Tigerair struggles to overcome communications crisis

Experts say Tigerair’s response to the withdrawal from Bali is a textbook example of how not to manage a crisis.

Tigerair chief executive Rob Sharp. Picture: Stuart McEvoy

Going to ground usually applies to airlines only when they land aeroplanes, but Virgin Australia’s budget carrier Tigerair showed how this could be done for two long weeks during its recent Bali flights fiasco.

Tigerair’s response to the suspension and subsequent withdrawal from Bali is a textbook example of how not to manage a crisis, according to experts in the field.

The airline’s response to the unforeseen events that disrupted the travel plans of more than 5000 people involved a 14-day communications blackout — perhaps one of the longest on record — which ended at 11.40pm the night before the carrier was due to recommence flights.

At a time when airlines usually update customers in real time, ­either through email, SMS or ­social media platforms, Tigerair failed to communicate openly and regularly with its passengers about the situation with Indo­nesian authorities, and has ­therefore suffered considerable reputat­ional damage, according to crisis management experts.

Tigerair did provide regular updates for nine days after it first suspended flights but then, as it was locked in negotiations with the Indonesian government, it provided no further updates between January 19 and February 2.

Virgin Australia’s handling of this situation contrasts markedly with that of Qantas and Jetstar, which have over a period of several years have won high praise from passengers for their clear and consistent communication in similar situations. Experts point to Qantas’s handling of a volcanic ash episode in Chile in 2011, and Jetstar’s handling of a similar ­episode in Indonesia in 2015.

GRAPHIC — Tigerair

They contrast with the anger vented by Tigerair passengers through the mainstream and social media before and after the announcement. Given that Tigerair said on January 19 that it had obtained “a key approval” to recommence flights on February 3, this made customers continue to plan on flying to Bali. One customer drove 500km to Adelaide because he was expecting to take a flight the next day.

Crisis communications expert Cecelia Haddad said both Tigerair and Virgin “failed both in crisis communication and crisis management planning, and from an outsider’s perspective it seemed that they were unprepared for both”.

“Tiger failed in basic customer communication in the first instance with the complete radio ­silence then, when it did finally communicate, with a negative message. It was way too late and caused extreme inconvenience to passengers,” said Ms Haddad, principal of the firm Media Elements.

Regarding the pivotal January 19 statement that it would recommence flights in 14 days’ time after receiving “a key approval”, she said three scenarios were possible: Tigerair did not have all the facts; Tigerair was misled by the Indonesian government; or Tigerair knew there was a chance flights would not go ahead.

“Whichever scenario was correct, Tigerair should have taken action and responsibility. Tigerair failed to communicate the real scenario and real issue to their passengers. In crisis communications, an honest mistake may lead to forgiveness but a calculated lie won’t.

“In every crisis story there is usually a victim, a villain and an expert. If, in fact, the Indonesian government gave no notice and had led Tigerair to believe they could continue to fly and Tigerair had followed all the rules of crisis communication, then Tigerair could have been the expert rather than the villain.”

Ms Haddad lectures in crisis communications and has used Qantas’s handling of the volcanic ash episode in Chile as a textbook example of how these situations should be managed. In this case, Qantas emerged as “the expert” through constant updates to customers, rather than becoming the victim or the villain.

Crisis expert Allan Briggs, whose most recent situation involved the Bourke St Mall tragedy, said Virgin’s extraction of stranded passengers was a good response but he still rates the overall episode as a failure in crisis communications. “From a crisis com­munications perspective, one of the fundamental things is getting the right message to the right ­people at right time, and that was where the failing was,” he said.

Mr Briggs said part of the failure stemmed from a failure to work out that the passengers were the most important stakeholders. Instead, Virgin and Tigerair seemed more concerned about not upsetting the Indonesian government, which is why it maintained radio silence.

“When an event is out of your control, you need to keep your stakeholders informed of what’s happening, and prioritise who your stakeholders are. Passengers should have been communicated with very quickly, given the heads- up that there’s a potential issue and then come back with more ­information,” he said.

Jenny Muir, the national president of the Public Relations Institute of Australia, said airlines needed to be prepared for dealing with unexpected disruptions.

“Best practice crisis and issues communication management includes scenario plans for likely ­issues. When your business is international aviation and customer engagement, you’d expect that this would include communication and operations plans for service disruption or termination of flights regardless of the reason.”

