Sunday, November 28, 2010

Tiger Airways signs Manila partnership

Tiger Airways signs Manila partnership

THE Singapore Airlines-backed Tiger Airways is likely to pursue further marketing agreements with carriers in the Asian region.

This week it struck a landmark deal with the Manila-based South East Asian Airlines (SEAIR).

The deal with SEAIR is the first following Tiger's announcement earlier this month of plans to establish a new business unit built around its fast-growing website,

Tiger wants to make a leading online travel portal across the Asia-Pacific region.

Tiger Airways chief executive Tony Davis said in an interview with The Australian during his visit to Melbourne this week that the alliance could provide a blueprint for other similar deals.

He wants those deals to help Tiger drive more business through its website in a bid to meet its goal to dramatically increase ancillary or non-ticket revenues.

Related Coverage
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Airlines join to form new budget carrier The Australian, 3 Aug 2010
Tiger to start Thai low-cost airline The Australian, 2 Aug 2010
New Thai Tiger to fight Jetstar Herald Sun, 2 Aug 2010

Tiger already draws about 20 per cent of its revenue from ancillaries and Mr Davis wants the airline to lift that figure to about one-third.

"We are generating a significant amount of our profitability through the website and want to further leverage the distribution power of the site," he said.

"Things we sell through our website enhance our profitability."

Under the deal, SEAIR will become the first Tiger Airways Partner Airline in the region through a marketing arrangement with that will see the Manila-based carrier offer jet services between Clark International Airport in The Philippines and Singapore using an initial fleet of two Airbus aircraft leased from Tiger.

Additional routes operated by SEAIR using these new jet aircraft will be added to the program over the coming months.

SEAIR is the Philippines' second-oldest airline and is the only airline based at Clark, which used to house the biggest American military base outside the US.

As part of the deal, Tiger will begin accepting payment in Philippine pesos for the first time on its website.

"This deal is about leveraging our website and distributing products," Mr Davis said.

"We are open to further deals. This is our first deal of this kind so we want to see how it goes.

"But all going well, I don't see why we wouldn't look at similar agreements." is the biggest airline website in Singapore with a market share of about 25 per cent.

Last month, Tiger introduced a membership club called Stripes to give members access before others to special promotions across the Tiger network, including international flights by Tiger Airways Singapore and domestic flights by Tiger Airways Australia. It hopes the club will help further drive traffic through the website.

"Stripes was one of the reasons we moved to create the website as a separate profit centre for the airline," Mr Davis said.

While he declined to give numbers, he said the take-up of membership was already "above expectations".

"Aussie membership is outpacing Asia by 2-1," he said.

The introduction of Stripes followed complaints by customers that cheap tickets were previously often gone by the time they got online.

Mr Davis also reiterated that Tiger was looking at other ways to boost ancillary revenues. "There are more things you can do inflight," he said.

"We've joked that it is the best shopping mall in Australia at 30,000 feet because you have a very captive audience."

Earlier this month, Tiger announced a first-half net profit of $S16 million ($12.39m), up from a loss of $S8.3m a year ago.

It was the fourth consecutive profitable quarter since the airline listed in Singapore last year.

The results included a second-quarter profit of $S14.1m as traffic increased by 25per cent, but were slightly below analysts' expectations.

With its small fleet, the airline has been hit hard by cancellations over the past three months because of weather and the unavailability of aircraft. But Mr Davis said service levels were "returning to normal".

Tiger Airways is planning to double its fleet over the next two years, which he said would improve the reliability of services.

Having successfully grown the airline to 21 aircraft over the past six years, the group plans to grow to 43 aircraft by March 2013. Earlier this month, Tiger started flying from Avalon airport near Geelong to nine destinations: Rockhampton, Mackay, Brisbane, Gold Coast, Sydney, Canberra, Alice Springs, Adelaide and Perth.

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