Tigerair philippines web check in

Strategic Marketing Report

Table of Contents 1. Company Overview 4 1.1 Tigerair’s Past Strategies 4 1.2 Key Milestones and Analysis 4 1.3 Current Situation 6 2. External Environment Analysis 7 2.1 Pestle Analysis 7 2.2 Porter’s Five Forces Analysis 10 2.3 Industry Life Cycle 13 2.4 Competition Analysis 14 3. Customer Analysis 16 3.1 Market Size and Profitability 16 3.2 Market Segmentation 17 4. Company Internal Analysis 18 4.1 Porter’s Value Chain of Company 18 4.1.1 Primary Activities 19 4.1.2 Supporting Activities 20 4.2 Collaborators 22 4.3 VRIN Framework 23 5. SWOT Analysis 23 5.1 SWOT 23 5.2 TOWS 26 6. Corporate Strategy Analysis 27 6.1 SIA Mission and Values 27 6.2 Current SIA Strategies 28 6.3 Latest Acquisition 28 6.4 Line of Business 29 6.4.1 Horizontal Integration 29 6.4.2 Backward Integration 29 6.4.3 Boston Consulting Group (BCG) Matrix 30 6.5 Corporate Strategy 30 7. Business Strategy Analysis 31 7.1 Tiger air’s Current Business Strategy 31 7.2 Functional Strategies 31 7.3 Evaluation of Current Business Strategy 32 7.4 New Business Strategy 33 7.5 Implications of New Business Strategy 33 8. Recommendations 35 8.1 Recommended Strategies 35 8.2 Implementation of Recommendations 37 8.2.1 Marketing Plan 37 9. Conclusion 40 10. References 41

1. Company Overview
Tigerair (TA), a subsidiary of Singapore Airlines (SIA) Limited, was formed in 2003. It is now a well-known low-cost carrier (LCC) in Singapore. It provides passenger transportation and some additional services (e.g. hotel bookings and travel insurance). Furthermore, mobile application services and web based check-in services are also offered by TA.

1.1 Tigerair’s Past Strategies
TA focused on aggressive regional expansion (Koh & Choo 2016). This involves expanding fleet sizes and into other countries (such as Australia, Philippines and Indonesia) to increase its profits and market share.

1.2 Key Milestones and Analysis

2004 - Current | Leadership of Tiger Airways

In 2004, Patrick Gan was selected to be the CEO of TA, however, he was inexperienced in the airline industry. He had then resigned in 2005 as he is incapable of managing airline company.

After Gan’s resignation, Anthony Davis, who was formerly a director of low-cost British carrier airline, took over Gan’s position. It was also Davis’ first time focusing on Asian budget travellers. Under Davis’ leadership, he failed to anticipate the situation for the market development in Indonesia and there was also no backup plan for the setback (Koh & Choo 2016).

Lee Lik Hsin has a 20-year working experience in SIA before becoming the CEO of TA. Under the leadership of Lee, there was an improvement on the financial performance of TA as it was reported that a profit of SGD 14.6 million was made in 2016, having an increment of 3.8% as compared to FY2015 (MarketLine 2016).

Lee also strongly believed that with the integration into the SIA family, TA’s current situation will improve (Koh & Choo 2016). To better integrate with Scoot, TA also adopted their fun and relaxed personality (Kaur 2016).

2006 - 2007 | Fleet Expansion

To compete with other airlines, TA doubles its fleet size to four A320 planes with orders of eight new planes and to be delivered in 2006 and 2007. Furthermore, TA had placed an order of 50 Airbus 320 aircraft in 2007 on firm contract. With this, TA aims to increase its profits and market growth. Thus, achieving a profit of S$37.8 million (USD 27.6 million) in 2008.

2010 - 2012 | Safety & Remuneration Issues

In 2010, many customers were affected by cancellation of flights due to technical faults from planes and many pilots resigned over salary matters from TA Singapore.

