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BACKGROUND
A standard Airline:
More than years the Singapore International Airlines has built up a well-built
brand name as a pacesetter in the aviation industry, mainly in terms of
safely, innovation and service quality. Its heart on the separation of its
services from other airlines has made it one of the most thriving and
identifiable airline brands in the recent earlier period. It is also an industry
bellwether for air-craft purchases. Its major shareholder being the
Government of Singapore, SIA has always received remarkable support from
them. It is the parent airline of the Singapore Airline Group of Companies. It
has expanded into airline-related businesses such as aircraft handling,
engineering and catering. The Singapore girl as we know is what the
hostesses are called- is recognized as a symbol of excellence in service
quality. The idea of choice of meals in the “economy class” was first
pioneered by the SIA. Other substantial and elusive discriminations were first
initiated by SIA which is now imitated almost by all major airlines.
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Then came the other airlines who did not waste any time in replicating many
of the outstanding advances prepared by SIA. SIA’s enlargement as a carrier
came through their policy of differentiation. But soon it became a custom, as a
result of the other airlines’ acclimatizing the ways. The breathtaking additions
of luxury such as choice of meals in economy class, pioneering entertainment
options etc that were introduced by the SIA which became their specific field,
no longer remained so. Core concern was the mounting competition from
International carriers headquartered in the neighboring countries, such as
Thai Airways, Cathay Pacific, Malaysian and Qantas. They replicated some of
the key features of SIA’s competitive policy, which incorporated recruitment,
in-flight service, fleet management and so on.
To make its existence effectively about in the world, SIA in order to swell its
business, acquired 25% of Air New Zealand, but as the Air New Zealand
became insolvent, the deal turned unpleasant and SIA lost about $157 million.
Around the year 1999, SIA bought a 49% stake in Virgin Atlantic Airways
worth $1.6 billion. By 2007, it lost 60% of its worth. Many said that the
affiliation was not functioning because of the different cultures of the individual
airlines. Mr. Chew Choon Seng the CEO of the SIA was faced with a exigent
task of determining the competitive strategy of SIA in unstable times.
Traditionally, due to the national and international rules, the airline industry
based on the limiting effects was disjointed. Each country has its own landing
rights and local ownership necessities. The large airline companies enlarged
dominance only on their own regional markets. That’s the best they could do
even being industry’s biggest airlines. The competition was divided into each
region and it was not universal. The solitary reason being different countries
not permitting other airlines to have their business in their countries and only
the government owned national carriers were given the sovereignty to run
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their business in their individual countries. Exemption was the United States,
where they did not allow the national carriers to control rather they
encouraged a fair competition among the airlines inside their country.
Nonetheless the situation in due course changed in the 1990s when the
industry began to change as a result of the deregulation, privatization and the
introduction of the new technologies.
United States deregulated its airlines in the late 1970s and as a result it has
observed the severe competition among the airlines in its country. Europe,
soon after the formation of the European Union, terminated the country-
specific barriers and allowed free-market competition among the carriers. As a
result they also entered the world of competition of the airline industry. In
Asia, some major regions started allowing greater access to foreign carriers.
Japan took an colossal step in the process of deregulation by selling off its
shares in the then state-owned Japan Airlines and authorized All Nippon
Airways to serve international markets. On the other side of the orb, in South
America, many small national flag carriers were privatized. Countries such as
Argentina, Mexico detached the anti-competing barriers and infused
substantial levels of market competition in their airline industry. They also
privatized their national carriers.
This tendency gained a lot of significance and approval. Countries such as the
European nations were by then having negotiations with the United States to
operate an open transatlantic market area where landing rights would be
determined by free market forces rather than regulatory process. Thus, the
traditional airline industry coming to an end. The age of globalization started.
Nations started having open-skies agreements between each other. There
agreements were mutual agreements between countries that agree to provide
landing and take-off facilities for air-carriers coming from any of the partner
countries.
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regional powers, but many airlines tried to make coalitions with the other
leading carriers, in order to provide perfect services across the wider
geographic regions. These alliances made most of the larger airline
companies into de facto global organizations. That is they became a group
and cooperated with each other in order to provide services to customers.
Due to globalization many regions were witnessing the significant and intense
competition among the airline companies. It was clearly exposed in case of
the fares offered by the airline companies. There were high fare wars among
them. Since the customers had more options to choose from, they became
concerned and more price-sensitive then ever before.
The competition became so intense and acute that many carriers started to
focus only on their service offerings. They concentrated on upgrading their
service offerings. To sustain the competition, many carriers in the process of
improving their service offering, contributed in the declining yields in a price-
conscious market. The presence of so many airlines competing with each
other worsened the situation. The passenger-revenue yield declined in all
geographic regions. The carriers around the world were passing a very tough
and challenging stage in order to extract higher levels of efficiencies from their
operating structures.
