Executive Summary

During the past decades, the airline’s sector grew up very fast,
especially thanks to globalization; consequently Singapore Airlines took
advantage of this trend to increase its turnover and profit even if the
competition was becoming stronger and stronger. Indeed, thanks to a
good management SIA had grown faster than its competitors. They
focused on a high quality customer service strategy using the best
technology along with building of a strong brand. Also, they invested in
other related companies, in aircrafts based on technology and innovation.
Singapore Airlines strategy is also making all the process to control
and assure a high customer satisfaction. That is to say, more than
transporting passengers, they are providing airline catering services,
ground, terminal and cargo services. At the same time, Singapore Airlines
has also an external strategy of development because, even if the
government has the majority in the capital shares, they share the risks
and the investment with different partners. Furthermore, they tried to be
first everywhere. They have been the first in 2007 to fly in a commercial
flight with the A380 and have the record for the longest scheduled
commercial flight, with a flying time of over 18 hours each way.
Nowadays, Singapore Airlines is one of the most famous airlines
company in term of good services; they won for instance the award of the
best business class in 2007. They also have luxury suites that nobody else
has in the A380.
Moreover, in term of revenue, SIA group has the 10th biggest
revenue with $10,831 million of turnover in March 2008. However, we can
see that Singapore Airlines has a really strong strategic management
because it is classified as the 3rd best company in term of profit with
$1,389.4 million in March 2008.
However, since the middle of this year, the airline market is going
down because of several reasons. In a free market, the success or failure
of an individual airline is largely dictated by the quality of the service it
provides (Joseph Pillay, Chairman SIA, Harvard Business School, 1989b).
Most airlines, seeking to achieve the same deals, were not quite able to
match the service reputation set and attained by SIA. Many airlines had to
face the apparent contradiction between cutting costs and prices, on the
one hand, and maintaining customer focus and delivering customer
service, on the other. Moreover, as all sectors, the financial crisis affects a
lot airline companies. Indeed, because of investors becoming reluctant
and picky, airlines companies cannot develop their activities very well.
Also, we are in an environment of saving money, so, less people is
travelling, some managers begins to travel in economics’ classes.
Furthermore, the price of oil even if nowadays thanks to the crisis is
relatively cheaper, the price hit a peak of $147 per barrel in July 2008, and
so had a big impact on the profit of airlines companies. As concerned
Singapore Airlines, they still have improved their turnover this year.
However, even if they are still making an operating profit, it is decreasing
since 6 months, but we can say that they are still more competitive than
their competitors in the crisis.

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 To conclude, Singapore Airlines is a very strong brand with a very
good management and should keep doing more and more M&A, alliances
in order to diversify and to develop its market with always a focus on its
core activities, the air transportation services.

AGENDA
A)COMPANY OVERVIEW
1) Company History
2) Owners and shareholders
3) Profit History
4) Major events of the last 5 years
B)THE COMPANY’S MODEL
1) The airlines operations
a. Passenger air transportation
b. Cargo air transportation
c. The terminal services
d. Services engineering
2) Breakdown of turnover by business model/segment
3) International activities: breakdown of activities by geographical
area
C)CORE COMPETENCIES
D) COMPETITIVE ENVIRONMENT OF EACH
BUSINESS SEGMENT
1) Description of main competitors
a. All Nippon Airways
b. British Airways
c. Cathay Pacific
d. Quantas
2) Turnover, profits and market share of competitors
3) Market dynamics
4) Market evolution
5) Market potential
E) THE COMPANY’S MARKET VALUE
1) Profit history: the evolution of key accounting figures
a. Singapore Airlines group Financial Highlights
b. Situations of 2 big competitors, British Airways and
Malaysia Airlines
c. The change in the trend of airlines companies this year
d. Why do the airplane companies have to face this situation?
2) Share price history and market capitalization
a. Singapore Airlines Ltd
b. The competitors
c. Situation of the Airline sector
d. Analysts recommendations as concerned the share prices
of Singapore Airlines

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 F) STRATEGY FOR DEVELOPMENT
1) The beginning or the past
2) Methods of growth: INTERNAL AND EXTERNAL
3) General analysis
a. The reasons that pushed SIA
b. A future of firsts
c. What’s next?
G)GENERAL OPINION ON THE ENTIRE STRATEGY OF
THE COMPANY

A) COMPANY OVERVIEW:
1)Company History

Singapore airline (SIA) is the national airline of Singapore. It ranks

among the top 10 carriers worldwide in terms of revenue passengers
kilometres; actually SIA has the two longest non-stop flights in the world:
from Singapore to Newark and from Singapore to L.A. This company is well
known in terms of innovation, safety and service excellence. It has won
numerous awards, such as one for having the best business class in 2007.

Singapore Airlines began with the incorporation of Malayan Airways

Limited (MAL) on 12 October 1947 with Company of Singapore and
Imperial Airways. It is the result of the government in place at that time.
The company’s first flight was a chartered flight from the British Straits
Settlement of Singapore to Kuala Lumpur on April 2nd 1947 using an
Airspeed Consul twin-engine airplane.

MSA ceased operations in 1972, when political disagreements between

Singapore and Malaysia resulted in the formation of two entities:
Singapore Airlines and Malaysian Airlines System.
SIA saw a rapid growth during the 1970s, adding cities in the Indian
subcontinent and Asia, and adding Boeing 747s to its fleet.

New services to United States, Canada, European cities with Madrid were
created in the 1980s. Madrid became the first Hispanic city to be served
by SIA. The Boeing 747-400s called Megatops were introduced into SIA
fleet in 1989. Then to complete their fleet, they have introduced the latest
planes from Boeing and Airbus (Boeing 777s, Airbus A310 and Airbus
A340s). New routes were extended to southern Africa in the 1990s, with
introducing flights to Johannesburg and cities like Cape Town and Durban.

In 2004, utilising an Airbus A340-500, Singapore Airlines began non-stop

trans-Pacific flights from Singapore to Los Angeles and Newark. These
flights marked the first non-stop air services between Singapore and the
USA. The Singapore to Newark flight is the record for the longest

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scheduled commercial flight, with a flying time of over 18 hours each way.
Beginning in May 2008 Singapore Airlines began converting the five Airbus
A340-500 to a business class model only for its routes to Newark and Los
Angeles.

SIA was the first airline company to have a commercial flight on the A380.
In fact, on 25 October 2007, flight SQ 380 flew 455 passengers from
Singapore to Sydney. This was a huge public relation event because it
received a significant attention from the media. All the revenue from this
flight was donated to three charities in a ceremony the next day in
Sydney. On October 2007, SIA began regular services on the A380.

2)Owners and shareholders

Singapore Airlines is the parent airline company of the Singapore Airlines

Group of companies. The Singapore Government is the majority
shareholder with 54% shareholding.
However, according to the Singapore’s Government, they are not involved
in the management of the company.