Moreover, in 2011, all TA Australia was grounded by Australia’s Civil Aviation Safety Authority (CASA) over safety concerns. However, it is resolved in October 2012. Furthermore, during the restriction period, TA Singapore had to absorb the extra cost of four new planes that is initially for TA Australia.

The sudden cancellation of flights and technical problems will therefore cause customers to lose confidence in TA.

2010 - 2015 | Initial Public Offering (IPO)

Between year 2010 to 2015, TA was listed on the Main board of Singapore Exchange Securities Trading Limited and had raised funds through several rights issues. The funds were raised for the payment of new planes. Furthermore, Ryanasia and Indigo Singapore Partners divested their shares as TA was not able to pay any dividends in 2010. Thus, implying that TA was having financial problems during the years.

2012 - 2014 | Acquisition of Tigerair Australia

To help fund expansion of TA Australia, TA sold 60% shares of TA Australia to Virgin Australia Holdings in 2012. It was then renamed to become “Tigerair Australia”.

Moreover, TA struggled in the Australian market and had suffered losses for seven years as it was intensely competitive. Thus, deciding to exit the market. Virgin Australia Holdings then helped TA to overcome its financial difficulties by buying all the remaining shares for A$1 in 2014 while TA continues getting brand licensing fees from TA Australia.

2012 – 2014 | Expansion to Indonesia & Philippines

In 2012, TA expanded to both Indonesia and Philippines. However, due to industry overcapacity, after the expansion, TA Philippines failed to survive in the Philippines market and sold its 40% shares to Cebu Pacific in 2014. On the other hand, TA Mandala stopped operating in 2014 as it could not sustain financially.

2015 - 2016 | Subsidiary of SIA

Lee suggested that “the key element for a decisive turnaround and for future sustainable growth” is to integrate with SIA. Thus, a decision was made to integrate Scoot and TA in the second half of 2017 (Tang 2016).

Initially, SIA owns 40% shares of TA. However, in 2015, after the injection of fund, SIA became the largest shareholder in TA with 55.8% ownership. After Singapore Airlines (SIA) had obtained more than 90% shares of TA, TA was delisted from Singapore Exchange (SGX) (Ramchandani 2016).

It is beneficial for TA to be part of SIA as it can leverage on strategic alliance of SIA and Scoot to enhance network connectivity, increase market access and share technology resources for better online transactions.

1.3 Current Situation
Despite displaying strong financial performance in 2016, TA is unable to operate as a solo unit as it was announced that it is still going to come under the name of Scoot by the end of 2017. TA also facing an intense competition in the LCC industry as there are other airlines such as AirAsia and JetStar which have higher market share and fleets than TA.

2. External Environment Analysis
2.1 Pestle Analysis
Political-Legal Factors

In January 2005, Indonesian authorities informed Civil Aviation Authority of Singapore (CAAS) that foreign LCCs will not be granted access to bigger cities but only to smaller Indonesian cities (Choo & Koh 2016).

In addition, the Ministry of Transportation of Indonesia made an impact on airline tariffs by passing new legislation in 2016 (Euromonitor International 2016). In order to protect the consumers, the new legislation involves decreasing the minimum and maximum tariffs by 5% in response to lower jet fuel prices.

The Open Skies agreement (aka ASEAN Single Aviation Market), which allows carriers from all 10 member nations (of ASEAN) to fly freely within the region. The agreement will boost travel around the region, help increase trade between the nations (Giridharadas 2016).

Furthermore, in 2017, TA Australia was forced to cease flights between Australia and Bali as there were conflicts with the Indonesian authorities (Ironside 2017). In addition, the solution would take about six months and it will compromise TA Australia’s ability to provide a low-cost air transportation to passengers (ABC News 2017). Therefore, TA made the decision of suspending the route permanently.

New ruling by the International Civil Aviation Organisation to replace Tokyo Convention with Montreal Protocol. Under current law, Singapore can only act towards unruly passengers if only he/she arrives on Singapore carriers. To overcome such issue, Montreal Protocol will be replacing Tokyo Convention. Singapore will also toughen its own regulations to deter against unruly behaviour.