During the late 1990s had become a tradition for the carriers around the world
to be a part of the coalitions. By 2004 most of the key airlines were part of
mammoth alliances. These coalitions have developed in order to include quite
a lot of carriers under a single coalition brand. One such coalition was called
the star coalitions and it incorporated ten-carriers on behalf of Asia-Pacific,
North America, Latin America and the Europe. Another similar network of
partnership included eight carriers across a similar geographical territory to
Star.
The reason of the existence of these alliances was to redirect traffic, increase
profitability, and help leverage scale economies in operations. In addition
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and development of the people of the country. He believed that these all
helped to augment the quality of human capital. By 2004, Singapore had the
highest rate of literacy rate in the region. Mr Lee Kuan’s vision did pretty well
fit as one with the Singapore’s Confucian work ethic. It strained on
responsibilities over rights and placed huge value on features such as
hospitality, caring and service- the biggest asset of Singapore. Thus, as a
result of all these, Singapore ranked among the best countries in terms of
human capital in 2004 and was often looked upon as the sociable place to do
business with. But with the rising of standard of living meant a higher wage. In
addition to that the small size of the local population and a very low
unemployment rate, the availability of labor was seen as a potential obstacle
in the drive toward further growth. Many large companies were already
depending on a considerable number of expatriates, that is they were highing
labors from other countries, particularly the from the neighboring countries
and west in the workforce.
Mr. Lee supported free-trade and internal driven growth. He believed that the
business organizations must be self-sufficient, like in the air-sector he
declared that SIA although a national carrier of the country would not receive
any subsidies or protection from the government. The company has to be
completely on its own and has to use only the resources and skill it owns.
Singapore adopted the free-skies agreement policy at that time and allowed
foreign flag carriers from other countries to serve the city-state without any
restrictions. This increased the competition among the carriers, especially
SIA. But the free-market policy on the other hand resulted in sharper rates of
market growth. As during that time, almost 35% of the equity base shares of
Singapore were foreign in origin. In addition, 17% of shares of all companies
in the country were owned by foreign investors. Both of these demonstrated
the successful programs that attracted foreign capital and commerce to the
country. In the all over development of the country, Tourism played a very
significant role. Since the country was small in size, and lacked natural
resources, Singapore heavily had to rely on service industry such as tourism
and finance to generate growth. On of the advantages the country has is that,
it has always enjoyed a status as an important geographic hub since the
British colonization era. It has become an important Asian tourist hub since
during the time when Singapore was a British colony, it acted as an important
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stop-point for the travelers from Europe to the outlaying colonies of Australia
and New Zealand.
Both in terms of operational performance and its profitability history SIA was
doing really great. The record it had created was envied by the other airlines.
SIA was one of the few Asian airlines which continuously posted profit even at
times of economic downturns in the 1990s in Asia. However, its short-term
performance record began to decline as a result of SARS attack in the south
east region and the Middle East crisis and the global economic conditions that
had taken hold of most of its key markets. In view of all these major issues,
the company was looking for alternative courses of actions to survive in the
industry.
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SIA has been all along known for its ground services. They were known for
giving better services and they did it by building a strong arrangement of
completely owned subsidiaries and joint ventures to offer operational support
in the areas such as catering, terminal management, and aircraft
maintenance. The subsidiaries were largely managed as an autonomous
entities and it had to bid for orders from the parent company. In many of the
core areas they were rated as number one. One of the largest of the groups
was The Singapore Airlines Terminal Services (SATS). This group specialized
in terminal management which includes management services such as
catering, passenger and baggage handling, and ramp operations. SATS are
one of the largest flight kitchens in the world at Changi International Airport.
On average they produce about 45000 meals a day. Some of it’s clients were
the British Airways, Quantas, Lufthansa and Japan Airlines. In addition to that
SATS serves 70% of all airlines that fly in to Singapore. SATS also went
global by going in to joint ventures in Beijing, Hong Kong, Chennai, Manila
etc.
