed for bankruptcy few months later

January 2015

Tiger Airways raised S$227 million through investors

SIA became Tiger Airway’s largest shareholder with 55.8 % stake

February 2015

Tiger Airways sold its 40% stake of Australian associate to Virgin for A$1

June 2015

There is an improvement in financial year 2015/2016 regarding about net loss, which decreased up to S$1.7 million compared to previous year.

November 2015

SIA announced takeover bid for Tiger Airways

2016

Received “Best Low Cost Carrier at the AsiaOne People's Choice Awards 2016”

February 2016

SIA owned more than 90% of Tiger’s Airways share

Appendix 4: PESTEL

AIRLINE INDUSTRY PESTEL ANALYSIS

1 - Low, 5 - High

1 - Low, 5 - High

(A) x (B)

Issue

Implication

Level of Risk (A)

Impact Level (B)

Total Score

Economic

Global Financial Crisis

The Global Financial Crisis led to consumers being more price-sensitive, which shifted them from full-service airlines to low cost carriers such as TigerAir (Goyal & Negi 2014)

3

5

15

Globalisation

Increased business confidence, better performance in key emerging markets, increase in export orders, leads to an increase in overall travel demand

Increasing global GDP correlated with air travel (IATA 2016)

1

4

4

Income levels

Increasing disposable income leads to an increase in travel demand, which increases market growth for airlines

2

2

4

Currency Exchange

Appreciation of Singapore currency against neighbouring developing countries has led to more Singaporeans travelling overseas to capitalize on the cheaper rates

2

3

6

Fuel costs/ crude oil prices

Decreased fuel costs in 2013 from $105 per barrel to $66.70 per barrel in 2015 resulted in more profit margins for airlines and enabled airlines to focus on other business areas such as increasing capacity and restructuring fleets

3

4

12

Inflation Rates

Increases price of supplier's services/ products, which leads to decreased profits and increased overhaul and operations costs for the airlines

1

1

1

Increase in aircraft accidents

Decreased consumer confidence in airline industry, fueling growth in adjacent industries such as cruises

1

2

2

Rise of emerging markets

Increased travel to/from emerging asia markets forecasted, especially in countries with huge populations such as India and China

4

5

20

Terrorism

Rise in terrorism around the world has led to a decrease in travel demand due to safety concerns (Liz Alderman 2016)

1

5

5

Technological

Mobile Technologies

Enhances customer service experience and reduces manpower costs

2

3

6

Aircraft Manufacturers

New aircraft technologies reduces fuel consumption and costs

Aircraft seat manufacturers: Enhances customer's experience and acts as differentiation factor/ justifies higher price charged

2

4

8

Airline Operations

Greater efficiency in customer service and ticketing processes

2

3

6

Net connectivity

Connected to more customers through online channels such as online air ticket distributors

3

4

12

Social Media

Creates an online relationship acting as a link between companies and consumer

1

3

2

Environment

Pollution Control

Increased government regulations regarding carbon emissions

4

4

16

Corporate Social Responsibility

Increased consumer scrutiny over company's CSR may influence their final purchase decision

3

2

6

Weather

Bad weather conditions may cause flight delays, consumer frustrations, and additional overhead costs

3

3

9

Climate Change

Consumer are increasingly concerned about their carbon footprints

3

3

9

Social-Cultural

Global Population

Forecasted growth of global population from 7.3 billion in 2015 to 8.5 billion in 2030 (United Nations 2015). Airlines can tap into the increasing pool of consumers.

1

5

5

Richer Societies

Entails Air Travel made possible for more, including developing nations, E.g. Brazil, South Africa, Indonesia.

1

5

5

Globalization

International globalization influenced more consumers to partake in Air travel holidaying.

1

3

3

Literacy

Rising educational levels prompted developing societies to travel outside of their communities/countries.

1

1

1

Legal

International-Civil-Aviation-Organization’s Standard Air Travel Regulations

Airlines must achieve the ICAO’s standard of Air Travel rules and regulations before they can operate in participating nation’s air space. (International Civil Aviation Organization 2017).

5

5

25

Visa Requirements

Air traveling made confusing by inconsistent visa requirements posed by different country’s legislation.