List of Major Shareholders

Temasek Holdings 54,39%

DBS Nominees (Pte) Ltd 14,56%
Citibank Nominees (Singapore) Pte Ltd 6,27%
HSBC (Singapore) Noms Pte Ltd 4,59%
OTHERS 9,17%
General Public 11,02%

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 3)Profit History

The group recorded revenues of S$15,972.5 million (approximately

$10,831 million) during the financial year ended March, 2008 (FY2008), an
increase of 10.2% over 2007. The operating profit of the group was
S$2,124.5 million (approximately $1,441 million) during FY2008, an
increase of 61.6% over 2007. The net profit was S$2,049 million
(approximately $1,389.4 million) in FY2008, a decrease of 3.8% over 2007.

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 4) Major events of the last five years

In the past five years, unlike other companies SIA has not face any
major crisis such as crashes, or plane hijacking.
In 2004, SIA began non-stop trans-Pacific flights from Singapore to L.A.
and Newark.
In 2005, after placing an order for A380, they wanted to fly the planes by
2006 with the slogan “First to fly the A380” – “experience the difference in
2006”. However the A380 got delayed not of a few months but of a full
year. That was a lost for SIA who did loose money on this.

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In 2006, the Australian Government decided not to grant fifth freedom
rights to Singapore Airlines from Australia to the United States. This was a
lost of a potential market. In reality the Australian government wants to
protect Quantas.
In 2007, SIA is the first airline company to use the A380 as a commercial
fly and the first to introduce suites in its first class.
SIA won Several Awards such as having 1st rank at the Best Business Class
Award in 2007.

B) THE COMPANY’S MODEL:

Business models and strategic areas:

Singapore Airlines along with its subsidiaries is engaged in some

activities such as airline operations, airport terminal services, engineering
services, and other related activities.

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That means only three main segments constitute the activities of the
company: the airlines operations, airport terminal services and
engineering services.

1) The airlines operations:

This segment includes passenger and cargo air transportation and it is

carried out by Singapore Airlines and it is wholly owned subsidiary, Silk Air
(Singapore) Private.

Mission: “We are a global company dedicated to providing air

transportation services of the highest quality and to earning good returns
for shareholders”.

a) Passenger air transportation:

It is the most important segment of the company, the core
competency of SIA. Indeed. More, in that segment the company has
continual improvements in order to better satisfy its customers. The key
points considered for that are:

o Target:
As the company delivers premium services based on quality and
value, and nowadays the flying has become so stressful, people are willing
to pay a little more for a better experience. That means the customers of
Singapore Airlines concerned mainly people enough money to travel in a
certain comfort. Moreover, as the company was routinely voted
(Heracleous L., Wirtz J., and Johnston R., 2004, “Cost Effective Service
Excellence –Lessons from Singapore Airlines”, Business Strategy Review)
as the “best for punctuality”, we can also put hurried people such as
business in the target of the company.

o Strategy:
In this segment the company uses a focus strategy as point of
differentiation. That is delivering a “unique selling proposition”. Indeed,
since the beginning, Singapore Airlines chose to strategically be positioned
into premium services emphasized in quality and value in order to be the
leader in that industry.

This strategy is based on:

o Innovation: the company created a luxury travel experience and

retained the glamour of the long-distance travel. Thus, many
innovations support that. For example, at first we have the iconic
Singapore girls (easily come to mind) costumed in a specially
designed version of the graceful Malay sarong kebaya, designed
by renowned fashion house, Pierre Balmain and representing the
Asian value and culture; the company was the first in -seat TVs
and offered more channels than any airline and also put some
luxurious suites in their planes.

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 o Best technology: SIA is always trying to use the latest aircrafts to
maintain the youth of its fleet (which average age is 6.6 years).
Singapore Airlines recognizes that each innovation has a
relatively short life span. Once other airlines adopt it, it is no
longer considered "innovative". Therefore, the airline continues to
invest heavily in R&D, innovation and technology as an integrated
part of the business strategy to further differentiate itself.

o Strong brand strategy: Iconic Singapore girls, the heart of the

services delivered by SIA. They represent a very powerful idea
and have become a successful brand icon with an almost
mythical status and aura around her. The Singapore Girl
encapsulates Asian values and hospitality, and could be
described as caring, warm, gentle, elegant and serene. It is a
brilliant personification of SIA's commitment to service and
quality excellence. SIA engaged French haute-couture designer
Pierre Balmain at the inauguration of the airline in 1972. He
designed a special version of the Malay sarong kebaya as the
uniform which later became one of the most recognized
signatures of the airline. A very designated and visual part of the
entire brand experience. All this means that the iconic Singapore
girl is a main tool of marketing, promotion and communication
and a king of customerization for SIA across the world.

o Excellent customer service: the “raison d’être” for SIA.

Mr Yap Kim Wah, SIA’s Senior Vice President responsible for
Product and Service, explained “We have a high reputation for
service and that means that when someone flies with us they
come with high expectations. But still we want them to come
away saying ‘Wow! That was something out of the ordinary’.”
Thus, to deliver suitable propositions to the high expectations of
the customers, the company put a big emphasis on:
⇒ Consistency of personalization: enhancing soft skills such as
warmth, care and anticipation of needs where the
competition can not easily imitate.
⇒ Total approach: the company is aware that the customers
buy the totality, so the package or the components have to
be excellent (quality, value delivered).
⇒ Understand costumers and anticipating their needs: by
listening to them (their compliments and complaints) and
also the front line staff, by understanding the different
lifestyles.
⇒ Training of the front line staff: in topics such as deals to
stress and others related to lifestyles and all to drive the
different technologies in which the company invested huge
amounts. There are two types of training: the functional
training (equipping people with skills to do their job, to
make them technically competent and confident) and the

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 managerial one (delivered by THE SIA Management
Development Centre and concerned soft skills).
⇒ Team’s concept: to create “un esprit de corps” among its
cabin crew. But it is difficult to achieve in the sense there
are many planes and locations and crews are dispatched
according to that.
⇒ Communication and motivation: with regular corporate-
wide business meetings and briefings to keep staff
informed of the latest developments; there are also
company’s newsletters and circulars. Behind that is to
encourage good service.

