Harvard Case - Tiger Airways Australia: Mayday! Mayday! A Lesson in Crisis Management
"Tiger Airways Australia: Mayday! Mayday! A Lesson in Crisis Management" Harvard business case study is written by See Liang Foo, Christopher Dula. It deals with the challenges in the field of Strategy. The case study is 16 page(s) long and it was first published on : Apr 1, 2013
At Fern Fort University, we recommend a comprehensive strategic overhaul for Tiger Airways Australia, focusing on rebuilding trust, enhancing operational efficiency, and leveraging digital transformation to regain market share and achieve sustainable growth. This strategy involves a multi-pronged approach encompassing brand revitalization, operational excellence, customer-centricity, and strategic partnerships.
2. Background
Tiger Airways Australia (TAA) was a low-cost carrier (LCC) established in 2007, aiming to disrupt the Australian aviation market with low fares and a no-frills service. Initially successful, TAA faced challenges in 2014 due to operational issues, regulatory scrutiny, and a series of negative publicity incidents. These events culminated in a decline in customer trust and a significant drop in market share, leading to the airline's eventual suspension of operations in 2016.
The case study focuses on TAA's crisis management response to these challenges, highlighting the importance of proactive communication, transparency, and a customer-centric approach in navigating a crisis.
3. Analysis of the Case Study
SWOT Analysis:
- Strengths: TAA's initial success was built on its low-cost model, strong brand recognition, and a young and dynamic workforce.
- Weaknesses: TAA's operational inefficiencies, lack of transparency, and negative publicity significantly damaged its reputation and customer trust.
- Opportunities: The Australian aviation market remained competitive, with potential for growth in domestic and regional routes.
- Threats: Competition from established airlines and new entrants, fluctuating fuel prices, and economic downturns posed significant challenges.
Porter's Five Forces:
- Threat of new entrants: High barriers to entry due to regulatory requirements, capital investment, and established players.
- Bargaining power of buyers: High bargaining power due to numerous airlines and price-sensitive customers.
- Bargaining power of suppliers: Moderate bargaining power, with airlines relying on aircraft manufacturers, fuel suppliers, and airport services.
- Threat of substitute products: Moderate threat from alternative modes of transportation, such as rail and road travel.
- Rivalry among existing competitors: High rivalry due to numerous players, price wars, and limited market share.
Value Chain Analysis:
TAA's value chain was disrupted by operational inefficiencies, particularly in areas like customer service, maintenance, and flight scheduling. This negatively impacted the overall customer experience, leading to a decline in brand value.
Business Model Innovation:
TAA initially thrived on its low-cost business model, but its failure to adapt to changing customer expectations and market dynamics resulted in its downfall.
Corporate Governance:
TAA's lack of transparency and accountability in addressing operational issues and customer complaints exacerbated the crisis. This highlighted the importance of strong corporate governance and ethical decision-making.
4. Recommendations
1. Brand Revitalization:
- Rebranding and Marketing: Implement a comprehensive rebranding strategy focusing on rebuilding trust and showcasing TAA's commitment to safety, reliability, and customer satisfaction. This includes a new brand identity, marketing campaigns, and social media engagement.
- Customer-Centric Approach: Prioritize customer experience through improved communication, transparent pricing, and enhanced customer service.
- Social Media Strategy: Leverage social media platforms to engage with customers, address concerns, and build a positive online presence.
2. Operational Excellence:
- Process Optimization: Implement lean management principles to streamline operations, reduce costs, and enhance efficiency.
- Technology and Analytics: Invest in advanced technology and data analytics to improve flight scheduling, maintenance, and customer service.
- Employee Training and Development: Invest in employee training programs to enhance skills, improve customer service, and foster a culture of safety and excellence.
3. Strategic Partnerships:
- Strategic Alliances: Explore strategic partnerships with airlines, travel agencies, and other businesses to expand reach, enhance customer offerings, and leverage complementary resources.
- Vertical Integration: Consider vertical integration by acquiring or partnering with ground handling, maintenance, or catering companies to gain control over key aspects of the value chain.
4. Digital Transformation:
- Digital Marketing and Sales: Implement a robust digital marketing strategy to reach target customers online.
- Mobile App Development: Develop a user-friendly mobile app for booking flights, managing itineraries, and accessing customer support.
- Data-Driven Decision Making: Utilize data analytics to understand customer preferences, optimize pricing, and improve operational efficiency.
5. Basis of Recommendations
These recommendations are based on a comprehensive analysis of TAA's situation, considering:
- Core Competencies: Leveraging TAA's initial strengths in cost leadership and brand recognition, while addressing its weaknesses in operational efficiency and customer trust.
- External Customers: Focusing on building a customer-centric approach, addressing customer concerns, and providing a positive travel experience.
- Competitors: Staying competitive in the Australian aviation market by adopting innovative strategies, leveraging technology, and forging strategic partnerships.
- Attractiveness: The recommendations are expected to improve TAA's financial performance through increased revenue, reduced costs, and enhanced operational efficiency.
6. Conclusion
TAA's crisis highlighted the importance of proactive crisis management, transparency, and a customer-centric approach. By implementing a comprehensive strategic overhaul, TAA can rebuild trust, enhance operational efficiency, and leverage digital transformation to regain market share and achieve sustainable growth.
7. Discussion
Alternative strategies include focusing solely on cost leadership, pursuing a niche market, or merging with another airline. However, these options carry risks, such as further eroding customer trust, limiting growth potential, or compromising brand identity.
Key assumptions include the availability of sufficient capital for investment, the willingness of customers to give TAA a second chance, and the ability to execute the strategic plan effectively.
8. Next Steps
- Phase 1 (Months 1-6): Implement a comprehensive rebranding strategy, enhance customer service, and optimize operational processes.
- Phase 2 (Months 7-12): Invest in technology and analytics, develop strategic partnerships, and launch a digital marketing campaign.
- Phase 3 (Months 13-18): Monitor progress, refine strategies, and implement further improvements based on performance data and market feedback.
By taking these steps, TAA can navigate the turbulent skies and emerge as a stronger, more sustainable airline, ready to compete in the dynamic Australian aviation market.
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Case Description
This case chronicles the events surrounding the six-week grounding of Tiger Airways Australia between June and August 2011. During this time, Tiger Airways Australia's revenue falls by 44% with the Tiger Airways Group share price falling 20%. Australian air safety regulators and key investors rapidly lose confidence in the company. This crisis necessitates drastic changes in the board of directors and executive leadership. On November 1, 2011, Chin Yau Seng is appointed the new CEO of the Tiger Airways Group. How can Chin guide the company as it emerges from the crisis, restore confidence and return the company back to normal operations?
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