The Changi International Airport was indeed very significant for the SIA. The
SIA being the national flag carrier was also very important for the Changi
airport. The SIA managed the airport. It was considered as one of the best
airports of the world and often got top honors for people handling efficiency
and cleanliness. One such example would be the delivery of passengers’
baggage within 10 minutes after arrival. It was really hard to sustain such high
standards but thanks to the efficient subsidiaries, especially for the SATS, the
SIA could continue offering such services. Changi was also the home for the
SIA Engineering Company, another subsidiary of the SIA. They provided
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The SIA was one of the first airlines to bring in the electronic ticketing through
its website. Online ticket booking was allowed all over the world where the
SIA had their hubs. For its customer’s convenience, it introduced the
automated check-in systems on certain flights and it attracted a lot of
travelers. The company adopted technologies in variety of forms, allowing
check-in via e-mail, telephone and fax. For the first-class and business-class,
the SIA offered the Silver Kris Lounge, which was an illustration of
sophistication and a demonstration of exoticness that reflected the culture of
Singapore. The lounge consisted of plush armchairs, deep-pile carpeting,
aquariums, tropical gardens and paintings by the original Singapore artists. It
also comprised the top of the line business equipment such as computers, fax
services etc. It was undoubtedly one of the world’s largest and most luxurious
airport lounges.
The SIA started very small and when it started it just had a fleet of just 10
aircrafts and covered 22 destinations. But gradually, over the years SIA’s
position became stronger and stronger. By 2003, it was operating a fleet of 97
aircrafts and most of them were capable of long-haul, large-capacity flights.
The SIA was also in the process of ordering more aircrafts and was one of the
first airline companies in the line to purchase the 500-plus passenger, double-
decker mega liner that Airbus would unveil shortly. The SIA followed a very
careful and expensive fleet acquisition policy. The policy was such that its
fleet average was a little over five years old. It was the world’s largest
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The advantages with newer aircrafts were that, the aircrafts were more fuel
efficient. Besides less maintenance were required than the ones that were
old. The SIA Acquired fleet of aircrafts through two ways: By leasing and by
purchasing it outright. This was done primarily during economic lulls to
acquire more new fleets, thus taking out the maximum value for its
investment.
SIA’s Fleet selection reflected their outstanding ability to satisfy their potential
customers. They emphasized on fleet selection because the company
believed that this indicated the fact that they as an airline would provide top of
the line technology, comfortable seating and a safe trip. All of these were
considered as an important feature as far as differentiation strategy was
considered. It has probably concentrated the most on the customer
satisfaction as far as the airlines were considered. The SIA always designed
the interior of their aircrafts that for all the times included the latest amenities.
As we know the SIA has been one of the very first airlines to offer personal
video screen in every seat, including the economy class. The in-flight
entertainment ‘The Kris World’ that it offered, delivered 22 video channels, 12
audio stereo channels and nine Nintendo game channels at every seat, with a
Dolby surround-sound system and it was specially designed by the SIA. The
First Class Cabin became a benchmark for the industry. They had four
variations in the First class and they were truly something to look at. The first-
class consisted of arm-chair seats types that converted into comfortable beds
with switches. It used the most sophisticated and expensive type of seat
covers. It used Connolly leathers for the seat covers. The seats had built-in
communication devices and inflatable air mattress. On long trips the bed
linens in the first-class were changed by the cabin-crew. It truly showed how
much the SIA gave importance to customer satisfaction. All the service wares
were designed by the famous French Fashion house “Givenchy”. The SIA
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wanted to make all its passengers feel special, regardless of which class they
were traveling to.
The SIA made sure that the economy class passengers feel the differences
and superiority offered by the company. The seats they provided were wider
than average with spacious leg room, leg rests, video screens, and its
ergonomic headrests.
SIA always was ahead in the race as far as providing services were
concerned.19 years ago, SIA introduced in-flight telephone using the
advanced communications technology. SIA was the first to introduce Dolby
surround sound and personal video screens in coach. The SIA was also
started the fax services in the air. Discussions were on the way to upgrade the
communications package to allow Internet access on flight. The SIA also
introduced an entertainment system called the ‘‘WISEMEN’’. It was available
for the first class and the business class. The specialty of this entertainment
system was that it functioned like a personal home theatre and featured a
range of movies and other entertainment options that passengers individually
could choose and control.
