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Tiger Air Express

Tiger Air express Company was founded in 1987, primarily to provide charter air services. Soon after, it is
incorporated tour business and taxi business into its domain and during its first two years of operations, it
sales grew by 168 percent. Because of its rapid growth, it experienced some difficulties in providing the
necessary resources and building proper infrastructure for this growth. These difficulties were due
to underestimated requirement of capital for vehicles, maintenance, office facilities, and staff.
These Gulf wars which resulted in steep increase in fuel costs added more burden on the
financially-strapped organization. The management was having difficulties in exactly evaluating the financial and
operational situation of the company. A well- known accounting firm was hired to develop
and install accounting system that would accurately reflect the companys financial situations at
any given time. As a result of the report, the taxi division was eliminated and the resources were
diverted towards the freight and tour divisions of the companys, specially the air-freight
capabilities. In order to expand on the air-freight business, further studies were conducted in order to
understand the market better. Some insights into the air-freight market were gained through a
survey of 44 air-freight shippers conducted by an outside agency in 1992. There are two types of services
available for forwarding air-freight. First, there are integrated carriers. These are the companies
which have their own planes. An example is Federal Express. These carriers offer customers pickup and delivery
by truck along with airplane shipping. Second, there are freight forwarders. These are the carriers that
handle pickup and delivery but the regular scheduled airlines for air shipment. A summary of the
responses to some of the questions asked in the survey, as noted above, are explained below:
i)

ii)

iii)

30 per cent of the survey respondents stated that their air-freight expenditures had
increased in the past year. 60 per cent indicated no change in these expenditures and 10
per cent reported a drop in expenses.
50 per cent of the survey respondents used integrated carriers for shipping. However, for small
packages, this percentage increased to 75 per cent. Only 19per cent used freight
forwarders. 62 per cent of those who used freight forwarders did so because of
their ability to handle international air freight more effectively and reliably.
39 per cent of the respondents indicated that they were using more 2-3 daysdeliveries which
were cheaper than one day delivery, then they did 2 years
ago.iv) When the survey asked the customers as to what they looked for in a carrier
the responses were as follows:
On-time delivery -- 59 per cent
Price -- 57 Per cent
Customer Responsiveness 43 per cent
Geographic coverage 9 Per cent
Single source control 7 per cent
Tracing Capabilities 7 per cent

Questions for Discussions:


1. Based on your knowledge of probability theory, what strategy should
Tiger Air Express adopt in determining their emphasis on the air
freight business, based on the data given?
2. Some of the percentages reported in the survey can be converted
into conditional probabilities; conditional probabilities contain
information about the responses in certain categories. Can you
describe some of these categories? How would these categories
help the management of Tiger Air Express? Explain.
3. If you were a consultant to Tiger Air Express, what
recommendations would you give to the management so that they
can meet the competition with other companies, offerings based on
the type of shippers and shipments that are most probably in
demand.

After going through each and every aspect of LCCs and studying its impact on costumers
satisfaction and whether it is worth travelling in LCCs
and are they safe in terms of standards and their service quality through the survey of 300
respondents form the Changi Airport, Singapore it is more clear that Tiger Airways is
doing well in Asia and their service quality is appreciated by the passengers as from the survey it
is proved. Only some minor issues were brought in by the passengers that more promotion offers
need to be provided; Baggage allowance can be reduced from the present rate; Quantity of food
severed on board can be off higher potion and the rest was well got a good score on an overall
basics as far the customer satisfaction of both the airlines are concerned.
From the global angel as far the LCCs operations are concerned they too are doing well from the
statistics provided in the earlier discussion. In Europe, LCCs are capturing higher and higher
market shares on most domestic and intra-European routes. In response, network airlines are
being forced to adopt some of the management practices previously developed by their LCC
competitors, such as no free on-board frills, the elimination of business class, and the increased
utilization of planes and crew. A further step for network airlines might involve their creating
low-cost subsidiaries that can compete on equal terms with their low-cost rivals.
To be more competent as far LCC industry is concern the major support factor is its pricing of
tickets are the success story behind it. In earlier days passengers were ready to compromise on
service and amenities but now more LCCs airlines are coming in to business so the demand in
keeping the price low and giving better service to the customers is a big task ahead for the LCCs
operators. Key success of LCC depends on its best strategy by keeping higher load factor in
terms of seats sold with respect to seats available; will keep the price down the cost per
passenger Higher utilization of the aircraft that can be achieved by maintaining a short turnaround time. Able to manage the overhead cost and keep it low that can be achieved by proper
internal processes in back office. Finally keep a good labor forces with higher