The new laws will ensure safe and secure air hubs and seamless service by airlines.

Economic Factors

It is expected in 2016 that 1% of the world Gross Domestic Product (GDP) will be contributed in air transport which amounted to $740 billion (IATA 2016).

In addition, fuel prices are also being predicted an increment of $129 billion in 2017 and this will lead to an increment in operating costs on average by 18.7%. There will also be a rise in labour costs in the airline industry (Bachman 2017).

With Singapore having a slower economic growth rate ahead, LCCs are able to benefit from it with its affordable offering as consumers are more price conscious (Chia 2017).

Furthermore, the U.S. interest rate hike has caused many Asian countries’ exchange rates to be affected thus causing its citizens to be more frugal. (Chia 2017).

Socio-Cultural Factors

There is a high demand for passenger travel as it is estimated to rise by 6.9%, with 3.8 billion passengers to travel in 2016 (MarketLine 2016). With this, Tiger Airways may broaden its geographic boundary.

Moreover, there is psychographic and behavioural change in consumers in the airline industry. Initially, before the rising trend of low-cost carries, those ‘high-paying business travellers’ were more willing to pay for any price but, after the trend, they became more price-sensitive towards the idea of paying more to travel (Teichert, Shehu & von Wartburg 2008).

In addition, due to Singapore being a small country and densely populated, citizens constantly feel a need to have a getaway and travel overseas for holidays (Lim 2016). Furthermore, there are two factors that will affect the Perception of Quality by local and foreign passengers for Budget Airlines (CSISG 2016). They are the cabin’s cleanliness and choices of food and beverage.

Technological Factors

Artificial intelligence could serve as digital assistant in the front-line operation for the airline. Using AI, airline can create a seamless travel experience and will be able to eliminate any human errors (BBC News 2017). More developed AI, however, will be able to provide more usage such as market intelligence, revenue management and many more that can bring competitive advantage to the airline. It can improve efficiency, drive down costs, increase customer satisfaction and potentially elevate revenue.

The use of virtual reality is not unheard of in the airline industry. Qantas have tested VR as an in-flight entertainment and using a VR app for marketing purposes such as providing immersive videos of Australian destinations (CNBC 2017).

Augmented reality can assist in wayfinding, entertainment and provide AR billboards that displays information. In 2016, Emirates offered the first interactive amenity kits in the industry (Emirates 2017). Implementing AR technology, Emirates customers can enjoy digital entertainment on their mobile devices.

Both VR and AR has a lot of growth in the airline industry. It main usage is largely focus on the added-value towards customer experiences.

Environmental Factors

As Airlines account for 2% of man-made global carbon emission, United Nation has proposed a voluntary scheme that aim to cap the aviation industry’s carbon footprint and Singapore has joined to be part of the scheme (Kaur 2017).

From 2021, all Singapore carriers must neutralise their carbon dioxide emission. Extra cost incurred will be borne by airlines and therefore, raising the overall price of air-travel. This can impact TA and reduce their attractiveness due to price hike.

2.2 Porter’s Five Forces Analysis
Threat of New Entrants [LOW]

Increase Power (+)

Decrease Power (-)

· N/A

· High barrier of Entry

· Players are willing and able to contest new entry

· Industry outlook is risky

The strict government regulations in the airline industry and the high capital needed to set up an airline decrease the attractiveness of this market. Within the LCC industry in Asia, there are also many established competitors that have cost advantages and reputable brand image that provide them competitive advantages. The LCC industry is a highly price sensitive market and extremely competitive therefore, actions (price war) will be taken if there’s a new entrant.

