Low Cost Carriers (LCC) Tiger Airways’ Marketing Strategy

secondary Cost Carriers (LCC) tiger tonal patternways Marketing StrategyExecutive SummarySince the late of last century, the air exemplar of menial hail skyway represented by federationwest Airlines has been spreading all over the world, has influence and changed the framework and nurture of the world songway pains.This report is the analysis of the youngest airlines companies of Low Cost Carriers (LCC) tiger Airwayss commercializeng strategy. Firstly, it is focused on the macro environmental factors affecting Tiger Airways. Next, it analyzes the competitors including direct and substantiative competitors to point out the combative service of Tiger Airways. Finally, this report is focused on the shopping center competence analysis of Tiger Airways.1. IntroductionThe low cost toter is an airline that offers generally low fares in exchange for eliminating more traditional passenger run. The concept originated in the unite States and subsequently spread to much of t he rest of the world. The term originated within the airline effort referring to airlines with a lower operating cost structure than their competitors. The first successful low cost carrier was Pacific Southwest Airlines in the United States, which pi iodineered the concept in 1949, then this concept has been incorrectly given to Southwest Airlines which began service in 1971 and has been profitable every year since 1973.1Today, the low cost carrier model is applicable worldwide. One of the famous and successful airlines is Tiger Airways.Tiger Airways Private Limited is a low-cost airline which set up their central office in capital of capital of capital of Singapores Changi International Airport. It is operated by one of the premium airlines in the world (Singapore Airline). The parent company is Tiger Aviation Private Limited that consists of The Tiger Singapore and Tiger Australia, Incheon Tiger Airways with slogan Get The Real Deal. The company was established from December 20 03 to September 15, the 2004 maiden voyage.2 It is currently the largest low cost airline operating in Singapore in terms of the amount passengers.Tiger Airways is Asia Pacifics true low fare airline. It offers the lowest fares of passenger safety and convenience of air travel. Tiger Airways from Singapore in September 2004 brought in deuce aircrafts in its fleet, the network of three routes. In the four years of operation, the operation of Tiger Airways from Singapore and Melbourne bases, base and third-party action in Adelaide in early 2009.Tiger Airways currently fly to over 25 destinations in nine countries in Asia. In moreover one year (2006), the airline served 1.2 million passengers it is a growth of seventy quint portion compared to the previous year. 3 Through the internet (the public and agents), it accounts for seventy five percent of Tiger Airways seats sold. In other words, passenger book from war cry centers and airport outlets accounts for twenty five percent. Thi s indicates that the low cost carrier (LCC) model uses online merchandise and engine room to reduce operating costs is working. 42. Macro-Environmental analysis2.1 TechnologySingapore is a technology driven country. From wireless internet to escalators, advanced technology is found everywhere in the country. People use technology here for the better quality of their lives. Under the Infocomm cultivation Authority of Singapore (IDA), emailprotected is a political science initiative to build Singapores infocomm infrastructure. Working through IDAs call-for-collaboration, SingTel, QMax and iCell deploy a municipal wireless network throughout Singapore. Internet establish booking adopted by Tiger Airways is one of the technological benefits.E-ticketing is the fastest way of booking tickets in the 21st century. Tiger Airways attracts most of its customers online.In addition, Tiger Airways operations are based on graduate(prenominal)-technology, and the company is constantly striving to bring customers the best services available in the industry in terms of operational efficiency, reliability and safety.According to industry standards, the on-time departure is the one that departs from the designated bay less than 15 minutes from the scheduled departure time.5 That authority they are not only doing their every effort to secure that their planes leave on time (and get customers in that location on time), but in like manner remain in tiptop condition as well, thus, customers will evermore get the same great experience that have come to expect, every time.2.2 Demographic and economicThe population in Singapore has increased and the visitors coming into Singapore has in like manner increased. According to government statistics, the population of Singapore was 4.84 million in 2008, of whom 3.64 million were Singaporean citizens and permanent residents.6 Singapore has one of the world largest GDP growths, which means that the people in Singapore are growing rich er with higher rate of success.Singapore has a highly developed market which has historically revolved nigh extensive exports trade, in other words an export driven