Porters Five Forces of Tiger Airlines
Introduction: Tiger Airways is a low cost airline started its operations in Australia in November 2007 with its head office at Melbourne Tullamarine Airport. Tiger Airways offers cheap domestic flights to 12 destinations within Australia and expanding its operations by increasing its workforce, investment and started international flights. Tiger Airways ticket cost overs the seat booking and 1 5kg of check-in luggage and offers upgrades on luggage that is paid on top of ticket price. No food or drink is included in the ticket price however in-flight service offers food and drinks for sale.
Generally these prices are expensive for budget conscious travellers. Analysis of Porter’s Five Forces on Tiger Airlines: [pic] The Justification is provided in the form of a table. I Force I Power I ICustomers I High IJustification I Airline industries are customer driven thus face high competition emphasising I I power of customers: Cheap airfares offered by competitors I bargaining I Bargaining power of individual travellers where airfares become part of their I I I income. Higher the airfare then they will look for cheap fares.
I Packages or deals available in the market. I IT plays major role for easy access for upto date nformation to the customers I I I ISuppliers airline industries but their effects I I I viz e-ticketing. | 1) Although suppliers are few suppliers in lare high like: are based on market I If a model is phased outl I I Fuel suppliers I Food suppliers I Merchandise suppliers I Aircraft Suppliers I Except for Aircraft suppliers, terms for other suppliers I conditions. 12) High replacement costs: Replacing aircraft is high.
I then replacement costs with newer model is huge – advanced technology, training I I and engineers costs etc. I I Existing competitors I High Qantas. I Threat from existing competitors depends on: I Rivalry is very high especially from Virgin, Jetstar and I High fixed costs made up of finance cost, hire purchase and staff costs. always look for cheap price, best customer services I Customers I Promotional products and creative advertising to same destinations. I I New entrants I Low depends on: I The possible threat from new entrants I Customer’s loyalty brand.
If Tiger Airlines do not have brand loyalty then I threat of new entrants is very high. I Airline industries are very expensive and needs huge start-up capital like I I I Setting up offices, buying and leasing aircraft’s, hiring pilots, air teward’s I I and affordable pricing I I letc. Thus threat is low I Low switching costs -availability of competitor prices I Online ticketing access Istrict government regulations – very hard for new entrants I I Substitute products I High I Different packages available in the market play significant role in attracting I I lcustomers.
Following factors can be applied: I Tiger Airlines faces huge threat and stiff competition of substitute products I I I from Virgin and Jetstar. I People using own car for inter state travel I Performance of substitute product effect the decision making- accuracy of take I I erformance. I off time, staffs services, aircraft I Relative price – competitors price and timing – Booking dates and travels. If I I premium airlines offer similar price then customer will switch. Conclusion: Tiger Airlines is emerging player in domestic market in Australia.
Tiger adopts differentiation generic strategy to gain a competitive advantage amongst its competitors by offering great deals. But it is also facing stiff competition from Virgin and Jetstar on price war. There is growing dissatisfaction from customers on Tiger on i) Accuracy of take off time it) Staff services iii) Baggage handling v) Cancellation of flights without proper notice Tiger needs to take proper care on these complaints and introduce offensive strategies-internal and external to survive in this competitive market otherwise customers in turn shift to competitor products in no time.