Nor has the listed Virgin Australia said anything to shareholders about the likely impact on the business, even though it has a legal responsibility to do so if the impact is material.

Not only has Virgin lost business — 10 per cent of Tigerair’s ­capacity — it has also had to put on extra flights to bring passengers home and compensate them.

Citi transport analyst Anthony Moulder said he expected Virgin to disclose the financial impact of Tigerair’s Bali problems in its half- yearly results, to be released on February 17.

He said any decision to disclose before this date “comes down to the materiality of the impact”.

“Consensus estimates are for Virgin to report FY17 PBT of $61.7 million, suggesting the financial impact from the Bali flight cancellations could be material. If the impact is material then there is a legal requirement to disclose it as soon as they can, and therefore it is ­likely management are still working through the quantum of that impact,” he said.

Virgin would not comment on why it had not informed the ASX. It is understood Virgin Australia is still calculating the impact and whether it could be material.

A spokesman for the Indo­nesian transport ministry said the airline had been operating in clear breach of local civil aviation requirements and he disputed Tigerair’s claim that new requirements had been imposed.

“We found out that Tigerair had sold regularly scheduled conventional flight tickets from and to Bali,” a transport ministry spokesman told the BBC. “They have broken AOC129 requirements. Yes, we have given them a notification this week that they have broken the requirements. But this doesn’t mean that these are new requirements, otherwise all other airlines would have been impacted.”

After finally breaking the long silence, Tigerair chief executive Rob Sharp wrote to each affected customer to explain the situation. Tigerair has refunded customers for the cost of their flights but not for booked accommodation. However, the letters also provide a goodwill travel voucher that can be used on another Tigerair flight. The vouchers vary in value from $50 to $300.

A Tigerair spokeswoman declined to say why the airline would not grant an interview with The Australian to discuss its handling of the crisis.

“Tigerair Australia understands the impact that this decision has had on passengers and sincerely apologises for the in­convenience caused. Our main priority has been to work with customers affected by this matter.

“All affected customers in Bali were offered an alternate solution to travel home at Tigerair’s cost, while all affected customers in Australia will receive a full refund for their bookings, with the maj­ority already processed.”

BALI HIGHS AND LOWS

MARCH 23, 2016
Tigerair, fully owned by Virgin Australia Holdings, begins flying into Bali with interim approval from the Indonesian government. This approval enabled Tigerair to operate flights with aircraft leased from Virgin and operated by Virgin Australia’s pilots. This arrangement was overseen by the Scheduled Flights Department
of the Indonesian government.

JANUARY 10, 2017
Tigerair is advised by Indonesia that the agreement needed to conform to a traditional charter flight agreement until late March 2017. This came after the management of the interim arrangement was moved to the Indonesian Charter Services Department, which wanted to manage the flights as a pure charter arrangement, and means Tigerair cannot sell tickets for these flights. The airline suspends all flights, stranding up to 5000 people who have to be flown back by Virgin. Return flights involve long waits at airports in Australia.

JANUARY 19
Tigerair announces it has received “a key approval from
the Indonesian government to operate scheduled flights to and from Bali using its Airbus A320 aircraft”, and that it plans to resume its normal Bali flying schedule from February 3, “subject to final procedural approvals being secured”. The airline has never said what the “key approval” was.
The airline offers full refunds to passengers due to travel from Australia to Bali during the period from January 20 to February 2.

FEBRUARY 2
At 11.40pm Tigerair announces it will not operate Bali flights on Friday, February 3, but it still hopes to fly on February 4. It states: “Tigerair will provide an update on its flights to and from Bali from Saturday 4 February onwards as soon as possible on Friday 3 February. Tigerair’s domestic flights are not affected by this situation.”

FEBRUARY 3
At 1.30am, Tigerair announces it will cancel its Bali route after Indonesian authorities refused to provide the “final approval needed”. It offers to provide refunds to all passengers. The airline explains: “The Indonesian authorities have informed Tigerair that they require an alternative regulatory solution for Tigerair’s operations to Bali. This solution would take at least six months to implement and would compromise the airline’s ability to offer low-cost airfares to travellers to Bali. As a result of this development, Tigerair Australia has made the difficult decision to withdraw from flying between Australia and Bali permanently, effective today Friday February 3, 2017.”