Picture of a suite in an airbus A380 of Singapore Airlines

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 o Positioning: SIA had developed a very strong market position. While
keeping an eye on costs, its quality and service-enhancement
strategy allowed it to command a relative market price premium
position through premium service, value and quality. This good is
mainly due to the main role of the iconic girl that makes fragile also
the brand strategy. That means it should be difficult to make some
changes in that strategy by risking losing customers.

b) Cargo air transportation:

The Company’s cargo air transportation is carried out by SIA
Cargo, a subsidiary of Singapore Airlines, with 14 B747 400
freighters. SIA cargo operates in around 70 cities across the world.
o Target: passengers of SIA.
o Services: airfreight and deliver services.
o Strategy: focus on enhanced quality and value.
o Positioning: SIA is among the leaders, the top 10 (you can see the
table below in the part D called Turnover, profits and market share
of competitors (key numbers and ratios).
o Values: they are the same through all the segments. That means SIA
always try to be excellent in what it does with tight relationships
with partners and being pro-corporate responsibility system.

c) The terminal services:

This segment is carried out by SATS (Singapore Air Terminal
Services).

o Mission: To be the first-choice provider of Airline Ground Services

and In flight Solutions.
o Target: leading international airlines such as British Airways, Cathay
Pacific, EVA Air, Qantas, Singapore Airlines and United Airlines; and
also tailored service offerings to specially suit the specific
requirements of low-cost carrier clients, such as Jetstar and Valuair.
o Services:
o Airport Services: (53.3%) ground and cargo handling; aviation
security
o Food Services: (43.3%) in-flight catering; manufacturing and
distribution of chilled and frozen food.
o Others: (3.4%) airline laundry; cargo delivery; commercial
leasing.

o Strategy: oriented customer strategy.

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 o Positioning: Largest network in Asia with dominant presence (41
airports across 9 countries).

Good reputation and brand name (recently rated top 3 most-admired

company overall in Singapore in Asia 200 surveys 2008 – The Wall
Street Journal Asia 5-7 Sep 08). Good relationship and understanding of
Asian & Middle Eastern airlines.
o Values: carrying the SATS’ brand promise and achieve excellence in
everything the company does with tight relationships with partners
and being pro-corporate responsibility system.
o Vision: The main aim is to be one of the largest Services companies
in the world by maintaining innovation and customer intimacy,
creating new value propositions for its clients, exciting growth
opportunities for the its employees, partners and associates &
sustainable enterprise value for its stakeholders and fulfilling its
corporate social responsibilities.

d) Services engineering:

o Mission: providing aviation engineering services of the highest

quality, at competitive prices for customers and a profit to the
Company.
o Target: major airlines from four continents.
o Services: Provides repair and overhaul (MRO) services in airframe,
component, engine, aircraft conversions and modifications. Its
growing network of line maintenance support is extended to more
than 40 airports in Australia, China, Indonesia and the Philippines.
o Strategy: focus on quality and value.
o Positioning: among the leaders, the top 10.
o Values:
o Pursuit of Excellence: strive for the highest professional
standards in our work and aim to be the best in everything we
do.
o Safety: maintain and adopt practices that promote the safety
of our customers and staff.
o Customer First: customers are foremost in our minds all the
time.
o Concern for Staff: care for the well-being of its staff and treat
them with respect and dignity and seek to provide them with
appropriate training and development so that they can lead
fulfilling careers.

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 2) Breakdown of turnover by business model/segment:

CONTRIBUTION TO GROUP OPERATING PROFIT –

FY2007/08

As we can see in the above table for the fiscal year 2007/08, the
segment that generates more profits for the company is the passenger air
services (SIA), the core activity, with 77.4%, followed by Air terminal
services (8.2%) and SIA Cargo (6.2%) and engineering services or
company segment (SIAEC) brings 4.8% of profits.

3) International activities: breakdown of activities by

geographical area

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Singapore Airlines operates passenger services in 65 countries across
Asia, Europe, America and Africa:
o East Asia: largest geographical market with 52.6% of the total
revenue in the fiscal year 2007
o Europe: accounted for 17.2% of the total revenue in the fiscal year
2007
o South west Pacific: accounted for 13.5% of the total revenue in the
fiscal year 2007
o America: with 9% of the total revenue in the fiscal year 2007
o West Asia and Africa: with 7.7% of the total revenue in the fiscal
year 2007

C) CORE COMPETENCES:

Before analysing the core competencies, one should understand that

Singapore Airline provides a service and that its goal is to provide the best
service possible along with values such as Excellency and luxury.
SIA’s core competencies include the skills of its top management at
planning marketing strategies and the interpersonal skills of its flight
attendants. Making flights as comfortable as possible is what they do best.

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How does the business make use of the competencies?
The Group's principal activities are providing passenger and cargo air
transportation, airport terminal services, engineering services, training of
pilots, air charters and tour wholesaling and related activities. The Group
operates in East and West Asia, South West Pacific, Americas, Africa and
Europe.
The group uses its core competencies when getting involved in new airline
companies. For instance, it can be for a low cost company such as Tiger
airways, or au contraire with companies such as virgin Atlantic.

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 D) COMPETITIVE ENVIRONMENT OF EACH
BUSINESS SEGMENT:
1) Description of main competitors

As per our findings from Market Line, Singapore Airlines faces

competitions from below listed companies in its worldwide services.
However, we have jolted down 4 main competitors for Singapore Airlines
including the market leader British Airways.

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 a) All Nippon Airways
All Nippon Airways Co. Ltd. (ANA) is Japan's second largest airline and
serves 49 local and 22 international destinations. It is headquartered in
Tokyo, Japan and employs about 30, 300 people. In addition to its airline
business, the company is also involved in travel services, hotels, trading
and sales, and ground transportation and distribution. The company
operates through four business segments: air transportation, travel
services, hotel operations and other businesses. The air transportation
segment primarily provides passenger, cargo, and mail transportation
services. The segment operates or conducts air transportation and other
operations through ANA, Air Nippon Company and Air Japan Company. In
addition, it also provides various services that include loading and removal
of catering equipment from aircraft, operation of staff canteens,
preparation of in-flight meals, aircraft ground support operations,
maintenance, repair, and improvement of aircraft and equipment,
maintenance and development of training equipment for cabin crews. The
segment operates three business divisions that include domestic
passenger, international passenger and cargo and mail operations
division.

b) British Airways
The company primarily operates in Europe and the Americas. The
company is headquartered in Harmondsworth, Middlesex and employed
around 42,377 people as on March 31, 2008. The company also has its
operations spread across Far East Asia, Australia, Africa, Middle East and
the Indian sub-continent. Its Asia Pacific Routes gives SIA very tough
competition. British Airways is one of the world's largest scheduled
17 | P a g e
international passenger airlines. The company's airline route network
comprises around 300 destinations all over the world. In FY2008, the
company carried more than 33 million passengers. The company's
principal base is the Heathrow International Airport, where the company
carries an estimated 41% of the airport's passengers. In addition, the
company has a second base of operations at Gatwick, London. The
company operates offices, maintenance hangars, and other support
facilities at Heathrow, Gatwick and other UK airports. The company also
occupies space and desks under lease or license in airports throughout the
UK including Manchester, Birmingham, Newcastle, Edinburgh and
Glasgow.