Bargaining Power of Suppliers [MODERATE]

Increase Power (+)

Decrease Power (-)

· Few suppliers for aircraft manufacturing in the airline industry

· No substitutes for jet fuel

· High switching costs for aircraft suppliers

· Jet fuel is a commodity

· Substitutes for maintenance, staff and food providers

· Airline companies are the major customers of suppliers (jet fuel and aircraft manufacturing)

Large capital and intellectual property is required for aircraft manufacturing thus it is hard to backward integrate. For large aircrafts, there are only Boeing and Airbus, the two major companies for huge aircraft manufacturing, while larger but limited number of suppliers for small aircraft manufacturing. Therefore, there is high switching costs for aircraft suppliers. Moreover, there is no substitutes for jet fuel but it is a commodity hence it weakens the bargaining power of suppliers. There are also substitutes for maintenance, staff and food providers (such as SATS Food, Gate Gourmet and Flying Food Group). Suppliers also include airports (e.g. Changi Airport) as they provide infrastructure (such as parking and runway), and SATS which provides baggage solution. However, there is no doubt that the airline companies are the major customers of suppliers for aircraft manufacturing and jet fuel as they are for a long-term basis.

Bargaining Power of Customers [HIGH]

Increase Power (+)

Decrease Power (-)

· Mostly Standardized

· Low Cost of Switching

· Buyers are price sensitive

· Well-informed

· Cannot integrate backwards

· Buyers are small

The LCC services are mostly standardized, providing low cost fares and similar routes. Therefore, passenger have more options to choose from. Due to the highly competition and price sensitive market in LCC industry, there is little cost of switching beside the frequent flyer program. With today’s technology, buyers are more well-informed regarding the airline prices and level of services and able to find better deals.

However, the buyers in the market are numerous and lack financial muscle to integrate backwards. Bargaining power of customer is considered high due to the factors above.

Threat of Substitutes [LOW]

Increase Power (+)

Decrease Power (-)

· N/A

· Lack of reliable substitute transport

· High cost in switching

Main factor in determining threat of substitute is the length of the distance. Short haul routes towards nearby cities or island such as Johor Bahru and Batam can normally use substitute such as land or water transport. While longer distance routes such as China and Taiwan, air-travel are best use for access.

Despite having a train routes from Singapore towards countries such as Thailand, Vietnam and China, it requires transit and take more time, therefore translating to a higher cost.

Overall, the price of substitute is rather low compared to air-travel, however, the quality and performance are incomparable, thus the threat level is low.

Competitive Rivalry within an Industry [HIGH]

Increase Power (+)

Decrease Power (-)

· Buyer costs to switch brand are low

· Weakly Differentiated

· Highly perishable goods

· High exit barrier

· Numerous Competitors

· High buyer demand

The weakly differentiated offerings by LCC and the price sensitivity market allows buyers to switch brand based on the price factor. This results in price competition in the market to convince consumers to switch.

Rivalry increased as the services provided by airline is highly perishable coupled by the high fixed cost (aircraft fuel, manpower etc.) This will force price wars to ensure seats are fill to cut down on costs.

Within the LCC industry, there are many competitors (Scoot, TA, AirAsia, JetStar etc.), therefore rivalry will intensify when one try to gain market shares which can result in price war.

High barrier of exit also increase the level of rivalry as industry become overcrowded or firm cutting price to overcome financial trouble. Some example of exit barrier is difficulty in selling off used aircraft, cost associated with termination payment to workers, costs for contract violations and costs of abandoning valuable slots (IATA 2012).

Industry Outlook

The assessment revealed that the strongest threat to profitability comes from rivalry among existing competitors and bargaining power of buyer. Therefore, TA would have to pursue strategies that can shield competitive pressure or decrease the pressure.

Overall analysis suggests that the LCC market is an attractive market for the established players due to the rest of the forces lie between low and moderate pressure.

2.3 Industry Life Cycle
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The LCC industry in Asia is currently at the shakeout stage. The current industry is growing at a slower rate compared to when the industry was at its introductory stage sixteen years ago, (Meszaros 2016). A shakeout occurred due to high growth and demand with the overexpansion of airlines. However, there are emerging markets in Asia (E.g. China, India and certain Southeast Asian countries). Thus, showing there is a slow but rising growth.

Due to the major players such as JetStar group, AirAsia Group owning a large percentage of the market share in Asia, Value Alliance, is a sign of consolidation in the shakeout period to increase their reach and tackle the larger rivals (Kotoky & Whitley 2016). The alliance was formed to prevent the 8 LCCs from getting eliminated.

