I’ve written about Tiger before, both on the appointment of ex bmibaby boss Crawford Rix to head up their Australian operations and also when reviewing their booking flow, but for an airline that seems to get a lot of bad publicity, today it is all thumbs up from me for this low cost carrier.
Earlier this week I had the CEO of an online travel related company asking me if I saw a possibility to charge passengers a fee to receive better quality price alerts and my answer was categorically no. So I was surprised to see the following news from Tiger, and even more surprised to find that I think it is a great idea – I’ll tell you why in a moment, but first, here is part of the article I was reading.
TIGER Airways is hunting for new ways to slug travellers for extras. The move comes as it seeks to boost ancillary revenue from about 20 per cent of passenger revenue to as much as 35 per cent. Tiger chief executive Tony Davis this week made no secret of the fact he wanted the low-cost carrier to move into the top three airlines in the world in terms of the percentage of revenue it receives by charging for add-ons. It currently ranks fifth.
Forget the long arguments on these pages in days gone by about what is and isn’t ancillary revenue, and let’s just say that even if this falls into the hazy zone shared with selling frequent flyer points, there is no doubt that it is a bold and impressive move. But for any airline that has a frequent flyer program of any significance, copying this move from Tiger is going to be much harder to justify. Putting your top frequent flyers at the front of any notification for discount fares is something other airlines should assess (if only for adding perceived value to the program), but charging for it is much more risky. For a true LCC that doesn’t need to worry about offending super elite platinum members, charging for advance notice of sale fares is much more interesting. Some more from the article in The Australian newspaper:
Its most recent innovation, Stripes, allows passengers to pay a fee to get priority email notifications of fare sales. Asked what new charges travellers could expect, Mr Davis said: “The honest answer is I don’t know, but we’re not going to stop looking.”… Its Stripes membership scheme follows complaints by customers that cheap tickets are gone by the time they get online, and the response has been “phenomenal”. “By creating that solution to a customer need we create another revenue stream,” Mr Davis said. “And I think what you will continue to see from us is looking effectively at customers’ wants and complaints, and trying to convert those into additional revenues.”
Southwest have long had Ding which gives anyone installing the program advance notification of sales, but this service is free to join. Tiger are entering into territory I have not seen another airline doing, but please correct me if I am wrong and they are simply copying someone else. The difference between Tiger and the CEO’s question I mentioned earlier is the difference between better availability and better search. It is a subtle difference but one that I think may make the difference between what people will and won’t pay for.
The Tiger example conceptually isn’t that different from a scheme where you pay $X for a card and get Y% off all future purchases – except of course that there is still no guarantee you will save money if the offers do not come thick and fast as expected; or if you are still too slow to get them before the other people who paid the upfront fee.
On the other hand, if I run a website offering third party content, then a large part of the attraction of my site is that I offer a better level of search than the next site. If I degrade my own search results and you have to pay to get the better quality, it really undermines the quality of what I am getting for free. Imagine if Google said you only got to see a lesser set of results for free and more if you pay – if and when they do this, then they open up that part of their business to a new competitor who can offer a larger set of search results free of charge. They would want to be very, very confident and brave if they did go down this path.
But Tiger’s website is not selling itself on the quality of search, so a move like Stripes could well make a lot of sense. Australia was always a bit different as in the old days Qantas were one of the few airlines in the world that charged you to join their frequent flyer program. Tiger are bringing back the concept of the traveler paying for the right to be more loyal to their chosen airline. Who said LCC’s and loyalty didn’t mix?