c) Cathay Pacific
Cathay Pacific is an international airline based in Hong Kong. It offers
scheduled cargo and passenger services to 113 destinations in 37
countries and territories. The company operates in Asia, Europe, China,
Africa and the US. As of December 2007, the company had 93 passenger
aircraft and 19 freighters. The company transported 23,253,000
passengers and carried 1,642,000 tons of cargo in 2007. Cathay Pacific
ranks as is the world's 11th most profitable airline and 20th largest airline
in the world by virtue of its operating margin.
The company operates through three key business segments: passenger
services; cargo services; and catering, recoveries and other services.
The company's passenger services provide domestic and international air
transport. The company provides passenger services through the Hong
Kong Dragon Airlines Limited (Dragonair), a wholly owned subsidiary
integrated in 2006. In 2006, five new destinations were added to the
Dragonair network and many routes were strengthened to improve
connections with Cathay Pacific's international network. Cathay Pacific
offers leisure travel service and also operates Hong Kong Airport Services
Limited (HAS), a wholly owned subsidiary of the company.

d) Qantas
The group operates primarily in Australia, Europe, Americas, Japan,
Asia, and New Zealand. It is headquartered in Mascot, New South Wales,
Australia and employed 34,267 people as on June 30, 2007. Qantas
Airways purchased Australian Airlines in 1993, which positioned the group
as the principal air operator in Australia. In the same year, the Australian
government sold its 25% share of the group to British Airways as the first
step towards privatization. In April 2007, the group formed a new inbound
tourism business, Tour East Australia based in Sydney. In the same month,
Qantas Airways signed an investment agreement with the State Capital
Investment Corporation (SCIC), the investment holding arm of the
Vietnamese Government, to purchase a 30% stake in Pacific Airlines,
Vietnam's second largest carrier.

2) Turnover, profits and market share of competitors

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 The top competitors for Singapore Airlines in Asia Pacific region is
Cathay Pacific, Qantas Airlines and All Nippon Airways. The Key Financial
Ratios are compared for these companies are compared.

All Numbers in US $ (in Millions, Base Year 2005)

Key Ratios/ All Nippon British Airways Cathay Pacific Qantas
Numbers*
Total Current Assets 3,916.0 5,343.9 2,225.9 2,825.1
Total Current 4,709.2 5,599.4 2,492.0 3,529.6
Liabilities
Current Ratio 0.831564 0.95437 0.893218 0.800402
Net Operating Cash 1,386.1 1,042.0 1,183.8 1,484.9
Flow
Cost of Goods Sold 6,359.1 7,136.0 3,517.5 5,796.8
Total Assets
Turnover 0.425691 0.3511569 0.3205829 0.4197751
Long Term Debt 6,860.1 8,166.1 2,271.3 3,986.2
Shareholder’s Equity 2,087.4 3,652.8 4,225.2 4,894.1
Debt Equity Ratio 3.286433 2.235573 0.53756 0.814491
Net Profit Margin 2.1% 4.6% 11.3% 6.0%
Net Income After 260.8 373.0 580.8 582.1
Taxes
Total Assets 14,938.3 20,321.4 10,972.2 13,809.3
Return on Assets 0.0174585 0.018355 0.0529338 0.0421528
Gross Profit Margin 47.1% 8.7% 30.0% 39.8%
Return on Equity 0.12494 0.102113 0.137461 0.118939
*Key Ratios and Balance Sheet Figures are taken from http://www.hoovers.com, yahoo
finance; BASE Year 2005 is taken into account for the above analysis

Airline * Revenue 2007 (Turnover) Net Profit 2007

AMR Corporation $22,935 million $504 million
Air New Zealand $2,948.1 million $146.8 million
Nippon Airways $11.6 billion , March 2006 $200 million
British Airways $17,572.3 million , March 2008 $1,365.2 million
Cathay Pacific $9,659.4 million $900.2 million
China Airlines $3,678.9 million (-$76.7 million)
Continental Airlines $14,232 million $459 million
Delta Airlines $19,154 million $1,612 million
Japan Airlines $19,704.4 million (-$139.2 million )
Korean Airlines $9,516.9 million $12.1 million
Northwest Airlines $12,528 million $2,093 million
Qantas Airlines $11,919 million $565.4 million
US Airways $11,700 million $427 million
Virgin Airways £2,140 million £46.8 million
Singapore Airlines $10,831 million , March 2008 $1,389.4 million
*Revenue Figures: Market Line

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 3)Market dynamics
The geographic location of Singapore in Asia Pacific is vital to emerging
economies and their growing demand in passenger aviation and cargo
transportation. The airline industry in Singapore is characterized by strong
supplier power; a consequence of the global duopoly of Boeing and Airbus
that exists in the manufacture of aircraft globally. The air industry in
Singapore has been deregulated to a certain extent, which makes it more
attractive for new entrants, although the bureaucracy and large financial
outlay involved in setting up an airline serve as a deterrent to new
companies. The desire for relatively fast international travel means that
other forms of transport pose no more than a moderate threat to air
travel.
Supplier Power

Buyer Power
Rivalry
New Entrants

Buyer Power Substitutes

Presence of online booking sites that allow customers to compare and
contrast tickets according to price, flight times and number of stops en
route and travel agents who assist customers in finding the best deal. In
response to the ease of switching from one player to another, many
airlines offer loyalty schemes such as Singapore Airlines’ ‘KrisFlyer’
program.

Supplier Power
Globally, Boeing and Airbus are the only manufactures of airliners. A
number of airlines have formed partnerships or alliances with other
airlines in order to buy fuel or purchase aircraft as a bloc, thereby
achieving higher bargaining power and reducing supplier power.

New Entrants
A new company must apply to Civil Aviation Authority of Singapore for an
air operator certificate. This is a complex process and takes months,
during which time it is difficult to generate any revenues. Entering the
market as a new company requires considerable capital (for example, to

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acquire a fleet of planes); and, given for an existing company to begin
operating in Singapore, the market may impose significant costs in terms
of overheads, wages, and so on. Access to good distribution channels may
be difficult.

Substitutes
Singapore is a small country, and there are no domestic flights. There is a
comprehensive bus network that provides frequent and efficient services
along with a convenient Mass Rapid Transit (MRT) subway system that is
relatively inexpensive. Some consumers may see the greater
environmental impact of air travel as a significant disadvantage compared
to rail. Singapore is the southern terminus of Malaysia's rail system, and
three trains go to Kuala Lumpur each day. A bus service links Singapore to
almost all large Malaysian cities with fares that are generally inexpensive.
There are also ferry links with Malaysia and islands in Indonesian
archipelago, although these may be time-consuming and only serve
certain destinations.

Rivalry
Low-cost competitors have provided a key competitive challenge in recent
years. Consumers can switch between different airlines quite easily,
although the players at the high end of the industry differentiate their
products in terms of quality of service, which makes it difficult for them to
abandon completely the more expensive services they offer for low-
budget alternatives. Fixed costs are likely to be high which also tends to
intensify rivalry.

