Back from the dead: Tiger takes low-cost on-time lead

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October 27, 2015

Tigerair’s spectacular resurrection from death’s doorway four years ago has marked a symbolic milestone with its management able to boast for the first time that the airline that once had Australia’s worst reputation for unreliability is now the low-cost leader for on-time performance.

“A Tiger can change its stripes,” chief executive Rob Sharp says in an acknowledgement of just how bad the carrier’s reputation used to be. “We made a promise to Australian consumers that we would listen and we would change.”

The little low-cost airline with just 14 planes compared with competitor Jetstar’s 70 has been “re-engineered” in almost every detail since it was grounded in 2011 for serious safety breaches.

After renaming itself in 2013, Tigerair has been ticking off the black marks that used to turn flyers away: a new check-in system, where mobile staff with iPads greet customers around the check-in area to speed up the process, a new website and booking system, new staff uniforms and a new staff attitude.

But it’s OTP [on-time performance] that will speak loudest to leisure and business flyers who had been avoiding Tiger.

“Year-to-date, our OTP has averaged 84% and our key competitor [Jetstar] 79% — we’ve got a 5% improvement over our key competitor,” says Sharp in an interview with AirlineRatings.com.

As recently as four months ago, it was the other way around. In the year to June, Tiger had just 79.3 per cent of flights arriving on time compared with Jetstar’s 82 per cent.

In fact, Tiger has improved OTP even more in the latest month analysed by the Bureau of Transport and Regional Economics: 86.4 per cent, compared with Jetstars 83.1 per cent and market leader Qantas on 91.8 per cent.

“Historically people have associated Tiger with cancellations and we’ve put a huge effort into that,” says Sharp. “We’re now sitting at one of the lowest cancellation rates in the industry at 1%.  Year-to-date, our key competitor has been 2.5% — we’re some 60% lower. We’re twice as reliable as our key competitor.

“Cancellations are a major issue for consumers. They’re wanting to go to the football, a wedding, to catch up with friends – it’s really important to them.”

Surprisingly, Sharp says the crackdown on hand luggage announced by both Tigerair and Jetstar a year ago that was slowing down aircraft loading has not been crucial to the turnaround.

Getting its back office in order has been the key.

“From a driver of OTP perspective, two big things have contributed,” he says. “One is infrastructure. We had quite a lengthy negotiation with Sydney Airport last year and that was actually to gain infrastructure access.

“And that saw an immediate improvement in our first wave [morning] departures. If you can get your first wave aircraft departures away, you’ve got a much better chance of keeping your network running [on time].

“The other thing was a lot of operational efficiencies and improvements. This was around more data, more visibility within the business, actually setting a strategic priority for on-time performance.”

Sharp also reveals that the airline will have to make a decision about its fleet – whether to continue with its A320s or switch to Boeing 737s.

That is a key consideration for customers as the 737 has slightly narrower seats compared with the A320 – 43 centimetres [17 inches] versus 46 cms [18 inches].

However, it’s costly for the Virgin Australia group to service and maintain just 14 A320s when Virgin has 81 737s.

“Clearly it’s an important decision for us and it’s one that we’re working through,” Sharp says. “We have Boeing and Airbus and everyone touting for our business, but that’s going to take a little while before we come out with anything.

“We haven’t made a decision at this point and when we do we’ll announce it to the market. We don’t have a timeline on it.”