The SIA always appreciated its employees and considered them to be the
most important advantage for the company. As without them there nothing
would have been possible. It was for the services provided by the employees
that the company was in such a desirable position in the industry. The SIA
offered top-of-the-line services and the company was known for the
marvelous services they provided. SIA turned its human assets into a
significant source of competitive advantage through a brilliant combination of
organizational culture, training and rituals. The main source of employees was
Singapore and Malaysia. In 2003, the SIA employed around 14000
employees worldwide. It was the highest number of recruitment by any private
organizations in Singapore. The SIA also started a Training Centre in
Singapore. Its main objective was to train the cabin crew, commercial staff,
and flight crew and flight operations personnel of SIA. SIA followed a
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The base of the dedicated employees and the reason for their
unhappiness at the end:
The employees were hired from worldwide. The pilots employed, came from
over fifty countries. They were drawn to the SIA mainly because of their
desirability of flying the latest equipment under professional working
conditions. For this very reason they did not mind working at a very generous
level of compensation. It was very apparent as SIA gave a lot of importance to
the latest equipments and having a superb quality working conditions. The
SIA had its own flying college with facilities in Australia which focused on
improving the training efficiency and producing qualified pilots. The SIA also
made this college a base for the learning Singaporean pilots in order to meet
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the demands. The SIA also had a high-tech flying facility in Singapore which
had eight flight simulators to taint he pilots. All the employees were required to
go through the mandatory biennial proficiency checks. The company believed
the reason they were able to achieve the high levels of safety was because
the training centers were quite well-administered. The company’s long-term
target was to get as many Singaporean pilots as possible because the
Singaporean pilots represented a very little of the total number of pilots the
company had. The Singapore Armed Forces graduates were given
responsibilities to train the pilots for defense purposes. After the training some
of the pilots joined SIA. The company’s half of the pilots were expatriates. The
expatriates were generally paid more then the Singaporean pilots. As the
compensation for the expatriates included variety of expenses such as
housing, travel etc.
In the start when the company proclaimed and conversed bout the financial
conditions of the company and about taking projects like cutting down the
operating cost, the employees were very cooperative with the authority; they
agreed upon the wage-cut decision in a friendly manner and were very
understanding. They believed that they were a part of the organization and in
such economic downtimes; it was a way of showing their commitment to the
organization. The incident of cut-offs during the 2002-2003 session brought a
change in the employees judgment. They started to recognize the whole
situation and felt vulnerable. Many employees who, previously have
cooperated and understood the situation were publicly expressing their
concern regarding the wage-cuts and lay-offs. They viewed the whole event
as self serving, since although they gave reasons of financial crisis due to
SARS attack and middle crisis, even when the situation was under control, the
organization did not take any steps. It was difficult for the employees to trust
the company. They were always worried about their jobs, since it was the very
first time that SIA has had a large number of lay-offs and the employees
suspected that their job is at risk too.
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The hiring of the cabin crews ,along with the image of the
“Singaporean Girl”:
SIA alleged that the cabin crew acted as the brand representatives for the
company. So they had to reflect the high standards of service excellence that
its passengers expected. For this reason the complement of the cabin crew
was chosen through a very rigorous selection process. The cabin crews were
hired from the south, south-east Asia region but most of them were from
Singapore. The SIA’s main pool for recruitment was Singapore but this was
constrained by the shortage of labor available in Singapore market. Hiring
employees from Singapore had a lot of advantages including the fact that the
fellow people were paid less than the foreign employees. Since SIA had been
one of the airlines with lower labor costs among leading carriers, they had to
have more recruitment from its own country. Failing to do so would directly
affect its operating costs as then they had to go for hiring expatriates.
This fact would also contradict with their historic branding approach, “The
Singaporean Girl” if they had to fit in cabin crew from other countries. Also,
this factor was crucial as when SIA started off; it had to compete with other
established carriers. In order to differentiate itself from the rest, the company
launched the Singaporean girl as the embodiment of caring, comfortable,
hospitable service. This paid off immensely as all this Oriental mystique was
then a big attraction for the western world.
Since the Singaporean girl image was a part of their business strategy, they
nurtured it very carefully. They wanted their cabin crew to be perfect. That is
why; it started off with a rigorous selection process and ended with an
extensive training. They trained them on areas such as passenger handling,
social etiquette and grooming. The SIA programs were long and more
extensive then the other carriers programs. The programs also included some
nontraditional aspects, for instance, the company went as far as making the
trainees stay at homes of the aged to gain a better knowledge on the special
needs of this fast growing passenger segment. The cabin crew adopted
service-oriented behavior and followed the rules strictly. These training
programs were repeated periodically so that the crew could get acquainted
with new cabin management technologies and service standards every time
they were altered. Once they were in the fold of the organization, they learned
to help each other in order to provide the best services for the organization.
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For the betterment of the employees and to become accustomed to their job,
toward the end various practices such as detailed performance reviews and
feedback at all levels, career counseling and performance based reward
system were designed.
The SIA took advantage of the local labor laws and practices while recruiting
cabin crew. The male staff was hired as regular employees. However, the
female employees worked on a five year contract basis, which was renewed
at best for five years. The female employees were 60% of the total number of
employees.
