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18-09-2014, 02:30 PM
(This post was last modified: 18-09-2014, 02:31 PM by freedom.)
about a year ago, I did a comparison between Tiger and AirAsia. They are comparable, except airport operating cost and plane lease cost if I still remember correctly.
Sadly, Tiger operates from expensive Singapore and AirAsia operates from much cheaper Malaysia. I can't see a way for Tiger to win in the budget airline business, that's where I stopped further research.
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Are these companies headed by Foreign talents ? If yes should be in good hand.
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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18-09-2014, 05:46 PM
(This post was last modified: 18-09-2014, 05:53 PM by CY09.)
(18-09-2014, 02:30 PM)freedom Wrote: about a year ago, I did a comparison between Tiger and AirAsia. They are comparable, except airport operating cost and plane lease cost if I still remember correctly.
Sadly, Tiger operates from expensive Singapore and AirAsia operates from much cheaper Malaysia. I can't see a way for Tiger to win in the budget airline business, that's where I stopped further research.
There is 1 small segment that airasia has over tiger. Airasia flys to Mecca but tiger don't. For airasia this means being able to tap on the Muslim market which tiger does not
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(18-09-2014, 02:30 PM)freedom Wrote: about a year ago, I did a comparison between Tiger and AirAsia. They are comparable, except airport operating cost and plane lease cost if I still remember correctly.
Sadly, Tiger operates from expensive Singapore and AirAsia operates from much cheaper Malaysia. I can't see a way for Tiger to win in the budget airline business, that's where I stopped further research.
Did you manage to find out how much domestic flights contributed to AirAsia's business?
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19-09-2014, 11:32 AM
(This post was last modified: 19-09-2014, 05:07 PM by CityFarmer.)
I did a preliminary analysis on both TigerAir and AirAsia, with a focus on revenues and expenses. The analysis was done on FY2013 AR (FYe Dec 2013) for AirAsia, and FY2014 AR (FYe Mar 2014) for TigerAir.
The finding shows that for every $1 of passenger seat sales, AirAsia managed to earn additional 70 cents from other revenue sources, while TigerAir only managed to earn additional around 30 cents. That make a vastly different on net profit margin. AirAsia NPM was more than 7%, while TigerAir was -30% losses. AirAsia must has done things right to secure the additional revenues.
The finding shows that the top-2 expenses are not very different between AirAsia and TigerAir. The common top-2 expenses are fuel and staff. Both AirAsia and TigerAir spent around 20 cents on every $1 of passenger seat sales on staff expense. AirAsia spent slightly more on fuel than TigerAir. AirAsia spent slightly more than 70 cents on every $1 of passenger seat sales, while TigerAir spent around 60 cents. I reckon it might due to hedging advantages by TigerAir.
In conclusion, AirAsia win by exploring more revenue sources, other than passenger seat sales, and done right for its passenger to pay for them. In term of key expenses, AirAsia didn't has much advantages than TigerAir.
All comments are welcome.
(not vested in both)
“夏则资皮，冬则资纱，旱则资船，水则资车” - 范蠡
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19-09-2014, 11:56 AM
(This post was last modified: 19-09-2014, 12:01 PM by freedom.)
The main differences between AirAsia and Tiger in term of expense: (as they categorize expense differently, estimate only)
1. Tiger spent more than 10 cents per $1 revenue on "Maintenance, material and repair", AirAsia only spent 3 cents per $1 revenue on "Maintenance and overhaul". What's worse is that AirAsia has higher depreciation and amortization expense(owned aircrafts, more than 10 cents) and Tiger has higher aircraft rental expense(more than 8 cents).
2. Tiger spent 14 cents per $1 revenue on "Airport and handling", another 5 cents on "Route charge, marketing and distribution costs". AirAsia only spent a bit more than 8 cents per $1 revenue on "User charges and other related expenses" which is not found on Tiger.
So in term of operating airline service, Singapore based Tiger seems highly disadvantaged to Malaysia based AirAsia. net net, Tiger is almost 20 cents per $1 revenue behind AirAsia.
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Interesting viewpoints and enlightening...
Thanks Cityfarmer & Freedom..for sharing, appreciate it.
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(19-09-2014, 11:56 AM)freedom Wrote: The main differences between AirAsia and Tiger in term of expense: (as they categorize expense differently, estimate only)
1. Tiger spent more than 10 cents per $1 revenue on "Maintenance, material and repair", AirAsia only spent 3 cents per $1 revenue on "Maintenance and overhaul". What's worse is that AirAsia has higher depreciation and amortization expense(owned aircrafts, more than 10 cents) and Tiger has higher aircraft rental expense(more than 8 cents).
2. Tiger spent 14 cents per $1 revenue on "Airport and handling", another 5 cents on "Route charge, marketing and distribution costs". AirAsia only spent a bit more than 8 cents per $1 revenue on "User charges and other related expenses" which is not found on Tiger.
So in term of operating airline service, Singapore based Tiger seems highly disadvantaged to Malaysia based AirAsia. net net, Tiger is almost 20 cents per $1 revenue behind AirAsia.
I have a slightly different conclusion. Yes, the airport operating fee is definitely higher for Singapore-based TigerAir, than M'sia-based AirAsia, but it shouldn't be the key contributor to their differences in performance.
The expense ratio should base on passenger seat sales, rather than overall revenue. AirAsia has an outsized aucillary & other revenue, which might distort the comparison, IMO
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However, that's what stops me from going any further. Anyone interested can dig further on revenue generated per aircraft, load factors, domestic/international and other parameters.
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(19-09-2014, 04:46 PM)freedom Wrote: However, that's what stops me from going any further. Anyone interested can dig further on revenue generated per aircraft, load factors, domestic/international and other parameters.
Even as the most promising LCC in the region, the AirAsia's ROA/ROE was 2%/7% in FY2013, and the profitability seems on a downtrend.
There is good reason to avoid LCC or airliner stocks. I am done with the job 
“夏则资皮，冬则资纱，旱则资船，水则资车” - 范蠡
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