4)Market evolution

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 As at 31 March 2007, the Airline operated 764
weekly flights to 65 destinations in 35 countries.
Taking into account code share services with
Star Alliance and partner airlines, the route
network grew to 144 destinations in 43
countries.
The revenues for Singapore Airlines are
continuing to increase owing to its
stupendous performance in customer
care and efficient logistics systems.
The profit margin is growing at a
double digit from 10.1% to 14.7%
The Singaporean airline industry grew by
11.6% in 2006 to reach a value of $5.6 billion.
The compound annual growth rate of the
industry in the period 2002-2006 was 10.1%.
Singapore Airline’s continuous improvement in
delivering service not only ensures
superior ROE but it makes sure it has
loyal customer base. Tourism is
thriving in Asia-Pacific Region
because many Asians now have
disposable income. Continuous
innovation to manage in-flight
services establishes SIA a leading
brand across major airlines in the
world.

Allied Units of Singapore Airlines

Singapore Airport Terminal Services Ltd
Singapore Airport Terminal Services (SATS) Group earned a profit
attributable to equity holders of $178 million in the year in review
Expansion into the region continued, with significant contract wins in India
and China.
Subsidiaries
SATS, in partnership with Air India, won the cargo and ground handling
franchises at the upcoming new Bangalore International Airport. Taj-SATS
Air Catering, a SATS associated company, was awarded the in-flight
catering franchise as well. In China, SATS associated companies, Beijing
Aviation Ground Services and Beijing Airport In-flight Kitchen, extended
their reach to eight regional airports in China.

SIA Engineering Company

SIA Engineering Company (SIAEC) Group earned a profit attributable to
equity holders of $242 million in the financial year ending 31 March
2007.In August 2006, SIAEC became the second company in the world to
enter the B747-400 Passenger-to-Freighter (PTF) conversion business. In
January 2007, it successfully completed its first B747-400 PTF conversion

22 | P a g e
for Hong Kong’s Dragonair Cargo, making it one of the first PTF
conversions in the world to be completed.

Singapore Airlines Cargo

Singapore Airlines Cargo (SIA Cargo) made a profit of $31 million during
the year in review. During the year in review, SIA Cargo secured several
key global accounts with organisers of major international events. A total
of 14 charter flights were operated for four Formula One races, including
three charters carrying racing vehicles and media equipment in and out of
Sao Paulo, Brazil. Five charter flights carrying motor bicycles were also
operated for Moto Grand Prix races in Japan, Malaysia and Doha. SIA Cargo
was also selected by NOKIA Corporation for the third successive year as
one of its preferred carriers for its intra-Asia and Asia to South-Pacific c
and Middle-East distribution.

SilkAir
SilkAir performed well during the year in review, generating a profit t of
$20 million despite rising fuel costs and a highly competitive environment.
The airline grew capacity on its existing network by 17 percent. SilkAir’s
charter revenue registered good growth, increasing 125 percent over the
previous year, as a result of charters to Christmas Island in Australia,
Guiyang and Nanning in China as well as Udon Thani in Thailand. SilkAir
was voted ‘Best Regional Airline’ for the seventh time in 2006 by readers
of Asia Pacific’s leading travel publication TTG Asia. It was also the only
regional airline to be featured in the top ten of Travel + Leisure’s ‘World’s
Best Airlines’ list for the second consecutive year.
(Reference: Annual Report 2007, Singapore Airlines)

23 | P a g e
 5)Market Potential

The Singapore airlines industry generated total revenues of $5.6 billion in

2006, this representing a compound annual growth rate (CAGR) of 10.1%
for the period spanning 2002-2006. In comparison, the Chinese and South
Korean industries grew with CAGRs of 15.4% and 8.6% over the same
period, to reach respective values of $16.8 billion and $6.8 billion in 2006.
Airline passenger volumes increased with a CAGR of 5.2% between 2002-
2006, to reach a total of 16.7 million people in 2006. The industry's
volume is expected to rise to 24 million people by the end of 2011, this
representing a CAGR of 7.5% for the 2006-2011 period. The international
segment generated all of the industry’s passenger volumes in 2006.This
was a volume of 16.7 million people, equivalent to 100% of the industry's
overall volume. The performance of the industry is forecast to decelerate,
with an anticipated CAGR of 8.3% for the five-year period 2006-2011
expected to drive the industry to a value of $8.3 billion by the end of
2011. Comparatively, the Chinese and South Korean industries will grow
with CAGRs of 17.5% and 9.2% respectively over the same period, to
reach respective values of $37.6 billion and $10.5 billion in 2011.
(Reference: Data Monitor Report, Airlines in Singapore)

24 | P a g e
 E) THE COMPANY’S MARKET VALUE:
1)Profit history: the evolution of key accounting
figures

a) Singapore Airlines Group Financial Highlights

Profit
Operating Profit before EPS after tax
Year Revenue Expenditure attributable to
profit taxation – diluted
ended (S$m) (S$m) equity holders
(S$m) (S$m) (cents)
(S$m)
31 March
7,795.9 6,941.5 854.4 1,116.8 1,033.2 80.6
1999
31 March
9,018.8 7,850.0 1,168.8 1,463.9 1,163.8 91.4
2000
31 March
9,951.3 8,604.6 1,346.7 1,904.7 1,549.3 126.5
2001
31 March
9,382.8 8,458.2 924.6 925.6 631.7 51.9
2002
31 March
10,515.0 9,797.9 717.1 976.8 1,064.8 87.4
2003
31 March
9,761.9 9,081.5 680.4 820.9 849.3 69.7
2004
31 March
12,012.9 10,657.4 1,355.5 1,829.4 1,389.3 113.9
2005
31 March
13,341.1 12,127.8 1,213.3 1,662.1 1,240.7 101.3
2006
31 March
14,494.4 13,180.0 1,314.4 2,284.6 2,128.8 170.8
2007
31 March
15,972.5 13,848.0 2,124.5 2,547.2 2,049.4 166.1
2008
% (99-08) +104,88% +99,49% +148,65% +128,08% +98,35% +106,08%

25 | P a g e
 Group Revenue ($ millions)

OPERATING PROFIT

26 | P a g e
 The financial situation until the end of March 2008 of Singapore
Airlines was really going in a good way. All the financial ratios have
increased at least of 100% from 1999 to 2008. For instance, the revenue
was in March 2008 $15,972.5M whereas it was only $7,795.9 in March
1999. The operating profit was only $ 854M in March 1999 whereas it was
$ 2125 in March 2008, so increased of 148.65% in the last 10 years with
an impressive increased of 61.6% during the last year. Furthermore,
Singapore Airlines in 2007, like we saw before was the third best airline
company in term of profit, so we can imagine they will do better for the
fiscal year 2008 as we can see the 2008 profit (until 31 of March) which
increased by 61%.

b) Situation of 2 big competitors, British Airways and

Malaysia Airlines

British
Airways
Net Profit/Loss Basic EPS
Year Ended Turnover (£m) turnover usd$ (£m) (p)

