Tuesday, October 26, 2010

The battle between AirAsia and Tiger Airways

The verbal spat between the two Tonys in the aviation sector reminds some people of how Lim Keng Yaik had to fight for the survival of palm oil back in the 1980s.

Then it was Lim against the Western world, and at stake was Malaysia's palm oil industry.

Lim succeeded and today Malaysia is one of the biggest suppliers of palm oil globally.

Last week the clash was between Tony and Tony - Fernandes, the boss of AirAsia; and Tony Davis, CEO of Singapore's Tiger Airways.

Both helm award-wining airlines.

AirAsia has won numerous awards and so has Fernandes. The airline has a wide reach, has operations in Thailand via Thai AirAsia and in Indonesia via Indonesia AirAsia. Its sister air?line, AirAsia X, is Asia's first long-haul low-cost carrier.

Tiger Airways is partly owned by Singapore Airlines. Based in Singapore, it flies to many destinations within Asia. Last Tuesday it was named the Centre for Asia Pacific Aviation's Low Cost Airline of the Year. Tiger Airways also has operations in Australia. It is about to seal a deal to set up Thai Tiger Airways, a low-cost airline in Thailand.

The new venture is the thing that triggered the spat.

Fernandes described Tiger Airways as an "odd" choice busi?ness ally to Thai Airways. He said this in an interview with the Bangkok Post. He was scep?tical about having Westerners running any successful Asia-based business, referring to some of Tiger Airways' man?agement.

"We're Asians, not a bunch of white guys running the airline," he said, explaining that Thai AirAsia was run by Thai man?agement who know the local and Asian markets. Tiger Airways had also recently can?celled numerous flights that left thousands of passengers stranded due to manpower shortage and aircraft fault.

Tiger Airways in an imme?diate reaction said it was a "racist remark" made by Fernandes.

To rub salt into the wound, Fernandes also described Tiger Airways as "a tiny carrier".

But Davis seemed unper?turbed and he declared on Wednesday that Tiger aims to be among the top three global airlines.

This spat stems from com?petition. A new player in the Thai air market would mean more competition for Thai AirAsia.

To tease Tiger Airway for its recent flight cancellations, AirAsia ran full-page adver?tisements in Singapore news?papers with the tag line: "If Tigers were meant to fly, they would be born with wings". The ads also featured a drawing of a tiger cub crying.

But AirAsia regional head of commercial Kathleen Tan denies the ads had anything to do with Thai Tiger.

"We thought it's a great time to do things that are a little bit fun; a little bit wicked. It's not meant as a one-up, we're not attacking anyone, we were just being clever and witty to assert our marketing leadership. We love a good fight on the mar?keting front once in a while," she said.

Whatever the campaign may be for, it did not stop Davis from saying, "It's no wonder some of our competitors are getting so rattled".

Thailand is a big tourism market. People from all over the world visit Bangkok and many other tourist destinations there so adding another player would keep the incumbents on their toes. Erosion of market share is to be expected.

Fernandes understands that and there is also nothing to stop Davis from entering the market since Thai Airways likes Tiger Airways.

These two Tonys may be tak?ing a swipe at each other and coming up with all kinds of tac?tics to discredit each other but for the consumer, competition is great. Had AirAsia not set up operations in Malaysia we would probably still be paying premium airfares to travel and in the same vein, more budget airlines in Asia simply means even more people can fly.

Whatever the motivation of these rivals, what matters to the traveller is safety, good service, low airfares, more baggage room and comfort. The fiercer the fight, hopefully, the lower the airfares.

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