motivation and do not have labour unions will be a key advantage in bargaining power with
them.
Further for LCCs to keep in the race is to keep its superiority and magnitude of its network and
its methods of building up of different fresh routes and destination. LCCs is not just for low end
travels or middle income group travellers, the future trend is changing for the business class
passengers to take the LCCs due to the cheap price and easy accessibility. Only concern to attract
Business travellers to LCCs will be the flexibility of the location of the airport, for them location
of the airport and centres is a key strength that can make the option to its customers a shortest
and similar alternatives to the FSC. While a new model of success for low-cost carriers has been
defined, earlier research in regards to the low cost model is still valid. As described by OConnell
and Williams (2005), passengers still select low cost carriers because of low fares rather than
product features. Air traffic in Asia will increase dramatically in the next fewdecades. While U.S.
airport passengertraffic was 1.467 billion arrivals (the largest in the world) and Asia's was 1.402
billion in 2009, Asia is expected to become the largest aviation market in the next few years. By
2030, Asia's passenger traffic is expected to exceed 4.88 billion, in contrast to 2.367 billion
projected for the U.S., according to IATA's Airport Development Supplement published in 2012.
Southeast Asia already has a high LCC penetration rate --the LCC capacity share of total seats is
approximately 56-57% --but the percentage for North Asia is stunningly low at 9%. "That's a
91% potential upside for us," says Jetstar's Alistair Hartley. (CNN, 2013) Both Tiger Airways and
AirAsia are expanding their routes at a faster rate to compete with each othe
r. Compare to both in terms of financial aspects AirAsia is doing well. AirAsia is named as the
Best Low-Cost Airline in Asia at the 2013 World Airline Awards by Skytrax in 2013. Tiger
Airways stands in the 6th position. (Worldairlineawards, 2012).
Tony Fernandes, AirAsia Group's CEO, believes tight control on costs and ties with one plane
maker will help his group retain its advantage. One aircraft the A320. Lowest cost airline in the
world. That's the key. Lowest cost always wins," Fernandes tweeted on Friday. (Reuters, Mar
2013). Due to the growing number of middle class and higher income levels in Asia with rapidly
developing economic and building on its infrastructure has made more LCCs to operate in Asia
in larger numbers; this has made more Expat to travel a lot to their home town quite frequently. I
myself prefer to travel in LCCs that comes half the price compare to the traditional airlines.
When we look into Europe 10 years back when Ryan air and EasyJet was competing with each
other for the customers is what happening here with AirAsia and Tiger Airways now. Compare
to Europe LCCs in Asia had started bit slow but it has grown at t tremendous pace that reflects
on the records that more airlines are coming up to start their operations in Asia and invest down
here on seeing the market potential. LCCs now account for 30% of seat capacity at Singapore,
compared to virtually zero a decade ago. The LCC growth in Singapore has been driven
primarily by Tiger and Jetstar Asia, which launched services in 2004. (A third Singapore-based
LCC, Valuair, also launched in 2004 but was acquired by Jetstar Asia in 2005). AirAsia also has
been able to build up a similarly sized presence in Singapore without having a local affiliate or
operating certificate. The group currently serves Singapore from 13 destinations using four of its
subsidiaries or affiliates Malaysia-based AirAsia Berhad, Indonesia AirAsia, Thai AirAsia and

AirAsia Philippines. (CAPA, 2013). On concluding I just like to say that LCC got a highpotential
in global market and Asia as shown that it is growing at a tremendous pace, so anyone want to
sustain its growth they need to make sure they provide the bestservice to the passengers at a
cheaper fare but not comprising on safety standards. From the overall survey and thefinancial
status of both the airlines it is always good to improve in the weaker areas and move forward
towards the success for the future.

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