economy colossally dependant on export of goods to other countries.Along with Hong Kong, Taiwan and South Korea, Singapore is one of the Four Asian Tigers countries. The economy depends heavily on exports and refining imported goods, especially in manufacturing. Moreover, Singapore is also a general travel destination making tourism one of its largest industries. There were about 7.8 million tourers visited Singapore in 2006.7 It has also indirectly resulted in booming development of aviation industry. Singapore gets its revenue mainly through tourism and most of people coming from different nearby countries prefer these types of airline for their short travel.2.3 politicalPolitical forces are one of the most important factors for budget or low cost airlines. Forty nine percent of the shares of Tiger Airways are po ssess by Singapore Airlines (SIA). The chairman of the Singapore airlines belongs to the advisory council of the president which gives an added advantage to expand their network relationships with other airlines and countries. Singapore has a successful and transparent market economy. Government linked companies are dominant in heterogeneous sectors of the local economy, such as utilities, media, and public transport.Singapore has uniformly been rated as the least depress country in Asia and among the worlds 10 most free from corruption by Transparency International.8Apart from that, the Economic Development Board (EDB) together with the Information Development Authority of Singapore (IDA) aim to make Singapore the regions major center. Their purpose is to promote Singapore as a compelling attitude for companies across the entire industry value chain creating a self-reinforcing, inter-dependent ecosystem that will continuously attract talent, capital, ideas, and enterprises to c reate multinational products and services from Singapore. 92.4 CulturalSingapore is a mixture of an ethnic Malay population with a Chinese majority, as well as Indian and Arab immigrants. There also exist significant Eurasiatic and Peranakan who are known also as Straits Chinese communities. Around 78,000 people work in the media in Singapore, including publishing, music, broadcasting, print, film, digital and IT media sectors. The industry contributed 1.56% to Singapores gross house servant product (GDP) in 2001 with an annual turnover of S$10 billion. The industry grew at an average rate of 7.7% annually from 1990 to 2000, and the government seeks to increase its GDP role to three percent by 2012.10Singaporean cuisine is an example of diversity and cultural diffusion, with influences from Chinese, Indian, Malay and Tamil cuisine. In Singapores hawker centres, traditionally Malay hawker stalls selling halal food may serve halal versions of traditionally Tamil food. Chinese food stalls may introduce autochthonous Malay ingredients or cooking techniques. This continues to make the cuisine of Singapore a significant cultural attraction. That is one of reasons why Singapore is a popular tourist country.3. Competitive analysisThe cost of competition in airline industry is high. Tiger Airways, due to its low cost nature, has cut throat competition with the touch on airlines like Virgin Blue and Jetstar. The industry growth is average for switching between airline companies which brings more convenience to the customers. The fixed cost is high for the Tiger Airlines and there is opportunity for it to sell unsold seats cheaply which results in pricing wars between the rivals. Tiger Airways competes in terms of price technology, customer services, in-flight entertainments and many more areas.3.1 Comparison of Tiger Airways with Direct CompetitorsAir Asia Air Asia is a low cost airline based in Kuala Lumpur, Malaysia. This is the first airline in the region provi ding ticketless travel and implementing comprehensive unassigned seats. With the domestic and international flight reservation Air Asia operates 656 flights daily, 102 routes to 57 destinations in 12 countries.11Destinations Covered Air Asia covers lambert seven destinations as Tiger Airways which covers only nineteen destinations. It covers three times more than Tiger Airways.Cost AnalysisAir Asia is near thirty percent more expensive as compared to Tiger Airways. For example, Tiger Airways ticket to Phuket is seventy two SGD whereas Air Asia charges one snow and ten SGD. Air Asia charges one hundred and seventy SGD to capital of Thailand whereas Tiger Airways charges one hundred and thirty SGD.Baggage AllowanceTiger Airways allows a maximum of fifteen Kg check in luggage and charges 25 SGD whereas Air Asia charges 7.50 SGD.Air India ExpressAir India express is Indias first international airline that offers great value for money and provides comfortable connectivity in the shor t range routes. Air India Express and Tiger Airways both connect India to Singapore and vice versa through Chennai.12Destinations Covered Air India covers ten international destinations whereas Tiger Airways covers nineteen destinations.Cost AnalysisAir India Express is more expensive than Tiger Airways, for example, Air India charges 306 SGD to Chennai whereas Tiger Airways