Tiger Air Plans to Leverage Cebu Pacific Partnership

With the recent announcement that Cebu Pacific will be purchasing Tigerair Philippines and operating it as a separate carrier, management at Tigerair Philippines have been evaluating ways to leverage the new partnership and create synergies between the two budget carriers. 

Copyright Photo: Angelo Agcamaran/PPSG

Tigerair Philippines revealed last week that it will be unveiling a new marketing campaign in the near future that is reflective of its new owner. The airline revealed that a number of initiatives are currently under review including the enhancement of ancillary services, the upgrade of the Tigerair website to enhance the customer experience, and the development of its route network. 

"Having a new owner does not mean that we stop generating ideas to enhance our customers' experience," said Olive Ramos, President and CEO of Tigerair Philippines. "Leveraging our partnership with Cebu Pacific, I believe that there is much more that we can do."

As a starting point, each carrier will be integrating their routes into each other's respective websites in order to maximise sales and distribution opportunities for all routes of both carriers. That means passengers will eventually be able to book Tigerair flights through the Cebu Pacific website while Cebu Pacific flights will also be made available through the Tigerair website. Work is now ongoing to upgrade each carrier's website to facilitate the cross booking of flights. 

“Our intention is to grow Tigerair Philippines as an independent franchise. We are reviewing opportunities to increase Tigerair Philippines’ fleet," said Lance Gokongwei, President and CEO of Cebu Pacific. "We are very excited to embark on this partnership and we look forward to working closely with Olive, who will continue with her leadership position at Tigerair Philippines.” 

Tigerair Philippines will continue to operate from Terminal 4 at the Ninoy Aquino International Airport and from Clark International Airport in Pampanga. The airline currently serves a number of domestic and international destinations including Cebu, Bacolod, Iloilo, Kalibo, Puerto Princesa, Davao, Hong Kong, Bangkok, and Singapore. 

Meanwhile, Cebu Pacific remains confident that it will be able to turn around fortunes at Tigerair Philippines that has failed to turn a profit since its inception. The airline has been consistently losing the equivalent of USD 1 million per aircraft each month. Although no announcements have been made, a number of operational changes are expected at Tigerair Philippines to create better synergies including a review and overhaul of the carrier's route network to complement that of Cebu Pacific. 

Cebu Pacific will likely seek to make changes before the end of this year cutting routes that remain unprofitable. In addition, new international routes are likely to emerge this year given that the new partners have the ability to apply twice for newly available traffic rights by maintaining two distinct air operator certificates. Taiwan is expected to sign a new air services agreement with the Philippines later this year and Cebu Pacific could use Tigerair to apply for traffic rights to serve that destination. Both Tigerair and Cebu Pacific also have ambitious plans to expand services into the Japanese market this year and Cebu Pacific could user Tigerair to support the group's expansion plans in Japan. 

To address costs and restore profitability, Cebu Pacific plans to increase utilisation rates of aircraft at both carriers and pursue synergies to ensure that flights of each carrier do not compete with one another. Cebu Pacific is anticipating a drastic increase in revenue at Tigerair once its flights become available for sale on the Cebu Pacific website and through its distribution network. 

Tigerair Philippines suffered significantly lower yields in the Philippines as a result of irrational pricing and intense competition in a saturated market. Furthermore, the carrier had difficulty competing against more established carriers like Cebu Pacific. But with Tigerair Philippines coming under Cebu Pacific, yields are expected to improve significantly this year with the possibility of becoming a profitable operation.

With just three major players competing in the Philippine domestic market in 2014, the outlook appears considerably better for all airlines as irrational competition exits. With the improved prospects of Tigerair Philippines, Cebu Pacific is likely to improve its domestic market share in the Philippines. The airline now controls the majority of slots at Ninoy Aquino International Airport.