2.4 Competition Analysis
Strategic Group Map

Company

Tigerair

Singapore (Singapore Airlines 2016)

AirAsia Group

(2016)

JetStar Asia Airways

(2015)

Lion Air, Thai Lion Air (n.d)

Scoot (Singapore Airlines 2016)

AirAsia X

Group (2016)

JetStar Airways, Pacific,

Japan (2015)

Revenue passenger-km

9,551.1

Million SGD

68,434 Million MYR (Approximately: 22,075 Million SGD)

-

-

8,673.9

Million SGD

29,343 Million MYR

(Approximately: 9,465 Million SGD)

-

Number of Passengers carried

5.128 Million

56.59

Million

-

-

2.412

Million

4,866

Million

-

Fleet Size

23

172

18

138

12

30

105

Destinations

40

Destinations

Over 100

Destinations

22

Destinations

56

Destinations

18 Destinations

23

Destinations

Over 50

Destinations

Market

Short Haul

Short Haul

Short Haul

Short, Medium Haul

Medium, Long Haul

Long Haul

Short, Medium, Long haul

Freight/ Cargo Service

✘

✔

✔

✔

✔

✔

✘

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Figure 2.4: Strategic Group Map

Figure 2.4 compares the quality range (Skytrax 2016) and market it caters by TA and its competitors. From the map, we can identify AirAsia Group, Lion Air, Thai Lion Air and Jetstar Asia being its direct competitor as they cater to passengers traveling short to medium haul flights.

Firstly, compared to its largest competitor, AirAsia Group an aspect which TA is able to improve on would be to increase its number of destinations it travels to. Secondly the airline is ranked third in quality range. This is an opportunity for improvement by providing their staff with better training and improving products offered.

By expanding their coverage, increasing their quality range and including cargo shipping, TA can grow the business and garner more sales.

3. Customer Analysis
3.1 Market Size and Profitability
Asia-Pacific currently holds 32.9% of the world air passenger market in 2017 (IATA 2017). To add on, Asia region is demonstrating healthy growth at a rate of 4.1% per year, higher than the global average (Boeing 2016). Total air traffic in the Asia-Pacific is forecast to grow at an average of 6.2%, and by 2035, Asia will have 48.7% of the global passenger air traffic (Boeing 2016). South East Asia passenger traffic will also be expected to accelerate at 6.4% over the next 20 years.

With the increasing expansion of the middle class in Asia, it is expected to experience a robust growth rate in the leisure and business travel industry.

In 2015, Asia became the biggest business travel region in the world and is expected to dominate (McKinsey&Company 2015), and by 2025, corporate travel spending in Asia-Pacific will double to $900 billion and will make up half of the world total (Amadeus 2015).

Increase business travel and leisure spending will also make a shift towards emerging markets like China, India, Indonesia, Thailand, Malaysia and the Philippines.

Low cost carrier is most likely benefit from this trend as LCCs are the popular choices for the individuals traveling in the region (Euromonitor 2016).

Currently, LCC holds a 26% market share in Asia-Pacific and 54% in South East Asia. Therefore, the current market size and future growth in the region is immense and allow many opportunities for LCC to capture and expand its leisure and business segment.

3.2 Market Segmentation
Two important customer segments to the LCC in Asia-Pacific were identified and the factors that influence their purchase decision.

LCC Consumer Segments

Segment 1:

Leisure Travellers

Segment 2:

Business Travellers

· Targeted a broad age group from 19 to 54. Older people aged above 55 most likely prefer full-service airlines (Mintel 2005).

· More price-sensitive due to low income. Value-oriented

· Mostly for short trip holiday

· Sees LCC as a mean for transportation only

· Favourite activities while travelling in Asia Pacific: 1st Wi-Fi, 2nd Meal, 3rd In-Flight Entertainment (Statista 2016).

· Targeting PMET (SME, Corporate)

· Price-sensitive due to market conditions.