31 March 2002 8340 13427,7894 -142 (13.2)

31 March 2003 7688 12378,0389 130 6.7

31 March 2004 7560 12171,9529 130 12.1

31 March 2005 7772 12513,2828 392 35.2

31 March 2006 8515 13709,5475 467 40.4

31 March 2006
(Restated)* 8213 13223,3134 464 40.4

31 March 2007 8492 13672,5165 438 25.5

31 March 2008 8753 14092,7386 696 59.0

Malaysia
Airlines
Year Ended revenue(RM '000) revenue usd$ net profit EPS

31 December 2002 8864385 $2 472 080,15 336,531 38.7

31 December 2003 8780820 $2 448 775,73 461,143 36.8

31 December 2004 11364309 $3 169 253,44 326,07 26.0

31 December 2005 9181338 $2 560 471,30 (1,251,603) (100.20)

27 | P a g e
31 December 2006 13489549 $3 761 935,69 -133,737 (10.90)

31 December 2007 15288640 $4 263 662,22 852,743 58.05

30 June 2008 7527569 $2 099 271,85 160,508 6.77

We can notice than the revenue of Malaysia Airlines which is a strong

competitor of Singapore Airlines in Asia had growing up of 72% the last 5
years.

Concerning British Airways, its revenue is growing but much slower

comparing with Singapore Airlines since 2005. Indeed, the turnover had
only growing up of 5% the last 7 years when during the last 10 years
Singapore Airlines did almost 105%.

As concern the profit, we can notice that Singapore Airlines has the best
increased of operating profit comparing with its competitors with 148% of
growth in 10 years. Of course British Airways has good results but it’s not
the same for Malaysia Airlines which have often losses. Moreover,
comparing with the revenue higher of British Airways, Singapore Airlines
has a better profit, that means a better management and financial
situation.

To summarise the comparison with the main competitors of Singapore

Airlines, they all have the same trend of growing up until the beginning of
2008, but less quickly than SIA.

c) The change in the trend of airlines companies this year:

Concerning this fiscal year, that is to say from April 2008 to March
2009, Singapore Airlines seems to forecast a considerable decreased in its
profit.
What is the situation at the end of the 2nd quarter (September 30th)?

GROUP REVENUE AFTER THE 2ND QUARTER OF THE YEAR

(SEPTEMBER 30th)

28 | P a g e
GROUP OPERATING PROFIT AFTER THE 2nd QUARTER OF
THE YEAR (September 30th)

We can observe that the group revenue is still increasing but the operating
profit have decreased of 41.4% as concerned the first term of this year.

29 | P a g e
Indeed, Singapore Airlines announced a 36 per cent fall in profits for the
2009 fiscal year.
According to the Business Times “The profit of Singapore Airlines, the
world's most valuable carrier, in the three months to September 30 had
fallen to S$324 million (163,748 million of Euros)”.
However, we can notice that this trend is similar for the entire airline
sector, it’s even worse for many other competitors. They all see the
number of their passengers decreasing and their net profit too.

d) Why do the airplane companies have to face this

situation?

First, the financial crisis affects considerably the financial situation of all
these companies. They need a lot of investments to continue to grow.
Consequently, they cannot generate more activities and the revenue and
profit are slowing down. However, this situation is not only due to the
financial crisis. Indeed, analysts believe the combination of record high
fuel prices during the summer and falling consumer demand devastated
profits. Oil hit a peak of $147 a barrel in July but thanks in part of the
financial crisis the oil price is now $61, which allow a break for airlines
companies.

2)Share price history and market capitalization of the

company

a) Singapore Airlines Ltd:

The share price of Singapore Airlines company was $11,42 (6,05502 EUR)
on November 12th:

Its Volume is composed of 1,799,000 shares

Its Market Capital is $14,014.78M (7.430,97 M Eur)
Its Shares Out is 1,185.68M
Its EPS (TTM) is $1.50
Its Dividend & Yield is 1.55 (13.58)

30 | P a g e
 Source :reuters.com (Singapore Stock Exchange)

Singapore Airlines has seen its share price fallen by 29 per cent since the
beginning of this year. However, the big fall of the share price is probably
due to the financial crisis that began in September. Indeed, we can notice
that the share price was still around $15 at the beginning of September.

b) The competitors
o British Airways PLC (London stock Exchange)

The share price of Bristish Airways company was 143.10 GBp (171,133
EUR) on November 12th.

Its Volume is 13,388,167

Its Market Capital is 1,811.20pM (2.168,87 M EUR)
Its Shares Out are 1,153.63M
Its EPS (TTM) is 0.13p
Its Dividends & Yield are 5.00 (3.49)

Source :reuters.com

Here too, concerning British Airways, the share price has fallen of 62%
during this year with a big fall since the middle of September.

31 | P a g e
 o Malaysian Airline Company Bhd (Kuala Lumpur Stock
Exchange)

The share price of Malaysian Airline company was 2.80 MYR (0,620758
EUR) on November 12th.

Its is Volume 193,600

Its Market Capital is RM 4,678.78M (1.037,07 M EUR)
Its Shares Out is 1,670.99M
Its EPS (TTM) is RM0.48
Its Dividends & Yield are 0.03 (0.89)

Source: Kuala Lumpur Stock Exchange

Here too, the share price of Malaysian Airlines has decreased of 25%
between May and November 2008 with a big fall since the middle of
September.

To summarise, when we observe the trend of the share price of the 2 main
competitors of Singapore Airlines, we can say that the situation is globally
the same. Indeed, we saw that Singapore Airlines lost 29% of the value of
its share price since the beginning of the year, BA's share price has fallen
62 % in the past year and Malaysia Airlines lost 25% between May and
November 2008.
For information, all the competitors have seen this year its share price
fallen. For instance, Cathay Pacific has fallen by 54 per cent and Qantas by
47 per cent.
Moreover, due to the financial crisis, we observe that all airlines
companies like many others have seen their share price decreasing a lot in
the same period, that is to say since the middle of September.

Concerning the market capitalization, we can observe that Singapore

Airlines have a much bigger market capitalization than its 2 main
competitors. With 7 billions dollars, we can consider that Singapore
Airlines has a mid-caps market capitalization. Consequently, they have all
the advantages of big-caps and small caps. IMS Capital Management says
that over the past 20 years, mid-caps enjoyed a higher overall return than
either large or small caps. SIA is a group which the stability is there when
we are seeing 7 billions of dollars of Market capital and at the same time

32 | P a g e
not as big as the leaders; consequently, they should continue to grow to
be a leader in the future. It can show the well being of the company if they
continue to grow as they did the last few years. So, they will attract
without any problems new shareholders if they need more investment.

c) Situation of the Airline sector:

All airlines companies have to face with the financial crisis this year. It’s
the first time since the SARS epidemic in 2003 that we saw the global air
traffic shrank said the International Air Transport Association. For example,
Deutsche Lufthansa, Frankfurt's biggest customer have transported 1.4
percent fewer passengers in October than a year earlier meanwhile they
raised the fees to land by 2 percent to help offset the impact of falling
passenger numbers. However, the analysts think that in 2009, the
situation in the airline industry will grow again. Indeed, according to an
industry conference, when the impact of the global financial crisis has
passed, the air traffic should double every 15 to 20 years.

d) Analysts recommendations as concerned the share

prices of Singapore Airlines:

According to Reuter’s analysis of November 12th, the

consensus recommendation is to hold.

