The purpose and objective of this report is to look into the business and management strategies of Singapore Airlines. Thing that I will be looking into would be the different challenges and threats that Singapore Airline face and also I will be sharing on how and what kind of strategy they used to survive and be on top of the competition. I will be using SWOT analysis to analyze Singapore Airlines strategies, to give an in-depth understanding on what are the contributing factors that helps or cripples the company.
Table of Contents
Introduction 3
Strategies of Singapore Airlines
Service strategy 4
Human Resource Management and Marketing strategies 5
Competitive challenges faced by Singapore Airlines 6
How did Singapore Airlines outstand their challengers 7
Star alliance 7
Cargo alliance with Lufthansa 7
Cost reduction 7
Problem Singapore Airlines might face in the future 8
SWOT analyze of Singapore Airlines
Strength
Branding 9
Quality of services 9
Weakness 9
Opportunity 10
Threat 10
Analysis of SWOT 10
Recommendation/conclusion for the report 11
References 12
Introduction
A brief introduction to Singapore Airlines on how it is form and what difficulties the company faced at first.
Singapore Airlines was found in 1947 with Malaysian Airlines (known as Malayan at that time), it was a joint venture between the Malaysia and Singapore government, placing their service mainly in the South East Asia region. Singapore Airlines is considered one of the world’s best airlines travelling up to 93 destinations and 38 countries.
After Singapore Separated from Malaysia in 1965 and both governments coincide to set up different airlines. Thus, Singapore Airlines was born in 1972.
Different from most other airlines, Singapore Airlines was at a disadvantage position as compared to them. What causes this is because it is due to that Singapore Airline is not given the choice of domestic routes to serve, as Singapore itself it too small, so Singapore Airlines is force to compete with international airlines for routes the moment it starts its business. The things to compete for are like getting access to terminals, securing flights slots and landing rights, and also trying to draw in a new customer base. Not like most state-owned entities, Singapore Airlines was force into to massive competition from the start of its business. Using this as motivational factor, it led and brings Singapore Airlines competitive spirit to an incomparable level and also the dedication to make a good branding of Singapore Airline be better than every service sector. These factors have stayed within the company acting as the core and since then, it has shown to serve the airline very well, allowing them to overcome any challenges.
It was shown that Singapore Airlines earned a profit of $253 million in April to June 2010. This was a complete change of $560 million from the loss of $307 million recorded in the same quarter a year ago. [1]
Strategies Singapore Airlines used to achieve success
Service Strategies
Singapore Airlines is known as one of the greatest and popular brands in the international business world. Singapore Airlines is also well respected as an airline that capable of providing one of the best flight services in the world. They are not only well known for its brand but also on its service quality, beating other famous airlines such as Fly Emirates, Qantas and British Airlines
The first aspect that I would share on is about the service process. This is a factor which has always has been presenting at its best by the entire cabin crew for the passengers up till present. The service is being personified in the Singapore girl figure, which is the air stewardess of the airline. The Singapore girl consistent visual advertising slogan applied to depictions of stewardesses of Singapore Airlines dressed in distinctive our Malay ethnic costume sarong Kebaya. This has been representing as the icon of the service guarantee and the exciting and unforgettable flight experience.
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Secondly, what contributes to the Singapore airlines glory is their strategy where they are always keeping the innovative edge particularly on the in-flight services. The Singapore airlines is the first airlines that brings in the personal system of the entertainment system and video on-demand for every seat. It is called the Krisworld. Apart from that, they are also the first airlines who introduce the seat configuration that brings maximum comfort to the passengers. Recently, they also introduce the first suite class in the commercial airlines which is the A380, a class that designed exactly as the five star hotel room, completed with the private compartment which also brings the comfort level even higher.
Thirdly, Singapore airlines consistently use new airplanes for one purpose. It is to enable a lower cost of operational as it is cheaper and more efficient to maintain younger airplanes as compared to older airplanes. This helps in cutting down the cost for Singapore airlines in the financial aspect.
Using those three strategies point, the excellent service, the continuity innovation, and the technology superiority, this is why Singapore Airlines is always remaining as one of the best airlines.