· Look for frequency of flight and degree of flexibility in changing booking (Garcia, Rosell & Coenders 2011)

· Prefers Wi-Fi, convenience flight times, direct flights and comfortable seats (Singapore Tourism Board 2015)

· “Time is Money” mindset

· Bleisure: Travel for business and leisure

· India and Indonesia businessman more willing to travel in LCC

In the increasing competitive LCC industry in Asia-Pacific, it is recommended for LCC to put emphasis on the business travel segment due to the higher revenue and the freedom to differentiate services as compared to leisure travellers.

While many LCCs in Asia provide differentiated offerings to the business segment, TA is lacking behind and offering limited services for the business travellers in the regional area such as flexi-combo, tigerplus and American express payment. This can allow other competitors to gain market share in this lucrative segment.

On the other hand, Scoot, TA “sister” company, is offering ScootBiz for this segment during their medium/long haul flights.

4. Company Internal Analysis
4.1 Porter’s Value Chain of Company
A company’s value chain distinguishes the primary activities and support activities that create customer values. It is a tool that helps in evaluating how a company delivers value proposition.

Using value chain, this report will analysis TA’s strengths and weaknesses in creating customer value proposition.

Firm Infrastructure

HR Management

Technology Department

Procurement

Supply-Chain Management

Operations

Distribution

Sales and Marketing

Service

· Fuel Procurement

· Route Selection

· Yield Management Service

· Aircraft Acquisition

(AIRBUS)

· Food and Beverage (SATS)

· Ticket Counters

· Gate Operations

· Aircraft Operation

· In-Flight Service

· Baggage Handling

· Flight Connections

· Car-rental/Hotel reservation.

· Booking channels

· Promotions

· Advertising

· Group Sales

· Customer Service

· Feedback Channels

· Lost/ damage Baggage Services

· Advantage Program

4.1.1 Primary Activities
Inbound Logistic

· TA have a good relationship with Airbus. Both entity have signed long term agreement regarding the purchase of more fuel-efficient aircrafts. Coupled with the current fuel cost, this will help TA to cut down on fuel costs in the long run. Total fleet size of TA is 23.

· Through actively reviewing Asia route networks, non-performing route like Guilin have been suspended by TA and added frequencies towards selective routes and new destinations (Ipoh, Quanzhou, Lucknow) that are more profitable. Currently, the airline flies over 40 destinations across 12 countries in Asia.

Operations

· With Web Check-in and Direct-to-Gate services introduced by TA, customers can be move to their flights quicker, ensuring punctuality and improve flight turnovers.

· TA had signed a contract with Airbus for fleet technical management and inventory technical management for its A320ceo aircraft. The agreement will allow the airline to save US$20million on aircraft maintenance.

· TA SG in-flight services includes tiger bites and a magazine. While TA Australia operates on a ‘bring your own device’ basis and provide tigertainment through the passengers’ own devices. This allows them to remain less costly.

Distribution

· TA uses 3 distribution channels to sell their tickets. The firm utilise direct selling through its website and its mobile app. They also utilised travel agents through Amadeus and lastly, through ticket counters. Their multi-channel strategy allows the firm to expose to more customers and provide value such as convenience, albeit at a higher cost.

· TA also provide car rental, hotel reservation and holiday bundles to give their customers more value, allowing them to have a seamless booking experience. They also provide airport transfer services.

Marketing and Sales

· TA utilised mainly social media (Facebook, Instagram, twitter) for marketing purposes. This will help TA to minimise cost but lower exposure to other segment which don’t use social media.

· Multiple awards received by TA reflects its strong leading position in the industry.

Services

· Through its hotline and website, TA provides special booking, feedback and complain channels for customer. They also provide lost baggage services.

· CSISG (2016) reported that compared with other low cost carrier, the satisfaction score of TA (68.6%) overall services are lower than its competitors, AirAsia (69.9%) and JetStar (70.3%).

· Through SIA, TA has been incorporated into the Kris Flyer programme. This allow members to gain and redeem miles when traveling. Through the prestige of the programme, TA can differentiate from its competitors.