SIA’s in-cabin service became the gold standard in the industry. It was the
benchmark for the other airlines. It was ranked overall as the “Best
International Airline” by a recent survey done by a well-known and respected
travel magazine’s for the tenth time was chosen for this prestigious honor. To
add, the award has been given for eleven years. This award, though were
nothing new for SIA. The company has been receiving awards such as Zagat,
Conde Nast, OAG Worldwide, ASEAN Tourism Association and magazines
included Asia Money, Business Traveler etc.
To gain the control over alliance SIA took some important decisions which
later came out to be a bit costly for them. Such as, SIA acquired an 8.3%
equity stake in Air New Zealand to strengthen the partnership with the New
Zealand carrier. Since Air New Zealand already owned 50% of Ansett
Airways, SIA would have the benefit of the additional alliance with Ansett as
well. These things expected SIA to make position in the Australasian market
which was growing rapidly but it destroyed when Sir New Zealand’s fortunes
turning into worst position. The Government raises capital to hold up the
company but it weakened SIA’s ownership in this company. SIA left the
company with a large amount of loss and hasty retreat from the initial foray to
establish control of the key Australia- Asia routes.
The second move of SIA was to acquire the 49% of the equity with UK based
Virgin Atlantic Airways for $1.6 billion. This was the fairly steep price to pay for
a deal that offered little operating control in the near term for SIA, but the
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Virgins thought that this partnership would give SIA the ability to control their
transatlantic routes, among the most lucrative worldwide. Virgin was popular
for their exacting service standards. They were constantly going up to the 2nd
position behind SIA in most surveys of customer satisfaction. The partnership
ultimately goes wrong. Virgin’s decision not to join the Star Alliance placed
SIA in delicate position and the threat of invoking the ire of other alliance
partners should it favor Virgin over United and other for channeling some of its
transatlantic passengers. On the other hand rejecting the opportunity to
participate in the venture of Virgin Blue, which later posted very good returns
in the Australasia market was another wide of the mark decision of SIA.
Asia had slow in responding to the phenomenon of low cost carriers. But to
saw the success of such companies like easy Jet and Ryan air in Europe and
Southwest and Jet Blue in the U.S., many new competitors engaging on the
Asian market. On the earlier years, the Asian market were only fly the longer
flight distances, they had only few alternative airport options for take off, and
lower passenger destinies, but now a days these barriers had broken, and low
cost carriers were alternate to these positions. Early 2003 they were six main
competitors in the market and another one wants to enter this market using
Singapore as a base. After the arrival of easy Jet and Ryan air in Europe
using their experience of the large network, the large players in Asia, such as
SIA, were facing unbelievable pricing pressures. Many of the new players
were focusing on South Pacific and East Asian routes, prime SIA territory.
Air Asia and Virgin Blue faced threats. Air Asia was based in Malaysia and
offered services at highly discounted rates to domestic destinations within the
country. Its operations model used Kuala Lumpur as its central hub, but plans
were on the anvil for expanding into Johor, a location that was within driving
distance from Singapore. It plans to fly with approximately two million
passengers by 2004 even though it had a small fleet of seven Boeings 737.
Its attractive price drove passengers to this way. It offered a round trip from
Kuala Lumpur to the resort island of Penang for only US$10, while Malaysia
Air, charged US$101 for the same trip. Air Asia also boasted that it had the
lowest cost for any passenger airline in the world at US2.5¢ per available seat
kilometer compared to US5.1¢ for SIA. Air Asia set challenges to SIA in the
near future. It had recently scouted Changi international and Seletar Airport in
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Although few carriers could legitimately claim to be global carriers, by the late
1990s the competition in the airline business had become distinctly global.
Carriers of Asia-Pacific region had offering the low fares which was the
premium services of SIA and had strengthened their positions in Europe and
North America through the alliances. The strategy SIA fixed to compete in the
airline business was to take some important steps to fortify its position
globally. SIA joined one of the powerful networks of carriers in Lufthansa,
United, Annett, Air New Zealand, All Nippon Airways, South Africa Airways,
Air Canada, Thai, Varying, and SAS named the Star Alliance. SIA expected
that this would let the members to increase revenues and their efficiency by
core sharing services, fine-tune traffic flows. They combined their buying
power to secure the inputs like; food and allied services. By joining the Star
Alliance, SIA had entered into several destinations that they did not serve yet.
By using the code sharing, SIA took off with a large number of passengers to
their destinations within Europe and the United States. Before joining to the
Star Alliance, SIA served only four major cities in the U.S., Los Angeles, San
Francisco, Las Vegas and New York. But for joining them the limited set of
destinations changed to the large number of primary and secondary cities of
United and the relationship extend between SIA and United. The new
relationship with Varying also influenced to fly to more destinations in South
America which was not well represented region in SIA’s route structure.
