Mr Tony Davis, President and Group CEO of Tiger Aviation

Tuesday 13 May 2008

6 pm

Military Theatre ADFA

Mr Davis has been CEO of Singapore-based Tiger Airways since 2005.  He has over 22 years’ airline experience with British Airways, Gulf Air, British Midland and BmiBaby.

 Tiger Airways is the newest airline, and perhaps the first truly low-cost carrier, in Australia. Tiger was born out of the enormous market potential of Asia with a population of 3 billion people. After three years of operation, Tiger has a fleet of 12 aircraft – four operating in Australia – with 60 firm deliveries on order.

Tiger’s fuel bill has risen 92% in the last 12 months, and so far in 2008, 27 airlines have failed.  Mr Davis believes that low-cost carriers are better placed to weather the fuel crisis than legacy carriers.

 Mr Davis debunked some of the myths of low-cost carriers.   He believes that in many ways the low-cost model lends itself to being safer than the legacy model. Tiger’s oldest aircraft is only four years old and it has owned all its aircraft since new.

 Mr Davis pointed out that, contrary to the initial view of many in the industry, when low-cost airlines started up in Europe the airline market expanded. Rather than take market share from the legacy carriers, the low-cost airlines were making flying affordable for people who had previously taken holidays by bus or train. In the United Kingdom, the number of passengers carried by low-cost carriers grew from 2 million to 22 million in only five years. Part of the reason for the increase in the market was the low-cost carriers’ exploitation of smaller markets such as direct flights between secondary airports. Today Tiger has two monopoly routes in Australia: Melbourne-Rockhampton and Melbourne-Mackay.

 Asia is attractive for low-cost carriers for a number of reasons. Unlike Europe and the United States, in most of Asia there is no suitable alternative to air travel. There is also a rapidly growing middle class.

Tiger’s aim is to provide low-cost air travel, on time, safely and without losing anyone’s baggage – its branding is all about their low fares. Its business is all about price, and it is absolutely disciplined in applying the low-cost model. Tiger relies as much as possible on free advertising. It spent less than $100,000 on marketing to launch Tiger in Australia. Tony said “as long they spell your name right, it doesn’t matter .. at least they’re talking about you.”

 Tiger operates its A320s 14 hours a day throughout India, China and Australia. It is about to add A319s to its fleet to improve access to shorter airfields. The A319s are essentially the same aircraft as the A320s, and can be operated by the same pilots and maintained by the same engineers. Tiger will be the launch customer for the A319 for civilian operations in Australia.

Tiger is achieving 80% load factors from its Melbourne base. Tiger’s second Australian base will be Adelaide, and it plans to have five Australian hubs within five years. The multiple hubs are important to the low-cost model, because they help keep costs down by not overnighting crews in hotels.

Extraordinary General Meeting 

After the lecture by Mr. Davis, a brief Extraordinary General Meeting was held. The business of the meeting centred on the following Motion, moved by Treasurer Robin Stanier and seconded by Secretary Neville Probert:  "That the members of the RAeS Canberra Branch accept the Audited Financial Statements dated 16 March 2008 and the Independent Auditor’s Report dated 16 March 2008 as a true and accurate record of the Branch's activities between I November 2006 and 31 October 2007".  The Motion was carried unanimously.