charges 269 SGD to Chennai.Baggage AllowanceAir India allows a certain limit of free of charge baggage whereas Tiger Airways only allows seven Kg of free hand baggage.Lion AirLion Air is Indonesias largest private carrier and Asias first hybrid carrier which offers both economy and business class seating. It operates scheduled passenger services on an extensive domestic network from Jakarta to forty destinations with 210 daily flights as of May 2008.13Destinations Covered Lion Air covers 7 international destinations whereas Tiger Airways covers 19 destinations.Cost AnalysisLion Airways is a little cheaper as com pared to Tiger Airways. For example, Lion Airways charges 89 SGD for a ticket to Ho Chi Minh City whereas tiger airways charges 102 SGD.Baggage allowanceFree baggage allowance by Lion airs is 20kilos for economy class and 30kilos for business class whereas tiger allows only 7 kilos.3.2 Tiger airways facing Indirect CompetitorsIndirect competition includes trains and buses as other means of transport to reach a destination. Land transport that includes trains and buses are the indirect competition to air travel because they permit far greater capacity and absolute frequency of service which is not possible by aircraft and their schedules are less interrupt by bad weather than airlines.Tiger Airways covers destinations such as Kuala Lumpur, Bangkok, Phuket and other destinations where are also accessible through other means of conveyance of titles such as trains and buses. Trains and buses hence are an indirect competition because of various reasons, such as time, price, and luggag e allowed to carry, etc,. For example1. Tiger Airways has daily flights to Kuala Lumpur and Bangkok from Singapore but the frequency of buses from Singapore to Kuala Lumpur are ten times more.2. Tiger Airways charges 59 SGD for a one way ticket from Singapore to Kuala Lumpur whereas the bus charges 33 SGD. However there are few buses such as Transnational Express which costs 15 SGD. Therefore, the ticket price varies depending on the type of bus passengers choose and the target from where passengers board the bus. A slower, costlier, but more comfortable way to travel to Kuala Lumpur, Malaysia, would be by rail. To Kuala Lumpur there are two day time trains and one over night sleeper train daily. The charges vary depending on the seat passengers choose. For instance, if passengers choose a first class seat it will cost approximately 28 SGD whereas a second class seat would cost around 14 SGD.3. Tiger Airways charges 131 SGD for a one way ticket from Singapore to Bangkok and the tra in charges approximately 82 SGD for second class sleeper. However there is no direct train from Singapore to Bangkok. Therefore, passengers have to change minimum two to three trains further down to Bangkok. Obviously, convenience of travel is a known fact as traveling by air is the fastest means of transportation as compared to any other means. Basically for an airlines industry the main substitutes are travelling by train, bus or car to any desired destination. The various factors affecting these substitutes are money, convenience and time.However Tiger Airlines being price sensitive lures many travelers away from these substitutes. Thus, the cost is the key consideration for many travelers.The competitive possession of tiger airlines is affected by the bargaining power of the buyers. The potential buyers can put a big money of pressure on airline business which further affects its price, volume and profit margin. Tiger Airlines flying from the Gold Coast airport is competing for the same customer, which in turn is strengthening the buying power.A lot of buyers are attracted to tiger airlines as it main strength is its price.The threaten route for Tiger Airlines in the future is determined by the existing barriers to submission. Cost of entry is the biggest barrier. The cost of buying and leasing aircrafts, safety and security measures, customer services and man power is high. Tiger Airways itself a new entrant in the Airline industry has added a lot to the competition. This means a major constraint on the profit margin for the Airline industry.4. Core Competences AnalysisIn order to assemble the visitors on the Asia-Pacific region, Tiger Airways relies on low fares and the reliable regional air services. That is a true low fare airline which operates on three customer-focused core strategiesFirst of all, market stimulation. Tiger Airlines creates opportunities for new travelers and empowering budget conscious people to fly more ofttimes by making travel affordable with its consistent low fares. Tiger Airlines facilitates its processes of providing good consumer service by online sales services, they provide hotel accommodation for the passengers, car rental and travel insurance benefits to passengers online.Huge response is generated by the consumers through the process of online sales as the number of seats booked online is increasing year after year. Services provided to travelers with benefits like offering them more options in terms of increased capacity in routes. Tiger Airlines is still under process of opening more