Human Resource Management and Marketing Strategies
The Singapore airlines make use of a Human resource management policy where productivity is closely related with motivational policies for employees to provide better service and productivity. It is to say that higher income particular are more likely than lower income particular to report them at higher sense of satisfaction. This practice is found in Singapore airlines where human resource management in Singapore airlines approaches viewing performance management as to further improve the particular performance through assessing past performance and rewarding them in purely financial terms.
The most important and different marking strategy exploited by Singapore Airlines is based on their quality of image and service of Singapore girl. The Singapore Girl is essential part of this brand image. One of the Singapore Girl core value is having the mindset of approachable customer orientated staff delivering better quality of customer service. This has become the most important competitive advantage for Singapore Airlines, because Singapore Girls can be considered as the frontline behind the success of the achievement. In order to retain its customers, staff trainings and development programs have been implied to the employees. To ensure the professional service amongst employees, they also have to attend language courses and attitudinal programmes. Global customers are high due to the awareness of the Singapore Girl image.
The effective marketing strategy helped Singapore airlines to reduce their cost pressures in order for them to compete in the airline industry through value adding targeted market division. Using the Singapore Girl as an icon for Singapore airlines has boost Singapore Airlines competitive position in the industry.
Competitive challenges faced by the Singapore airline
Airline industry has seen many changes and competition are stronger and fiercer than ever. Ranging from business and economic class flights to low-cost flights and the coupled with economic downturn, the competition between the airline industry is remarkably high. Some of the low-cost flights operators such as Ryanair, an Irish low-cost airline, are more flexible in responding to increase the cost pressure on profitability which set a threat to Singapore airline operations and growing.
Singapore airlines acted to these pressures and thus invested in newer technology in order to maintain its cost levels while trying to not sacrifice any customer service quality in order to achieve profitability. One concern caused at this stage in considering changing the consumer behaviour and attitudes towards flying in Singapore Airlines are related to what extent Singapore Airlines will be able to preserve and enhance its brand image of customer service. Continuous cost pressure such as increased in fuel prices as well as operational costs related to enhanced security will continue to be a challenge for Singapore airlines in preserving profitability in competing with budget operators. If budget operators to date have been either locally or regionally based should operators like Ryanair by expanding to provide international journeys, this will create huge threat to Singapore airlines in terms of competition for long-haul passengers.
Due to the economic downturn, consumers are leaning towards the area of low pricing of low-cost flights. Some notable competitors that Singapore Airlines are facing would be Cathay Pacific, Ryanair and the Malaysian Airlines.
How did Singapore airline outstand their competitors?
Singapore airlines increased its network via code-sharing with members of Star alliance marketing partnership including Lufthansa and united airlines. Code-sharing allows airlines to sell tickets on one another’s flight and this will offer service to additional destinations.
Star Alliance:
Partnership with star alliance allows Singapore airline to develop and improve operations, facilitates and processes and able to provide access to new capabilities as well as new knowledge and new technologies. The major airline part of star alliance marketing partnership which includes Lufthansa, united airlines, Thai airways and Singapore airlines. These legal agreement linkages are designed to meet the different needs for expanding worldwide through marketing linkages, without acquiring the costs involved in major fleet investments.
Cargo alliance with Lufthansa:
Partnership between Scandinavian Airlines’s cargo, Lufthansa and Singapore Airlines where this operation marketed under the brand name ‘WOW’. Expands are made including the carrier’s services as well as information technology and cargo handling. This alliance will help both airlines to expand their market to even wider area over the world where they did not have it earlier on.
Cost Reduction
Singapore airline has been seeing an increasing of its profit by starting new alliances with more other airlines. SIA has benefited in three ways. The first would be the success of getting the economies of scale through the joint operations of air and ground services. Secondly, scope which is through increased reach and efficient connections and lastly, the increased in traffic density through network expansion and additional traffic feed.
Problems Singapore airline might face in the future
Singapore airlines have an alliance with united airlines where it is now operating under bankruptcy protection. This alliance may face difficulties in the future and also have a reduction in the market share in the US sector. If something happen to the alliance, it will affect Singapore airline greatly. And there will also be bigger carriers that will be developing from each group of alliances. Big giants of the airline industry are combining and this will soon become a threat to other airlines.
