Singapore Airlines has learnt the painful way that major investments must be closely monitored hands-on. It is bad news for budget travellers but safety issues should prevail for everyone's good.
The pathetic quality of service and business ethics (or the lack of it) that plague Tiger Airways are simply unheard of in recent time. It is like between the earth and sky from the image and league that SIA belongs.
Allowing autonomy could be very costly especially when the executives and management do not deliver sterling quality and great customer service. Read : Tony Davis. Tiger's image and brand name is as good as gone in Australia.
The only saving grace to cut losses from Tiger's exit of the Aussie market is an earlier alliance forged between SIA and Virgin that will hopefully help to make up for the business losses and opportunities to keep Qantas on its toes for the lucrative trans-Pacific route.
Quotes :
Singapore Airlines has always presented itself as an arm’s-length, passive investor in Tiger Airways. It would appear that is no longer the case. The grounding of Tiger’s Australian fleet until at least the end of this month has ignited a flurry of activity within the boardroom of its Singapore parent, culminating in the departure of its Australian chief executive, Crawford Rix, and the appointment of the parent company’s chief executive, Tony Davis, as the local CEO – presumably on the basis that he was responsible for the turmoil and therefore it is up to him to fix it.
Singapore Airlines, which holds just under 33 per cent of Tiger’s capital, and the Singapore government’s investment arm, Temasek Holdings, which controls about 7.5 per cent, would have been embarrassed and aggrieved at the mess Tiger has got itself into in Australia. It appears they have been spurred into taking aggressive action to wrest control of the boardroom and the situation. Apart from the financial and brand damage Tiger has experienced, Tiger’s inexplicable decision to defy the public warnings of Australian Competition and Consumer Commission chair Graeme Samuel and continue to take bookings, until it finally backed down under duress on Tuesday, would have caused consternation in Singapore, where defiance of government authorities isn’t usual.
Qantas, through its Jetstar brand, and Virgin Australia could also be expected to seek to put a lot of pressure on Tiger if it is allowed to resume services, in the knowledge that an already loss-making business will be even more vulnerable in its damaged state. Tiger is likely to need a lot of time and capital if it is to re-establish itself and become a viable competitor in this market. Tiger’s Asian operations are profitable and growing and it may make more sense for the reshaped board and senior management to abandon the Australian market and redeploy the ten planes in the local fleet elsewhere.
Tiger Airways faces a tough task in coming back from its month-long grounding, Virgin Group CEO Sir Richard Branson says.
The Civil Aviation Safety Authority (CASA) has decided to extend Tiger Airways Australia's initial week-long grounding, which had been due to end on Saturday, until August 1.
http://www.businessspectator.com.au/
Qantas should not be complacent and absorb some lessons from the Tiger episode. It is high time for bystanding "winning" airlines to take the cue and try to iron out its own internal technical, organisation, services and security lapses.
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