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A report in The Sydney Morning Herald says that there is no doubt its arrival will be welcome news to leisure travellers but will new domestic carrier Tiger Airways be accepted by business travellers?
Will its internet-only sales strategy and non-flexible flights make it a no-go for corporate flyers or will the lure of cheap fares win out?
Tiger believes it will pick up business traffic on its Australian services, which are due to start in November. “Our experience on our services out of Singapore has shown that we have a healthy mix of business and holiday travellers,” a spokesman says.
“Many businesses travellers, especially those in small business, are on the lookout for reliable service and value for money airfares.”
However, aviation consultant Ian Thomas believes the carrier will be lucky to get 5 per cent of the business market in its first two years. “It’s a slow process, as Virgin [Blue] has found,” says Thomas, of CAPA Consulting. “Virgin hasn’t been able to lock them [business travellers] in but they have been able to grab a share of the ‘best fare of the day’ market.”
“There is some scope there for a low-priced operator like Tiger to come into that market,” Thomas says. Many business travellers seeking the best fare of the day use online retailers, such as Webjet, which provide a comparison of all available fares on a given day
However, Tiger is refusing to work with retailers, much to Webjet’s ire. Tiger is also shunning travel management companies (TMCs), although Rob Dell, president of the Association of Travel Management Companies, believes this could change once it is established as a leisure carrier.
“Virgin Blue came into this market with a strong leisure strategy and over time, partly due to the collapse of Ansett, they identified opportunities with business travellers,” Dell says.
“They changed their distribution strategy to allow TMCs to book their services and became active in building loyalty with corporates.”
“I would be surprised if Tiger does not follow that same direction.”
Dell says Tiger’s immediate appeal to business travellers will depend on routes and fare types.
“As it builds its fleet and network, I would say that they would pick up business travellers but it depends on whether they adopt a true low-cost model or not.
“Business travellers are generally worried about their ability to change flights.”
Dell agrees with Thomas that even if Tiger actively seeks business travellers, it will take a long time to secure a healthy slice of the market.
“Even after five years, Virgin still has a long way to go to achieve the penetration of the corporate market that they would like,” he says.
“If Tiger comes in and offers $79 fares across the board, it is not necessarily going to turn on the business travellers, because of contractual arrangements they have with other companies.”
Report by The Mole and The Sydney Morning Herald
John Alwyn-Jones
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