Lack of clear goals and objectives
Singapore Airlines might also face the problem of having a partner who lack of clear goals and objective. It had faced similar problems with the American carrier delta and Swiss air, thus had to leave the tri alliance. Reasons for such failure are mainly is because of different objectives, inability to share risk and lack of trust towards the different companies.
SWOT analysis of Singapore Airlines
Strength
Branding:
Singapore airline is well known for its branding from all over the world. Singapore airline is the one that has the most profit internationally. It is the strong brand management that driven primarily by its top management. Singapore airlines brand is unique in the way that the boardroom takes commitment of leadership of the brand strategy unlike many other airlines. The Singapore Airlines keeps enhancing innovation as an important part of the brand, and the ambience and experience are key factors of their success today.
Quality of service:
The quality of service of Singapore airline plays a very crucial part in the strength of the company. Behind the professional performance of cabin crews, Singapore airline gives their entire cabin crew rapid trainings to maintain their high quality of service. They constantly educate their cabin crew including Singapore girl, in order to fulfil the world class airlines service standard. This is why Singapore airlines is always at the top at customer satisfaction survey about in-flight service observed by the independent institution.
Weaknesses
Heavy, on-going investments and high costs.
Singapore airlines has dedicated itself strongly to positioning branding name and quality of services, and in order to maintain the high standard, it is of a high financial costs. By purchasing of new and young aircrafts, it proves to have a bigger fleet space and thus will create a high parking and maintenance cost. All these expenditure will be a weakness in down times.
Opportunities
The expansion into key aviation markets has provide Singapore airline to break through its limited space as compared to before, and this will increase market shares worldwide. Alliances, code-sharing with other aviation company increases Singapore airlines opportunity to provide better services and also to cut costs.
Threats
After terrorist attack on September 2001 in united state, it has been confronted with a tremendous decline in international tourism. The airline industry became more competitive in Asian region as there are more than thirty country operate around thousand of airline company. Singapore airline is one of the operating Asian region as well as in Europe and American region. This has affected the travel density for Singapore airlines.
The outbreak of H1N1 is also a huge threat to Singapore airline as people are in fear of travelling overseas due to the infection rate and highly contagious nature of the virus. And to add on to the bad news and misfortune, one for our Singapore airline flight attendances is also first cabin crew to be contracted with H1N1. This has tremendously affected the airline.
Analysis of SWOT
Opportunities of Singapore airlines can help to overcome their weaknesses. Their weaknesses is mainly high costs and heavy, on-going investments. By having the opportunity to partnership with other companies this help to cut cost. Alliances, code-sharing with other aviation company increases Singapore airlines opportunity to provide better services and also to cut costs. Singapore airlines threat can also be overcome by the company strength which is quality of service and branding. The competitive advantage of Singapore airline has achieved sustainable competitive advantage. Singapore airlines have consistently outdo its competitors since the time it was born, and still retaining high standard and services for customers.
The major factor of Singapore airlines competitive success that it managed to drive skilfully between poles that most companies think of as different. This includes delivering best service in a cost-effective way, at cost levels lower that they are comparable to budget airlines in the world.
Recommendation/conclusion for the report
What recommendations I have for Singapore airlines are as the following.
I think that Singapore can make use of the most number of benefits by the existing alliances and equally contributing to the partners by services or other benefits. If not, Singapore airlines can also prefer to have fewer partnership in the industry and add more to the destination, more aircrafts and customer service which will make them sustain their position of being the best. I believe that they should continue working on its branding and providing excellent service which is meant to maintain customer satisfactory level, and continue having strong workforce at the expense of costs.
They should maintain what they are now like their branding name and quality of service and if they were to switching to different market, this would provide risky results if their strategy fails. This will prove fatal to the company as there are also other companies that are also have established their names in the market. Through researching on Singapore airlines, it seems to me that the core of their success in the near future would be dependent on their innovativeness, this is because it has come to a point where all the airline are providing almost the same thing. Things like technology can be easily obtain by any other different companies.
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