· Only LCC that offers extensive boarding pass privileges such as exclusive deals with local merchants (Hong Kong, Malaysia, Singapore, Taiwan). Such added value service allows TA to offer consumers more value and cost saving.

4.1.2 Supporting Activities
Firm Infrastructure

· The firm quality management of the aircraft is considered a weakness. In January 2017, a burning smell caused by a faulty fan in the ventilation system caused the flight to divert to Ho Chi Minh City. While in 2016, a fault in the braking system caused the passengers to switch aircraft, subsequently, the substitute plane was also experiencing engine problems. The incident caused a 5 hours’ delay. This will incur cost to the airline operation.

· Currently, SIA control over 90 per cent of issued share capital of TA. The organisation structure also included several veteran SIA executives to assist in planning, sales and marketing. Majority of SIA nominees had taken up most of the directorships on TA’ Board. Combined with the wealth of experience and resources SIA brought in, TA began to recover.

HR Management

· TA had encountered many issues arise from bad HR management. In 2010, TA Singapore cancelled several flights due to resignation of pilots due to remuneration problems. The airline’s Australia franchise was also suspended due to pilot proficiency.

· In the 2015 annual report, TA acknowledged the high turnover rate due to the uncertainty future of the firm and aim to attract, retain talents and manage attrition through salaries review, provide job mobility, career development opportunities and strengthen employee engagement. A bad HR management will incur higher cost in the long run.

Technology Department

· With product innovation like Tigerholidays, TA provide a seamless whole package travel experience for passengers on the internet. The airline will also focus on mobile engagement (TA App) and data analytics to communicate and understand passengers better.

· Both TA and Scoot utilized the same computer reservations system, with the integration into the SIA family, the two airlines had integrated their system to allow convenience when booking either airlines.

Procurement

· Tiger Airway Singapore entered an agreement with Airbus and Pratt & Whitney for the order of 37 fuel-efficient Airbus A320neo aircraft with Pratt & Whiney PW1100G-JM engines. The new aircrafts coupled with the new engine will deliver 15% greater fuel efficiency which translate to S$40 million in savings annually.

· Tiger Airway Singapore has also signed a decade long contract with Airbus for fleet technical management and inventory technical management for its A320ceo aircraft. It will cover the planning and management of aircraft maintenance. This agreement will help Tiger Airway to save up to US$20million.

4.2 Collaborators
Value Alliance (Strategic Alliance)

(TA Scoot, Cebu Pacific, Jeju Air, Vanilla Air, Nok Air, NokScoot & TA Australia)

Opportunity to Enhance Value & Market Access

· Over 160 destinations across Asia

· Allow consumers to book tickets and addition services in a single itinerary.

· Increase accessibility and convenience.

· Alliance allows member to reach beyond their own home market and reduce costs on distribution channel through leveraging partners existing means.

· Allow the alliance to challenge bigger players (JetStar and AirAsia).

Airbus (Strategic Supplier)

Competitive Strategy

· By outsourcing maintenance services on its aircraft, TA can save on labour and equipment costs.

SIA & Scoot (Internal Partnership)

Opportunity to Enhance Value + Skill and Resource Gap

· Kris Flyer programme from SIA allows TA to enhance value towards consumers and differentiate from competitors.

· Integration between Scoot and TA will benefit both and fulfil any skill and resources gaps, improving their operational and commercial synergies.

· With SIA as the parent company, TA will benefit from its experience, capabilities, resources and brand image.

SATS (Strategic Supplier)

Competitive Strategy

· TA need to keep its cost low to have a competitive advantage in the LCC industry. Collaborating with SATS on outsourcing food and ground services, it allows the firm to maintain its low cost.

NTUC (Strategic Partnership)

Opportunity to Enhance Value

· Partnership with NTUC by offering travel benefits (Boardmefirst, $5 off upsize luggage) to NTUC members.

· Benefit both entities as TA will gain potential customers while NTUC add value to their members.

