By Martin Kelly, Editor, Travel Trends
Tiger Airways is full of it. News, I mean. Just yesterday Tiger announced it was stopping all Darwin flights from October 26. This came a couple of months after it withdrew from Newcastle. As usual, the carrier cited external rather than internal factors. Chief Operating Officer, Steve Burns, was reported in Travel Daily as saying that Darwin was its highest cost port. "It is just incompatible for a true low fare airline to operate to such a high cost destination," he said.
So why did Tiger fly there in the first place? Sure, fuel prices have increased but no mention in the rhetoric of an increase in airport fees. Therefore the real reason would appear to be that Tiger has badly misjudged demand, not once but twice – Newcastle and Darwin.
Mistakes such as these are a long way from the big statements made by CEO Tony Davis when Tiger first came to Australia, about how the Asian low-cost carrier would fight for the little guy, taking on the goliaths of Australian aviation: Qantas, Jetstar and Virgin Blue. The message from Davis was that Australians were getting ripped off and that Tiger would bring in lower fares.
This very basic PR strategy got some short-term coverage but was diluted by the fact that low-cost carriers were nothing new in this market, unlike Asia. It’s a ploy that’s been used before in Australia, and to much greater effect, by the likes of Brian Grey (Compass), Virgin Blue and Jetstar.
As a PR message, it also left Tiger with few places to go. Tiger is cheap, what else? Oh, you’re getting picked on. Davis then started complaining about the raw deal Tiger was getting from Qantas, which for example refused to provide ground-handling for its rival at Alice Springs. Not much public sympathy there because the Qantas stand seemed to make sense – why help a competitor? Some in the industry also started wondering how well-prepared Tiger actually was for this market, where Qantas has been fighting low-cost incursions since the early 1990s.
Now serious questions have to be asked about Tiger’s network strategy, which revolves around flying to 10 mostly smaller destinations from Melbourne. Certainly, its decision not to service Sydney or Brisbane is looking flawed, while there must be some pretty nervous staff working in leisure ports such as Mackay, Rockhampton, Launceston and Alice Springs. The next six months may well determine whether the carrier has a long term future in this market. Whatever happens, Tiger needs to take responsibility for the outcome.
Travel Trends: August 1, 2008