Tiger eyes battle for market share
In one of his first interviews since he was named Tiger's boss, the former Qantas executive said the key to turning around the airline would be "getting the basics right", such as ensuring planes arrived and departed on time.
Mr Sharp, who started on Wednesday, faces a big job stemming losses of $60 million a year and repairing the damage to Tiger's brand from the grounding of its fleet in 2011 due to safety concerns.
"There is an opportunity here to actually move the brand further up from those dark days," he said. "The key will be getting those basics right ... that will go a long way to changing the perception." Morgan Stanley analysts believe the biggest challenge for Tiger will be to restore its reputation.
Mr Sharp said there was "no silver bullet" to repairing the brand.
Last week the competition regulator cleared the way for Virgin to take a controlling stake in Tiger after deciding the ultra-budget airline would be "highly likely" to pull out of Australia without the deal. The deal is central to the plans of Virgin to set up a dual-branded airline group, with a lower cost base than Qantas and Jetstar.
Mr Sharp expects Tiger's key rival, Jetstar, to respond aggressively to his plans to boost the size of its fleet from 11 A320 aircraft to at least 23 within the next five years.
"I am certainly wanting to fight to cement a position for Tiger in the market place, so that will mean reasonably aggressive competition," he said. "It will be an extremely competitive market at that budget end for a few years."
Jetstar has about 22 per cent of the domestic market, which dwarfs Tiger's share of about 4 per cent.
Analysts have speculated that Tiger will redeploy the bulk of its capacity from the so-called "golden triangle" of Melbourne-Sydney-Brisbane to routes focused more on leisure travel. But Mr Sharp played down the prospect of a large shift in the routes Tiger's planes fly.
Mr Sharp expected Tiger to begin reducing its losses and cash burn next financial year, but it would take two years for the business to be in a position where "it is not a negative drain".
Frequently Asked Questions about this Article…
Tiger Australia's new chief executive is Rob Sharp, a former Qantas executive who started on Wednesday. His immediate priorities are getting the basics right — for example, making sure planes arrive and depart on time — as part of a broader plan to turn the airline around and rebuild its brand.
Rob Sharp expects the budget end of the market to be "extremely competitive" over the next two years. Tiger plans to boost its fleet and "fight to cement a position" in the marketplace, but he also expects Jetstar to respond aggressively given Jetstar's much larger presence in the domestic market.
Tiger has been suffering annual losses of about $60 million a year. Mr Sharp expects the airline to begin reducing losses and cash burn in the next financial year, and he estimates it will take around two years for the business to reach a point where "it is not a negative drain."
Tiger plans to expand its fleet from 11 A320 aircraft to at least 23 within the next five years. The CEO sees fleet growth as a way to boost Tiger's presence and compete for market share, though he expects heightened competition from rivals as a result.
The competition regulator recently cleared the way for Virgin to take a controlling stake in Tiger, saying Tiger would be "highly likely" to pull out of Australia without the deal. The acquisition is central to Virgin's plan to create a dual‑branded airline group with a lower cost base than Qantas and Jetstar.
Restoring Tiger's reputation is acknowledged as a major challenge. Mr Sharp says there is "no silver bullet" but believes focusing on operational basics will help change perceptions. Morgan Stanley analysts also note reputation repair is the biggest challenge; the CEO hopes progress will be evident as losses are reduced over the next couple of years.
While analysts have speculated that Tiger might redeploy capacity toward leisure routes and away from the Melbourne‑Sydney‑Brisbane "golden triangle," Mr Sharp has played down the prospect of a large shift in the routes Tiger operates.
According to the article, Jetstar holds about 22% of the domestic market, which significantly outweighs Tiger's share of roughly 4%.
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