travel options for the employees.Secondly, Tiger realized the importance of smashed cost control through their operations, so that they can keep our fares consistently low for travelers. Tiger Airways empowers budget conscious people to fly more often by making travel affordable with its consistent low fares. The market share of the airlines has increased due to the low price. Tiger airways offered 100,000 seats at 9.95 for Australian destinations.To book return flights from Melbourne at Mackay at 49.95 per flight and there were no server problems as in the case of Jet star. They charge $30 for clear row seats and $8 for all other seats.Thirdly, capacity utilization maximizes the number of sectors served by their aircraft per day with efficient air traffic planning. Tiger Airways has legal workforces, who work diligently to make the airlines a success. With the increase in the number of phone customers, due to good salesmanship done by the employees working in the call centers, the airline has decided to increase the number of staff in call centers. Generally the tickets are sold online or in airports. After sale services like delivering the purchased ticket at the house of customers adds to its marketing strategy.Moreover, Tiger Airways seeks to act as a good corporate citizen at all times and undertakes contributions and sponsorship programs as part of its partnership with the communit y. For example, it is currently making conscious efforts to conserve wildlife and sponsors the upkeep of Winnie, a white Tiger at the Singapore Zoological Gardens for the purpose of conservation, fostering and recreationTiger Airways business model is based on the success of Ryanair, which uses a very low cost competitive basis, the basis of low fares. It also involves examining every aspect of the business, in an effort to eliminate non-essential costs, but it will not cut any corner of the passenger safety and on time.However, Tiger Airways should be constantly looking for good business opportunities available to the market. For example, one glaring advantage of using YouTube is that it serves 100 million videos per day. No matter what YouTube study (unlicensed, kids falling of skateboards, etc), thats a huge number and there are tremendous opportunities for Tiger Airways to benefit in order to reach such a huge audience for any business opportunities.Changes in technology and m arkets on both a broad and narrow scale are opportunities that Tiger Airways can also utilize. According to Forrester Research, online consumer auction sales will reach US$65 billion by 2010. This is almost one-fifth of all online retail sales. The growth of high speed broadband, and the number of online users, has opened new windows of opportunity for reaching viewers. The aims is to find the most effective internet advertising techniques for making full use of the internets, apace expanding, global marketplace.5. ConclusionBased on above analysis, it can be seen clearly that Tigers success is no accident. It is based on their effective correct marketing strategies and operation performance. Although Tiger Airway is a successful company and has achieved good brand recognition widely, it still has much to improve in order to maintain the momentum it has generated over five years in operation.From the research point of view, with the marketing mix audit, I m able to put and provide suggestions based on the aspects which we feel have to be improved, reinforced, developed to be the most effective. Besides that, I get an obvious view of the marketing strategies employed by Tiger Airways through the macro, competitive and core analysis.Reference1 The History of PSA, http//www.jetpsa.com/index/history.html2 Company Overview, http//www.tigerairways.com/sg/en/about_us.php3 Tiger Airways sees 75% jump in number of passengers. Channel NewsAsia, Janauary 20074 Tiger Airways new Advertising Campaign sees sales up more than 60%, 26 October 2005, http//www.asiatraveltips.com/news05/2610-Advertising.shtml5 On-Time Performance, http//www.tigerairways.com/id/en/on_time_performance.php6 Singapore Statistic, http//www.singstat.gov.sg/stats/keyind.htmlpopnarea.7 Record family As Tourism Exceeds 2006 Targets With S$12.4 Billion Tourism Receipts And 9.7 Million Visitor Arrivals, http//app.stb.gov.sg/asp/new/new03a.asp?id=62438 Transparency International Corruption Perceptions In dex 2006. http//www.transparency.org/policy_research/surveys_indices/cpi. Retrieved on 2007-02-03.9 Singapore Paves the Way as Trusted Global E-Commerce Hub http//www.ida.gov.sg/News%20and%20Events/20060926094702.aspx?getPagetype=2010 Media 21 Transforming Singapore into a Global Media City. Media Development Authority Singapore (PDF). Retrieved on 17/09/0611 AirAsia, http//www.budgetairlineguide.com/airasia12 Air India Express, http//www.airindiaexpress.in/airindiaexpress/Home.asp13 Lion Air, http//w3.lionair.co.id/14 Tiger Airways, http//www.tigerairways.com/sg/15 Cheap Airline Tickets http//www.kipaddotta.com/travel/cheap-airline-tickets.html16 Gross, S./Schroeder, A. (Eds.) Handbook of Low Cost Airlines Strategies, Business Processes and Market Environment, Berlin 2007