Ride the tiger

Ride the tiger

Low-cost carrier Tiger Airways is using its deep pockets to bankroll super-cheap airfares and shake up the aviation market.

The boss of the latest no-frills carrier to tackle the Australian aviation market insists she has the correct flight plan. History suggests Tiger Airways Australia boss Shelley Roberts has the odds stacked against her. Traditionally those who've tried to move in on Australia's cosy domestic aviation market, dominated by incumbent Qantas, have crashed and burned. In the contrails are the failures of the likes of Compass, Ansett and Impulse. Yet the backers of Singapore-based parent Tiger Airways hired the 34-year-old former Macquarie Airports executive to do exactly that.

While there are plenty of sceptics about, Roberts has flown this route before. The South African-born accountant was a senior executive at Britain's no-frills easyJet in 2001 when it took on Europe's full-service carriers, giving mainline carriers such as British Airways a serious run for their money and changing aviation in Europe forever.

Roberts gleans a fair chunk of her aviation experience from Europe's low-cost market and makes no secret of the fact that Tiger is modelling itself heavily on Ryanair, the tightest, most aggressive, often most-hated, but most profitable, of all no-frills carriers.

Learnt on the job

With key roles in easyJet's expansion and the acquisition of British Airways' low-cost offshoot Go on her CV, Robert says: "I didn't need to pick up a text book ... I have lived it and breathed it," she said of the cut-throat airline world.

Flying these days, Roberts argues, is more like getting on a bus and if there is anything that will put bums on airline seats it is price and flexibility. "Can you remember the days of only getting a return ticket? The generation Ys among us would perish the thought," she laughs. "Low fares have turned airline seats into a box of cornflakes."

Since Roberts was lured out of the Macquarie Airports fold last June, Melbourne-based Tiger has opened a second base in Adelaide and increased capacity by 50 per cent. It launches services on the busy Melbourne-Sydney route in July. The 18-month-old carrier is still a minnow compared with its rivals: it has only six aircraft on just 16 routes in Australia and employs 200 employees.

In the midst of an economic crunch that has hurt all competitors, Roberts is talking tough. She wants half of the 60 aircraft the Singapore-based parent has on order, based in Australia, and expects to open more bases and launch new routes in an environment where competitors are scaling back capacity and jobs.

‘Free’ flights

Like Ryanair, she's proving to be provocative as well. Tiger's cheeky pitches, for example, for ‘free’ flights have caught the attention of the Australian Competition and Consumer Commission because they excluded various taxes and charges.

Enthusiastic and quick to laugh, Roberts lists her competitive side as another asset. She is going to need it when taking on her rivals.

The daughter of an Austrian-born immigrant in South Africa, Roberts grew up in her father's Cape Town restaurant and got an early feel for business working with the customers and accounts. "I would sit down with him and do the costings and the menus," she recalls. "I was 11 and talking about gross margins and net margins. He used to always say to me [that] the customer that walks away without telling you they are unhappy is the worst kind of customer. You want people to tell you what they like and what they don't like."

Roberts studied finance and economics at university in Cape Town where she had won a scholarship through auditing firm KPMG. Later she transferred to London and completed her chartered accounting articles. Working with clients such as Nestlé and Diageo, she developed an interest in consumer behaviour and went on to run courses within KPMG.

Always keen on travel, an ad for an investor relations role at easyJet around 2001 piqued her interest. "I got interviewed by the CEO Ray Webster in a coffee shop. At the time I thought it was a bit weird to do interviews in a coffee shop but now I do all my interviews in coffee shops. It puts people at ease and they get to relax and tell you about themselves."

Boosted by 9/11

Within weeks of getting her first big break into airlines, the industry was reeling from the 2001 terrorist attacks in New York. "It was that set of tragic events that meant low cost could gain a foothold," she says.

In 2005, recently married Roberts and her husband hit on the idea of moving to Australia. She submitted her CV to a consultant who had been doing work with Macquarie Bank. She soon got a call from Macquarie's airports guru Martyn Booth. "I remember thinking: who is Macquarie?" she laughs. She landed a job as asset director for Macquarie Airports working with chief executive Kerrie Mather. She also sat on the board of Sydney Airports Corporation.

The prospect of running her own show in Australia was what prompted her to accept the Tiger offer. Roberts says she wants to take the European low-cost model there and get people who would not normally fly onto planes by offering cheap fares. The strategy, adopted from easyJet and Ryanair, is to offer the cheapest seats possible to fill planes and charge passengers for almost everything else except the air they breathe.

Roberts argues the aim is not to steal market share from Qantas or Virgin Blue but to add to the number of Australians flying. "We are not stealing market share from anyone," she says. "If you offer consistently low fares, people will be stimulated to travel."

There are plenty of sceptics about the Tiger model. Rival airline executives and industry observers say the airline is churning through cash, its strategy is naïve, and that it will eventually end up joining the long list of failures.

Roberts refuses to buy in to the talk. She won't discuss passenger numbers, margins or any other measure of profitability. She doesn't deny Tiger is losing money but says the operation's business plan remains on track. "We are here for the marathon not the sprint."

If only cornflakes were so simple.

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Tags innovationstrategyQantaseconomic crisisairlinesAir New Zealandcompetitioncustomer focuscio and ceojulia rauerob fyfe

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