Can leadership change save Tigerair?

Courtesy Tigerair

Courtesy Tigerair

THE sudden departure of Koay Peng Yen as Tigerair’s CEO smacks of a management issue at the top.

To some observers, it may have come as a surprise, considering that not too long ago, Mr Koay appeared to be all too ready to steer the beleaguered budget carrier in a new direction when he said: “We have re-calibrated our strategy and taken the necessary steps to re-position Tigerair.” What exactly those steps might be is not clear, apart from the sale of Tigerair’s stake in Tigerair Philippines to Cebu Pacific Airways and the intended sale of its stake in Tigerair Mandala (Indonesia), both moves made to cut losses in the joint ventures.

To others, Mr Koay’s departure was to be expected as Tigerair continues to roll in losses, fails at expanding its regional connections with third party carriers, and hardly succeeds any better in performance even with its rebranding, in competition with rivals such as AirAsia and Jetstar Asia. Its Q4 net loss widened from S$15.4 million (US$12.3 million) a year ago to S$95.5 million, a hefty more-than-six-fold increase, of which S$21.5 million was attributed to losses in associate and joint ventures. The future is bleak. Or, as stated by the carrier: “Tigerair continues to operate in a challenging business environment. It is expected that yield and load factors will remain under pressure.”

Mr Koay is being replaced by an internal candidate from within parent Singapore Airlines (SIA), which owns about 40 per cent of Tigerair. Interestingly, Mr Koay whose stint with Tigerair lasted barely two years was an external candidate from the shipping industry. It is a perennial favourite debate across large corporations as to whether fresh blood from without might do a better job at improving a company`s fortune, especially when the company concerned is ailing and failing. With hindsight knowledge, one might reflect on whether Mr Koay`s appointment then could not have come at a better or worse time when Tigerair`s reputation was at its nadir, and the airline was reeling from the suspension of its Australian operations because of safety breaches. Quite paradoxically, it also marked the beginning of increased involvement by parent SIA in the affairs of Tigerair. The appointment of Lee Lik Hsin as Mr Koay’s successor pointed to even greater influence by SIA. Perhaps then there may be better synergy between parent and offspring, and perhaps even more significantly, the sibling carriers within the SIA stable may better complement rather than compete with each other.

A statement issued by Tiger said: “By the time of Koay’s departure, Tigerair Singapore had started the process of consolidating its services in preparation for a decisive turnaround in its prospects.” One cannot be sure if that was meant to compliment Mr Koay, who, during his term, also saw the sale of a 60-per-cent stake in Tigerair Australia to Virgin Australia which might at that time look like a sweet deal – for Tiger, it would improve the bottom line, and for Virgin it was an investment in its bitter competition with Qantas and Jetstar, Or did that Tiger’s statement inadvertently spell out the fortuitous timing for Mr Lee, to lead from a hinted certainty the way that Mr Koay might been challenged to steer from uncertainty?

Tigerair has blamed over-capacity in the industry, increased competition and “turbulence in markets that hampered fledgling carriers from establishing a decisive hold” for its woes. Yet this is the very stuff that the business is all about. Incorporated in 2003 and commencing services a year later, the company was hardly a “fledgling” though the reference might be directed at the carrier’s recent joint ventures whose failure might have to do with more than just being so granting that start-up costs are a normal course of business. Clearly the powers that be have recognized the need for reorganization and new directions, and we keep asking, “What next, Tigerair?”

So too, the question: Can leadership change save Tigerair? It is tempting to say it may need more than just that, but the change of hand provides the opportunity to change course, whether driven by the new man or the power behind him. Yet in fairness to Mr Lee, whose last appointment was president of SIA Cargo, time will tell.

This article was first published in Aspire Aviation.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

One Response to Can leadership change save Tigerair?

  1. Pingback: Can leadership change save Tigerair? | Aviation Blog

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