Despite this advantages, the alliance network brought with it some concerns.
It remained to be seen whether the other network carriers would be able to
rise to the levels of SIA’s hallmark service standards. However, despite the
obvious advantages, the alliance network brought some concerns like
restoring the brand image of SIA which it so carefully nourished over the
years, specifically with its loyal first-class and business-class passengers. The
collective group of companies joined the network which delegate some
aspects of brand management such that the identity of the network would go
beyond to the individual identities of the members. Some loss of controls also
creates future challenges for SIA like; scheduling and flight frequency. It also
raised critical questions about the immutability of core competences. Would
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the partner firms be able to learn more about the critical aspects of SIA’s
recipe for sustainable competitive advantage?
Mr. Chew Choong Seng had faced challenges in competitive issues in front of
him. How should SIA be distinctive from the copycats who copy and made a
great job in terms of cabin service and amenities? What tactics could SIA do
from which it separate itself from the copycats? The amount of people who
gave their best to built up SIA at the top most level, they were now disgruntled
after the salary cut offs and stuff cuts, SIA started to motivate those people to
help again to reach SIA up again like its past days. It was the time to face and
conclude the threat of low cost competition before it became a larger
phenomenon. How should the emergence of low-cost carriers be addressed?
SIA is at the cross roads in its history and the next few strategic moves would
determine the rise of the best Asian Airline to become a global player
commanding the respect of the world’s largest carriers. SIA needed to
compete with the low cost competitors and it’s the time to pass away from
their distinctive premium approaches to rise again in this newly competitive
airline business.
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Theme
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MAIN ISSUE
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SWOT ANALYSIS
SWOT analysis is a formal scrutiny of a firm considering its vital advantages
and disadvantages arising from both internal and external factors. SWOT can
be broken down in to its sub-components which are; internal factors include
Strengths and Weaknesses, external factors include Threats and
Opportunities. The reason for differentiating internal and external is that
internal factors can be changed in favor of the company whereas; the
company has no control over the external factors. It is also considered of an
indispensable value to the business for various reasons. Most important of all
is it provides the company a chance to understand its various capabilities and
incapacities at a glance.
ENVIRONME
NT
External
Internal
Opportunitie
Strengths Weaknesses
s
Threats
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Strengths:
Singapore Airlines is one of the most successful airlines of the world. The
strategy or the most effective plan working beneath its success is the
excellent differentiation strategy of the flight service. The differentiation
strategy is crucial for any kind of business. It can give any company the
competitive advantage over the competitors. There are no other airlines that
concentrated that much hard to differentiate their service among all the
competing companies. For the superior service quality all the potential
passengers are always willing to travel in this Singapore Airlines. They offer
higher passenger service, superior food cuisine, sincere passenger query
service, excellent lounge and services during the flight. Besides, at the airport
the pre-flight services are also up to the mark. There are so many strategies
the follow in the ground and also in the air to retain their position as the
leader. For this excellent differentiating strategy they have come to the
present situation and also will survive and maintain their current growth.
SIA as an Asian carrier has lower operating cost compared to their American
and European counterparts. It has higher labor productivity level and lower
unit labor cost. Lower operating cost is something mandatory if any company
wants to gain a higher profit and want to make their service more customers
centered. The operating cost of the company is low that’s why they got the
opportunity to put all their effort to up hold their service in the flight and also in
maintaining the management of the company. Without substantial amount of
low cost the higher profit is not possible at all. So, SIA would not be bale to
extend its business in different horizons with commitment of better service.
With the opportunity of lower operating cost SIA has used their resource in
different sectors of their company to get more flexibility, efficiency and thus
has become the hallmark in this industry.
SIA usually follow extensive recruitment strategy and selection process. They
provide extensive training, which is mainly on-the-job training, and also
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Unique services give the avenue to attract a large pool of customers to gain
their trust and expand the business. SIA is not different from that. They can be
considered as the pioneer of some flight services that are still considered as
the pioneer service of the company. These services have differentiated the
company from other competitors. These sorts of services are sole domain of
the company. SIA was among the first to introduce electronic ticketing through
website. It has embraced in a variety of forms, such as check-in via e-mail,
telephone and fax. By these facilities the flight experience of the passengers
remains smooth and the brand image of SIA gets the foundation among the
people. Due to these unique services the airlines has been able to survive in
this dynamic industry. That’s why it’s one of the strengths of SIA.
