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Hitwise Intelligence - Sandra Hanchard - Asia Pacific
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Tiger Airways - Market Entrant Online Analysis
February 23, 2007
Tiger Airways' recent announcement of its intention to establish a new domestic Australian airline resulted in an immediate spike in visits to the low-cost carrier's website by Australian Internet users. The market share of visits to Tiger Airways more than doubled between the weeks ending 3 February 2007 and 17 February 2007 to gain 2.81% of the Commercial Airlines industry.
The intense level of online competition between airline brands Virgin Blue, Qantas and Jetstar raises the question as to whether there is room in Australia for another domestic carrier. Hitwise Airlines industry data indicate that Virgin Blue and Qantas accounted for 28.53% and 27.68% respectively in market share in January 2007. Jetstar, the low-cost carrier brand of Qantas, followed in third position with 15.81% share. The three airlines accounted for 72.02% share in industry visits between them.
In the Singapore market, the collective share of the top 3 players was more diluted, with Singapore Airlines, Jetstar and Tiger Airways accounting for 60% of visits to the online Airlines industry in January 2007. The UK was even more competitive, where easyJet, British Airways and RyanAir accounted for 44.13% share. While there are different geographical and population considerations in the Singapore and UK markets, it does indicate the propensity of consumers to compare beyond the leading brands for their travel needs.
I'll provide a few summary notes here on strategy options (we'll be issuing a more detailed research note):
Search Terms to Inform a Domestic Route Strategy
Tiger Airways' website poll for users to vote on their flight preferences reflects the airline's strategy to target secondary airports and destinations around Australia. Hitwise Search Term charting also offers insight into what destinations are top of mind amongst users. For example, searches for Hamilton Island that resulted in a visit to the Travel industry have increased substantially between February 2006 and February 2007, overtaking searches to major cities, including Melbourne and Sydney.
User Retention Through Local Search
A recent trend in the Australian market for travel operators to be aware of is the localisation of online mapping services, in particular the launch of Google Maps Australia, Live Search and Whereis, which all offer street and aerial maps. Given the potential for increased regional travel, mapping services lend themselves to improving the online user experience when booking airfares. The potential is for users to organise more of their trips independently while on carriers' websites, using maps to co-ordinate their air and land movements, including travel with the airlines' respective partners.
Capturing Business and Budget Segments
An important factor in how the competition plays out between the domestic airlines is how they will target and cater to traveller segments. Hitwise Lifestyle analysis offers insight into the online behaviour of users who are likely to travel by air, and who fall within different income and employment brackets. Popular websites visited by each segment may be targeted for affiliate traffic partnerships and content syndication.
Opportunities for Domestic Tourism
The launch of another airline bodes well for domestic tourism, if Tiger Airways succeeds in providing cost-effective incentives for Australians to see more of their country. For other travel operators around the country, it would make sense to capitalise on the increased competition by reassessing their provision of motivational content. Hitwise Industry Clickstream data indicate that the Airlines industry sends 4% of its downstream visits to Travel - Destinations & Accommodation websites, while in the UK the referral rate is double at 8%. Regional airports also have the opportunity to strengthen their online partnerships with domestic airlines as new routes are announced.
2007 will be an important year for Australian consumers in terms of both domestic and regional travel, where there are potentially enormous benefits for all travel operators and ancillary industries.
Posted by Sandra Hanchard at 01:58 PM
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Comments
This will be real competition for the likes of Jetstar. Can't wait for a cheap flight to Singapore to visit our son.
Posted by Graeme | March 7, 2007 06:10 PM
A great oportunity for flights Singapore to the Gold Coast now that runway has been extended. Current shortage of direct flights Brisbane/Queensland to S.E asia.Chance to open up tourism in both directions.
Posted by Stan | March 15, 2007 09:44 PM
would like to be able to fly from perth to the east to see my family. getting there is out the question. the other airlines deserve it as there not cheap at all and its disgusting they get away with it. louise
Posted by louise | March 25, 2007 07:23 PM
Hi,
Just wanted to share my article on Online Performance of Airlines & their Ranking
Thanks
Posted by Jay | April 8, 2007 09:11 AM
It would be good to have another operator in the Aus market especially flying from Perth across to the Eastern States to break the duopoly between Quantas and Virgin Blue!!
Posted by John Kinsey | April 11, 2007 03:24 PM
we need a competitive airline that will operate Perth to the main eastern states capitals.Although Virgin offer ,what you would say is 'cheap',thats compared to Qantas.Lets get it under the $200 mark ,I'd use it every month.
Regards
Alan King
Posted by alan king | May 4, 2007 08:18 PM
I live in the Australian Capital City of Canberra and at one stage Virgin had flights to Sydney which are no longer, so we only have 1 carrier to Sydney qantas, they can charge what they wont. I fly to the Gold coast frequently and both carriers do not go direct, Virgin used to on a Saturday it was great to be able to get a cheap flight for $79 now you have to go to Melbourne first with Virgin and Sydney with Qantas, so what I do is go to Brisbane for the cheap flight then my son picks me up or I catch the train, which makes it cheaper. so please more competition for Sydney and the Gold Coast. Canberra the Australian Capital seems to always get left out.
Posted by christine adams | May 9, 2007 03:32 PM
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I think we should be able to have this airline in Hobart Tasmania the competition would be good for tourism
Posted by Tania | March 6, 2007 10:53 AM