Tigerair’s Singapore-focused strategy brings up passenger yield by 4.9%

Its alliance with Scoot and SIA will bring even more traffic.

Tigerair is having a feast, with profits up after several consecutive quarters of losses.

According to a report by OCBC, Tigerair’s 3QFY15 revenue increased 5.9% YoY to S$182.3m while expenses saw 1.5% decline to S$178.2m, largely due to improvement in yield, capacity rationalization as well as lower fuel and staff costs.

OCBC adds that the restructuring efforts by Tigerair’s management seem to be taking off as consolidation of its business to focus on Singapore operations saw its 3QFY15 passenger yield improved 4.9% YoY while load factor recorded 6.2ppt growth.

Here’s more from OCBC:

Management stated they will focus on capacity rationalization to sustain the YoY improvements in yields but cautioned against uncertainties in the macro environment where competition in the region remains intense.

We believe the longer-term success of Tigerair hinges on driving growth and managing costs through the alliance with Scoot as well as with its parent, Singapore Airlines Limited (SIA).

While the key idea to capture interlining passenger traffic between Tigerair and Scoot through coordination of connecting flights, slot timings at Changi Airport are generally granted semi-annually for each route. As such, we expect impact on passenger traffic growth to materialize gradually only from 2HFY16 onwards.