23 Group E
Case 2
Another beneficial important strength of SIA is their large luxurious world class
lounge. During the flight all the passengers want to relax and to enjoy the
flight time in a luxurious lounge. It can give the ultimate satisfaction to the
passengers. The Singapore Airlines understand this need of the passengers
very well. SIA offers the Silver Kris Lounge to the First class and Raffle Class
(Business class) passengers. That lounge is one of the largest and most
luxurious airport lounges in the world. They provide various kinds of
entertainment facilities to the passengers to make them relax during the flight
time. Due to these lounge SIA is attracting new passengers every day and
that’s how the business and the profit of SIA is also increasing.
SIA is considered as one of the largest air carriers in the world. It is the largest
operator of Boeing 747-400 Mega tops, a roomy aircraft capable of long
distance flight. SIA has the highest fleet age with an average of roughly eight
years. No other airlines have such a huge fleet like SIA. It’s giving the
advantage of flight flexibility and more chance of increasing the in-flight
services. Because of the large fleet the company is getting the competitive
advantage over the competitors as they have the opportunity to start venturing
at different direction at the same time worldwide. So, the profitability is highly
affected by the number of fleet that SIA posses at the current situation. More
the fleet age is also beneficial because it indicates the reliability of the fleet.
The high fleet age means the accident rate is very low. So the passengers are
more likely to be attracted towards SIA due to the high fleet as. That’s why it
is strength for the company.
24 Group E
Case 2
SIA had a long association with the Malaysian Airlines. Most of their current
flight operating personnel was working with the company from the very
beginning and some of the crews and pilots were also from the Malaysian
airlines. The crews have garnered significant flight experience through this
association. They used their experience completely in flight management
sector to give SIA the cutting age in operation sector. This has enabled the
company to experience the smooth operational management and also the
satisfaction of the passengers which integrated the beneficial reputation of
SIA. The pilots which are the driving force of the company have an
impeccable safety records. SIA personnel have crucial operating experience
in flight operation which one of the great strengths.
25 Group E
Case 2
For any kind of success, a strong commitment is must. SIA has their
corporate culture of providing the superior services to the passengers. This is
their one of the most important strength. It’s kind of internal strength that
drives the SIA towards their goal of success in operation. Due to this strong
commitment SIA has reached this present situation gaining the trust of the
passengers around the world. On the ground SIA had a legendary
commitment to superior service. It has built a network of wholly owned
subsidiaries and joint ventures to provide operational support in areas such as
catering, terminal management and aircraft maintenance. Holding the
commitment has their only capital SIA has ventured all the skies around the
world to become the superior in the industry of airlines. Other competitors had
a hard to compete with SIA because their lack of commitment in providing
service.
26 Group E
Case 2
Weaknesses:
Business strategy is the uniqueness of any company that gives the success to
that company. At the early stage of operation the services of the airline was
pioneer and unique but with time it has lost it’s potentiality to attract the
customers. The main problem with the strategy is that SIA’s competitors can
easily copy them. For that reason now the company has a very narrow path of
strategy to differentiating their service from their rivals. The competitors are
narrowing down the market of the Singapore Airlines as they are attracting the
passengers by similar sorts of services. The company is at the moment to
loss its credibility in the industry. The rivals companies are easily adopting
their strategies and give a hard time SIA to change its business strategy as
soon as possible. This frequent strategy change is coming up with lots of
expenses so the profitability of the company is being hampered. SIA was
pioneer in most if the areas regarding service but now they have lost that
pride.
High fare is one of the great weaknesses of the company. The industry is
heavily depended on the tradition of low cost flight. All the companies are
trying to minimize their operating cost so that then can charge lower fare and
attract more customers. But Singapore Airline is totally different. Their fare of
the first class cabin is comparatively higher than other similar kind of flights.
That’s why they are losing some European passengers while the rival airlines
are capitalizing on their low fare strategy. SIA First Class cabin is the golden
standard in the industry but the main fact is that they charge more compare to
their competitors like Thai Airways, Qantas, Lufthansa, and Air New Zealand
etc. who offer similar kind of services in flight and also in the airport. That’s
why higher fare of first class cabin is a major weakness of SIA. It’s pulling out
the business of the company.
27 Group E
Case 2
The Singapore Airlines has spread its wings in different skies of the world. It
has its flights operating in different regions with different association and also
with other airlines. But the company has its weakness in providing domestic
flights. SIA does not offer any domestic flights, which have narrowed their
market. It had a long association with Malaysian Airlines. When they came
apart, Malaysian Airlines focused on domestic market while SIA focused on
International market. But now Malaysian Airlines is also competing with SIA.
