Tiger Air Express

Written by:

Swapna.Dasari

Tiger Air express Company was founded in 1987, primarily to provide charter air services.
Soon after, it is incorporated tour business and taxi business into its domain and during its
first two years of operations, it sales grew by 168 percent.

Because of its rapid growth, it experienced some difficulties in providing the necessary
resources and building proper infrastructure for this growth. These difficulties were due to
underestimated requirement of capital for vehicles, maintenance, office facilities, and staff.
These Gulf wars which resulted in steep increase in fuel costs added more burden on the
financially-strapped organization.

The management was having difficulties in exactly evaluating the financial and operational
situation of the company. A well- known accounting firm was hired to develop and install
accounting system that would accurately reflect the companys financial situations at any
given time. As a result of the report, the taxi division was eliminated and the resources were
diverted towards the freight and tour divisions of the companys, specially the air-freight
capabilities.

In order to expand on the air-freight business, further studies were conducted in order to
understand the market better. Some insights into the air-freight market were gained through
a survey of 44 air-freight shippers conducted by an outside agency in 1992. There are two
types of services available for forwarding air-freight. First, there are integrated carriers.
These are the companies which have their own planes. An example is Federal Express.
These carriers offer customers pickup and delivery by truck along with airplane shipping.
Second, there are freight forwarders. These are the carriers that handle pickup and delivery
but the regular scheduled airlines for air shipment.

A summary of the responses to some of the questions asked in the survey, as noted above,
are explained below:

i) 30 per cent of the survey respondents stated that their air-freight expenditures
had increased in the past year. 60 per cent indicated no change in these
expenditures and 10 per cent reported a drop in expenses.
ii) 50 per cent of the survey respondents used integrated carriers for shipping.
However, for small packages, this percentage increased to 75 per cent. Only 19
per cent used freight forwarders. 62 per cent of those who used freight
forwarders did so because of their ability to handle international air freight more
effectively and reliably.
iii) 39 per cent of the respondents indicated that they were using more 2-3 days
deliveries which were cheaper than one day delivery, then they did 2 years ago.
iv) When the survey asked the customers as to what they looked for in a carrier the
responses were as follows:
On-time delivery -- 59 per cent
Price -- 57 Per cent
Customer Responsiveness --43 per cent
 Geographic coverage -- 9 Per cent
Single source control --7 per cent
Tracing Capabilities -- 7 per cent

Questions for Discussions:

1. Based on your knowledge of probability theory, what strategy should
Tiger Air Express adopt in determining their emphasis on the air
freight business, based on the data given?
2. Some of the percentages reported in the survey can be converted
into conditional probabilities; conditional probabilities contain
information about the responses in certain categories. Can you
describe some of these categories? How would these categories
help the management of Tiger Air Express? Explain.
3. If you were a consultant to Tiger Air Express, what
recommendations would you give to the management so that they
can meet the competition with other companies, offerings based on
the type of shippers and shipments that are most probably in
demand.