1

2

2

Appendix 5: Porter’s five forces

Porter Table 1.JPG

Porter Table 2.JPG

Appendix 6: Segmentation Table

Segment Table 1.JPG

Segment Table 2.JPG

Appendix 7: Industry Driving Forces

Factor

Importance: 5- Highest, 1- Lowest

Fast Rising household incomes, especially in markets such as China and India (Deutsche Welle 2016)

2

Increase in Leisure travel

2

Safety Priority

3

Emerging new internet capability and applications

5

Technology Change

5

Globalization

2

Changes in long term industry growth rate

1

Entry/ Exit of Major firms

2

Regulatory influences

2

Changing societal concerns, attitudes,and lifestyles

5

Appendix 8: Michael's porter's framework for competitor analysis

Competitor

AirAsia

Screen shot 2017-02-27 at PM 02.12.57.png

LionAir

Screen shot 2017-03-23 at AM 01.00.19.png

Current Strategy

Competitive Advantage: low cost model, high aircraft utilization and lean distribution system

Competitive Advantage: Largest privately run airline in Indonesia

Expected Growth trajectory: Increase in safety, simplifying their operations through technology, finding new under-served markets with high airline costs in emerging Asia markets, expanding capacity (ordering of 100 A321neo aircraft), aircraft R&D to reduce fuel consumptions (which ultimately reduces cost)

Expected Growth trajectory:

Expanding domestic market share through offering more flights and capacity

Capability

Current capabilities:

lean operations lines, exceptional social media engagement with their target market, strong CEO recognition, leading cabin crew, single aircraft type - leads to simplified maintenance costs, world's best low cost airline (7 years running)

Current capabilities:

Financially strong and strong brand reputation in the Indonesian market

Weaknesses: High reliance on IT leads to inefficient booking handling in system disruption situations, decreased customer confidence due major aircraft accident on 28 December 2014

Weaknesses:

Limited to a very small market

Poor safety records and on-time performance (lowest among all Indonesian Airlines)

Which capabilities is it making efforts to obtain: leaner operations lines (to reduce costs), reduce fuel costs, safety assurance

Which capabilities is it making efforts to obtain: reducing fuel costs

Objectives

Strategic Objectives: niche route network for leisure destinations, standardized serv qual, automation, distribution network expansion, expanding in-flight purchases, greater adoption of digital networks to reduce cost

Strategic Objectives:

Focus on domestic flights that is targeted to price conscious consumers

Assumptions

what do managers think about strategic situation: Cost efficient, profitable, and create value

how will belief affect company behaviour in the market: Company will focus on efficient operations and cost-reducing activities

what do managers think about strategic situation: Internal management conflict, especially regarding employee welfare

how will belief affect company behaviour in the market: Company will continue current strategy because any form of proposed changes will be met by pro-longed internal management conflicts

Appendix 9: Competitive strength assessment

Competitive Strength Assessment

(Rating Scale: 1 = Very Weak, 10 = Very Strong)

TigerAir

AirAsia

LionAir

Key Success Factor/ Strength Measure

Importance Weight

Strength Rating

Weighted Score

Strength Rating

Weighted Score

Strength Rating

Weighted Score

Branding

0.2

4

0.8

8

1.6

2

0.4

Distribution Network

0.2

5

1

2

0.4

5

1

Relative Cost position

0.2

5

1

7

1.4

8

1.6

In-flight amenities

0.05

4

0.2

5

0.25

2

0.1

Customer Satisfaction

0.1

6

0.6

6

0.6

4

0.4

Route Systems

0.05

4

0.2

9

0.45

3

0.15

On-Time performance

0.1

6

0.6

7

0.7

4

0.4

Seat Capacity

0.05

4

0.2

8

0.4

6

0.3

Fleet Size

0.05

2

0.1

8

0.4

9

0.45

Sum of importance weights

1

Overall weighted competitive strength rating

4.7

6.2

4.8

Appendix 10: Global air travel forecast diagram

Appendix 11: Regional market share diagram

Appendix 12: SWOT

Strengths

Weaknesses

· Dominant market position in Singapore for LCC

· Strong brand existence due to great offer for customers by collaborating with others.

· Take proactive steps to enhance travel experience, meet price sensitive customers’ need and maintain the company’s profit at the same time.

· Expand their network capabilities with hotels, car rental companies and travel insurance to provide complimentary service.

· Detailed and user-friendly website

· Small fleet size

· Limited in-flight services

· It is under vulnerable conditions due to its financial crisis.

· Reputation was affected when Civil Aviation Safety Authority suspended Tiger Airways Australia.

· Minimal brand interaction with consumers

· Below average safety perception

Opportunities

Threats

· Shifting consumer preference to Low Cost Carriers as compared to Full Service Carriers

· Global GDP is forecasted to grow which is positively correlated to air travel demand

· Growth of emerging markets such as China and India

· Travel demand forecasted to at least double

· Asia Pacific region holds highest market share as of 2016

· Growing demand for short haul flights across Asia

· Decreased Consumer confidence in airline industry due to multiple aircraft accidents over recent years

· Saturated industry due to mergers/ acquisitions

· Homogenous market with few product/service differentiation among firms

· Increasing pressure from government/ lobby groups to lower carbon emissions

· High supplier bargaining power

· Power of buyers is high

· High competition within industry members

· Frequent Price Wars