Cebu Pacific (Strategic Alliance)

Opportunity to Enhance Value + Resources Gap

· Allow TA and Cebu Pacific to expand their network by leverage each established network in South East Asia, India, Philippines and North Asia.

· Provide greater connectivity to travellers and value.

4.3 VRIN Framework
Valuable

Rare

Inimitable

Non-substitutable

Customer Service

No

No

Yes

No

Destination

Yes

No

Yes

No

Food Variety

Yes

No

Yes

No

Food Quality

Yes

No

Yes

No

Seat Comfort (leg space)

No

No

Yes

No

Flight Punctuality

Yes

No

Yes

No

Additional Services

Yes

No

Yes

No

Special Needs

(allow guide dogs on-flight)

Yes

No

Yes

No

Based on the VRIN framework above, TA has no competitive advantage as it lacks differentiation in the airline industry.

5. SWOT Analysis
5.1 SWOT
After evaluating both internal and external factors of TA and the low-cost carrier industry, the below SWOT table was created to further analysis and craft future strategic actions.

Internal Strength

Integration with Scoot

Integration between the 2 airlines allow economic of scale and the expansion of routes, therefore opening more opportunities.

Experienced Management

The management team are experienced and capable ex SIA veterans. Their experience will benefit TA and allow improvement in their management.

Strategic Partnership

The value alliance allows TA to open out its network and able to resist strong competition in the industry.

Strategic alliance with Cebu Pacific allow TA to expand its network even bigger and providing more value to customers.

Partnering with Kris Flyer, a prestige loyalty program by SIA allows TA to better differentiate from its competitors.

SIA

With SIA as the parent company, TA can leverage on its resources and brand image.

Boarding Pass Privilege

TA is the only airline with an extensive boarding pass privilege that offers better deal from local merchant. This can attract consumers who are more price conscious.

Strong Market Position and Brand Identity

TA has a strong position in the LCC industry and have won several awards in the past year. The awards are a testament of TA leading position which can be used for promotion means to attract customer.

Internal Weakness

Customer Service

TA compared to its competitors (JetStar, Air Asia) score lower satisfaction score according to CSISG (2016). As airline is a service operation, it is essential to deliver satisfaction to customer beside having low price.

Lack of Management Depth

There is a management problem as there have been issues on quality management and HR management. Such problems will incur higher cost for TA.

Lack of Differentiation

TA and its competitors are offering standardised services. There is no clear differentiation between them which increases the rivalry and bargaining power of buyer. Compared to other airlines, TA also provide lesser offerings to business traveller segment.

Asia Network

TA focus on only short haul flights in Asia. Therefore, the limited operations make it vulnerable to the political and economic risk in this area.

In-flight Entertainment

Compared to the other LCC. TA do not provide any in-flight entertainment add-on beside a magazine. TA also do not provide Wi-Fi which is an important factor for both leisure and business segment.

External Opportunities

Increase in Global Demand / Tourism Industry Bloom

Positive outlook in global airline traffic as Asia-Pacific will see an extra 1.8 billion annual passengers by 2035.

China and India will be the growth engine of LCC market.

This will increase demand for air travel.

New Technology

VR and AR

Economic Downturn

TA can benefit as consumers will be more price conscious.

Business Traveller

Business Traveller market in Asia will become the biggest market globally. Provide higher revenue than leisure traveller. Especially in China and India.

ASEAN Open Skies

Allow LCCs to fly freely within SEA. Past restrictions are lifted, clearing path for expansion and more routes.

Cargo Services

TA don’t offer cargo services currently, therefore, it is an opportunity to expand into cargo.

External Threat

UN Scheme

TA will be affected by the UN Scheme as cost incurred will pass on to consumers.

Intense Competition

· Many competitors

· Low switching cost

· Lack of differentiation

Increase of Buyer Power

Due to the standardized offerings, price sensitive market, variety of competitors and ease of collecting information, consumers can select which LCC to patronise, therefore, TA need to minimise pressure from buyer.

Fuel Cost Rising

It is expected for fuel cost to rise in the upcoming years, which will impact TA overall expenses.

5.2 TOWS