33 | P a g e
Analyst Recommendations and Revisions :
1 Month 2 Month 3 Month
1-5 Linear Scale Current Ago Ago Ago
(1) BUY 3 4 6 5
(2) OUTPERFORM 3 3 5 5
(3) HOLD 4 2 2 2
(4) UNDERPERFORM 2 2 0 0
(5) SELL 2 2 1 0
No Opinion 0 0 0 0
Mean Rating 2.79 2.62 1.93 1.75

As you can see on this scale, analysts think it’s time to hold the shares.
It could also be interesting to buy SIA shares even if it was more
interesting few months ago. On the other hand, we are quite sure that
selling would be a bad idea. As we saw before Singapore Airlines is in “the
Mid-Caps” Market, so we can say that they are relatively stable and they
should continue to growth in order to be the leader of the airline sector,
especially in Asia and on the luxurious market.

o How can we explain this situation?

The company has to deal with the financial crisis in this period.
Consequently, the value of its share price is decreasing. However, the
demand should be increasing from January and all ratios seem to persuade
that SIA is going to make more profit in the future. The return on
investment is 9.95 for SIA for only 0.26 in the industry and 2.31 in the
airline sector. The return on assets for SIA is 7.18 when it’s 0.19 in the
industry and 1.44 in the airline sector.
The gross Margin is for SIA of 43.88 and only 2.26 for the industry and
8.64 for the airline sector. The net profit Margin is for SIA of 11.14 and only
0.30 for the industry and 0.39 for the airline sector.
To summarise, all ratio show the good financial situation of Singapore
Airlines and even if its share price is decreasing because of the crisis, the
high price of oil and less passengers, we can be optimist for the future.
Moreover, to be in a Mid-Caps market, SIA should have certain stability
and at the same time should continue to grow. As IMS Capital
Management says, mid-caps enjoyed a higher overall return than either
large or small caps. Consequently, if you have SIA shares, hold them.

F) STRATEGY FOR DEVELOPMENT

Since its beginning, SIA is facing diverse strategies of development:
from focus to diversification including internal and external growth
methods.
Three periods will be analysed to know the different strategies used.

1) The beginning or the past

34 | P a g e
 focus strategy:

They have a strategic plan under which a firm concentrates its

resources on entering or expanding in a narrow market or industry
segment. It is usually employed where the firm knows its segment and
has products to competitively satisfy its needs. Focus strategy is one of
three generic marketing strategies (see differentiation strategy and low
cost strategy for the other two) that can be adopted by any firm. In our
context, we can say SIA by remaining specialised in air transportation
services (passengers) start with the focus strategy.

o 1) From May 1947 to 1972.

SIA was in alliance (in transportation services) with Malaysian
Airways Limited (MAL).

o 2) From 1972 to 1989:

The alliance ceased due to political disagreements between

Singapore and Malaysia. At this period, SIA started to modernize its
services by choosing the luxury as range of services (always in
passengers’ air transportation). The result was a rapid growth.

o 3) In the 1970s:

SIA saw a rapid growth. And according to Mr Yong Nyuk Lin, then
Minister for Communications at the welcoming ceremony of the first
2 SIA-Boeing 747s at Paya Lebar Airport on Monday 3 September
1973:” May I emphasise that SIA as an organisation will continue to
succeed only so long as the men and women behind it will not relax
but continue to work diligently, plan boldly, and strive for excellence
in performance”.

The modern history: mixture of focus and diversification.

Diversification is a form of growth marketing strategy for a company. It

seeks to increase profitability through greater sales volume obtained from
new products and new markets. Diversification can occur either at the
business unit or at the corporate level. At the business unit level, it is
most likely to expand into a new segment of an industry in which the
business is already in. At the corporate level, it is generally very
interesting entering a promising business outside of the scope of the
existing business unit.
It the case of SIA, the diversification concerned the business unit level.
Singapore Airlines has diversified into related industries and sectors,
including ground handling, aircraft leasing, aviation engineering, air

35 | P a g e
catering, and tour operations. It has also developed strategic alliances,
partnerships and acquisitions.

o From 1989 to nowadays:

The airline has invested in other airlines in a bid to expand beyond

its Singapore base, although the results are often financially
negative.

In 1989, it went into a tripartite alliance with Delta Air Lines and
Swissair,[41] but terminated their partnership in 1999 after divesting
their 5% equity stake in each other's company.

The airline purchased 25% of Air New Zealand in 2000. However,

following the near collapse of Air New Zealand the New Zealand
government bought into the airline to rescue it from bankruptcy, reducing
Singapore Airlines' stake to 4.5%. This was subsequently sold in October
2004 at a substantial loss. Boeing 747-400 lined up for taking off at
London Heathrow Airport, England.

SIA bought a 49% stake in Virgin Atlantic Airways on 30 March 2000 worth
600 million pounds in cash in the hope of leveraging on it on the lucrative
transatlantic market, but by 2007, there has been reports of
underperformance and the possibility of divesting its stake. On 14 May
2008, the company formally announced an invitation for offers for its
Virgin Atlantic stake, and publicly acknowledged that its stake in the
airline has "underperformed".

In September 2004, the airline entered the low-cost carrier market by

establishing Tiger Airways with a 49% stake, in partnership with Indigo
Partners LLC, the investment firm founded by Bill Franke, (24%); Irelandia
Investments Limited, the private investment arm of Tony Ryan and his
family, (16%); and Temasek Holdings Pte Ltd (11%).

Type Principa Incorpor Group's equity

l ated in Shareholding
Company
activitie (31 March 2007)
s
Singapore Joint Engine Singapore 41%
Aero venture overhaul
Engine
Services
Private
Limited

Internation Joint Aircraft Singapore 41%

al Engine venture overhaul
Component

36 | P a g e
 Overhaul
Private
Limited
Virgin Associat Holding United 49%
Atlantic e company Kingdom
Limited
Tiger Low-Cost
Airways Associat Airline
Singapore 49%
Private e
Limited
TajSATS Air Joint Catering India 50%
Catering Venture
Singapore Subsidiar Holding
Airport y company
Terminal Singapore 81.9%
Services
Limited
SIA Subsidiar Engineeri
Engineerin y ng
Singapore 81.9%
g Company
Limited
Singapore Subsidiar Flight
Flying y school
College Singapore 100%
Private
Limited
Singapore Subsidiar Cargo
Airlines y airline
Cargo Singapore 100%
Private
Limited
SilkAir Subsidiar Airline
(Singapore) y
Singapore 100%
Private
Limited

2)Methods of growth: INTERNAL AND EXTERNAL

o From 1947 to 1972:

SIA was developing via an alliance with Malaysia Airlines System

(MAL).That means the growth was due to the external way (costs
and investments shared).

37 | P a g e
 o From 1972 to 1989:

The alliance was over; so SIA had to count on itself by using its
internal resources/competencies (even if it is the parent airline
company of the Singapore Airlines Group of companies).

o From 1989 to nowadays:

SIA is developing more and more partnerships and M&A as we can

see in the above table. Thais growth is supported by:

External ways: SIA share costs and investment with the partners.

Internal ways: SIA is among the leader, so has a good financial

performance due to its excellent customer services): Singapore Airlines
generates revenues through four business divisions: airline operations
(95.6%) of the total revenues during FY2008), engineering services (2.1%),
airport terminal services (1.8%), and others (0.5%).

3)General analysis

It was just around at the beginning of the 1990s that we can deeply
analyse the different strategies used by SIA. That means since this period
to nowadays, SIA knew:

A focus strategy based on specialisation on a certain segment or

industry (transportation services, mainly in passenger one. To succeed in
that strategy, a company has to always find out some new ideas
(innovation). Indeed, SIA has a continual improvement services.

A diversification strategy based on investment via acquisition, joint-

ventures, alliance into related services in order to support the main
activity, the air transportation services. But the danger with this kind of
strategy is the ability to have high financial performance to support
investments for excellent customer services. Again with that strategy the
company has enough cash flow, money to support that (it has a positive
financial performance).

a) The reasons that pushed SIA:

To focus: to be leader and maintain its position in that industry by

offering innovative, excellent and selective air transportation services
than the competition; and the strong role of the iconic Singapore girl in the
branding strategy. (It has a good positioning in the market, received many
awards). But, it might be risky for SIA if there is no diversification of its
activities at a corporate level. Indeed, it could be dependant to that

38 | P a g e
industry (the competition is getting hard and stronger) and it cannot put
more changes in its brand strategy (iconic girl) because it is the main point
of its success.

To diversify: SIA diversified into related services in order to support

and having a full control into that industry (from the passenger to the
ground services and also to take care of its aircrafts with the engineering
services). Moreover, SIA is developing its market by new destinations (e.g.:
in New Zealand).

b) What’s next?

SIA should keep doing more and more M&A, alliances in order to
diversify and to develop its market, but always a focus on the core
activities (air transportation services). Indeed, this last point is the point of
differentiation of SIA. The latter point retains all the attention of the
different managers in order to always and fully meets the high
expectations of the customers.

c) A future of firsts:

Singapore Airlines made Aviation history when the Airline became the
first to operate the world's largest aircraft, the A380, on the 25 October
2007 between Singapore and Sydney. The A380 also operates to and from
London and between Singapore and Tokyo.

In addition, Singapore Airlines introduced its Suites - in a class beyond

First, together with cabin improvements in all other classes while still
providing excellent service. The future promises to bring more firsts like
these, as Singapore Airlines continually strives to drive quality service
through innovation.

39 | P a g e
 G) GENERAL OPINION ON THE ENTIRE
STRATEGY OF THE COMPANY
The strategy of Singapore Airlines seems to be successful thanks to
their strong brand and the high quality of their services. Indeed, SIA is an
innovator and more than the price, they want to reach all the time their
main goal: the customer satisfaction. Indeed, we saw in this report that
SIA achieved well its goals. However, nowadays, with the actual economy,
things are changing. Consequently, to stay efficient, they have to be
constantly aware of these changes and of the new needs and behaviour of
their customers and of the potential market. Are they going to continue to
take the right decisions?

What keeps the chief executive awake at night?

The chief executive of Singapore Airlines must have to think about the
challenges SIA has to face in near future. Firstly, Due to the current
increase in prices in aviation fuels, SIA has to decide whether to cut down
new routes or replace old aeroplanes.

SIA has already established itself a leading brand among Airline

Industry, so to maintain its own benchmark it has to perform consistently.
But the most striking issue involves aeroplane emissions causes a lot of
damage to environment which leads to Global Warming. International
protocols on Aviation Emissions are inevitable in this regard.

The competition in South East Asia is expanding to rest of Asia, Europe

and America. Lots of new age airlines like Kingfisher Airlines based in
India, regional airlines like Thai and Malaysian Airlines are bound to
challenge SIA’s market leadership in the region. Also, competitions from
its arch rival Cathay Pacific are bound to get further intensify. SIA’s
business model is being critically analyzed by its main competitors. Old
Giants such as British Airways, Qantas, Japan Airlines and Continental
Airways will further intensify the competition.

The training programs of its in-flight crew and ground staffs for SIA are
now being analysed sharply by every airlines operating in international
routes. So, the chief executive has to make sure SIA continues to deliver
service excellence in its operations. But the chief executive will derive
confidence from SIA’s main philosophy that is to continuously innovate
and improvise in every quarter of its operation.

Managers have to be careful of the strategy based mainly around the

Singapore Girls. Indeed, the day this will become old-fashion, it can
become obsolete and so SIA will lose customers. Managers have to think if
it’s time to change soon this strategy or not.

40 | P a g e
 Lastly, the low cost airlines that operate in South East Asia, will keep
away a large segment of probable passengers at bay. But with Emerging
Asia, and SIA’s zeal to give its passengers ‘the very best of customer
experience…’ the future looks exciting.

Question we could ask?

Q1) The on going global recession is bound to make an impact on SIA’s

strategy. How SIA is going to cope up with the on going global recession,
with people are certain to cut down their expenditure?

Q2) Is the SIA strategy of growing by all the possible ways, by merger
and acquisition or in diversifying its activities (catering, terminal and
ground services) not going to affect its main activity and goal, the high
quality of services in passengers’ transportation?

41 | P a g e
SOURCES:

• http://www.timing.net/stock-market-article5.php
• http://www.mcbup.com/research_registers/tdev.asp article“Beyond
Singapore Girls”
• www.hoovers.com
• “Singapore Airlines Winning’ formula” by Zellna
• “The story of Singapore Airlines and the Singapore Girl” by Daniel
Chan
• Reuters.com
• Wikipedia.org
• Business times magazine
• EBSCO (Sup de Co extranet)
• Market line (Sup de Co extranet)
• Yahoo finance
• Singapore Airlines finance website:
http://www.singaporeair.com/saa/en_UK/content/company_info/investor/financials.jsp
• “Managing human resources for service excellence and cost effectiveness at Singapore
Airlines” by Jochen Wirtz
• Sinagapore Airlines: The excellence in services by Jochen Wirtz and Robert Johnston.
• London Stock Exchange
• Singapore Stock Exchange
• Kuala Lumpur Stock Exchange

42 | P a g e