They are targeting all the potential market of the world but they are ignoring
their own domestic market. From this domestic/local market other airlines
companies are earning a significant portion of their total earning. SIA is
ignoring the local possibility if earning money while venturing in different
regions at loss. This ignorance shows the strategic inefficiency and that’s why
it’s a weakness of the SIA.
28 Group E
Case 2
29 Group E
Case 2
In balancing growth potential against the ability to control the alliance, SIA
acquired an 8.3% equity stake in air new Zealand to cement a long
partnership with the New Zealand carrier. Since Air New Zealand already
owned 50% of Ansett Airways, SIA would have the benefit of the additional
alliances. It was expected that these moves would strengthen SIA’s position in
the Australasian market that is growing rapidly. This grand design crumbled
when air new Zealand’s fortunes started turning sour. The government of New
Zealand injected capital to shore up the company, but this had the negative
effect of diluting SIA’s ownership position. SIA was left with a sizeable loss
and had to beat a hasty retreat from this initial foray to establish control of the
key Australasian routes.
One of the major weaknesses of SIA is their inferior service in some flight
classes. The airline has the commitment to provide superior service in all the
flight classes but it’s only concentrating on the high fared class where the
passengers are paying more. For this the company is losing its costly earned
reputation. SIA has established their first class cabin service as the world’s
best but their services in Raffle class (Business) and Economic class is not up
the satisfactory level. People want to travel with SIA because of their First
class service but the other class has failed to attract passengers. Comparing
the number of passengers in those classes, the people are more willing to
travel in economic or business class. So, poor service in those classes is
obviously not beneficial for SIA. That’s why it’s a major weakness of the
company.
30 Group E
Case 2
The information that is provided in the appendix part of the case is very much
crucial. If we compare the administrative salary of SIA with other competing
airlines, we would see that the salary expense of Singapore Airlines is quite
high comparatively. SIA shows a signal of inefficiency in its operational areas.
Because after analyzing the Annual Staff Cost Pert Employee, it reveals that
SIA has a pretty high annual staff cost compared to their other competitors
such as – Malaysian Airlines, Thai Airlines, Air New Zealand, and Korean
Airlines. This is considered as a weakness because to this high administrative
salary cost the profit margin of the company is being minimized where the
competitors are earning more giving les effort.
All the pilots and flighty management staffs are very much professional. The
company provides them with on job training facility. Most of the pilots
expatriate who are coming from some other foreign companies. These
expatriates are costly for the Singapore Airlines as they have to provide some
extra facility to them, such as – housing, school of children, travel etc. these
extra expenses are cutting the profit margin of the company. For these reason
this is a weakness for SIA.
Opportunities:
31 Group E
Case 2
This is another good option for SIA to leverage their business in aviation
industry. Forming alliance is a new phenomenon in this sector that allows any
airlines to tie up with other airlines and share their common values and work
under a single alliance brand. For an example, Star alliance, this covers a lot
of cities of the world, even the continents. For a single airline it’s really difficult
to cover a large area consisting different routes simultaneously.
32 Group E
Case 2
Building alliance is a massive task but it opens more opportunity for any
individual airliner. An individual airliner sometimes faces some difficulties with
various types of problems. It might be technical, operational, and strategic and
so on. It’s very tough to solve those problems lacks lonely. Sometimes it’s not
possible to operate flights on some routes due to operational cost though it
might have prospects as well. Financial constraints most of the time create
headache as well. Forming alliance is a good solution for it where everyone
works under same umbrella. Working under an alliance will give SIA a unique
opportunity to work with other friendly airlines and would able them to reach to
other different destinations in Europe and USA, the zones that are yet to be
served by SIA. This will definitely increase the profitability margin. SIA will be
able to reach to cover up their loses on different zones by forming alliances
with its friendly companies. It will help them to share profit as well because
some people might not travel by SIA but they may travel through one of the
airlines of the alliance.
33 Group E
Case 2
Threats:
The SARS, causing the Singapore International Airlines (SIA) to
downsize the operating costs:
All of a sudden the SARS (Severe Acute Respiratory Syndrome) has fall over
the countries like Singapore, Hong Kong, China and the neighboring
countries. This syndrome has caused destruction on the passenger travel.
Due to this issue, the cost of Singapore International Airlines was hampered.
The reasons of SARS obstructing the cost of SIA are that for the SARS the
passenger traffic got hanged and due to this action the profit earning capacity
of SIA slowed down. As a result, to earn profit the company has to cut its
operating cost by outsourcing its employees. Thus the SARS became a major
threat to the company.
34 Group E
Case 2
and their salary cut off will be a treat in terms of quality maintenance of the
organization.
35 Group E
Case 2
This issue put SIA under lots of travel, as they now need to compete with
international market along with the fact that they do not have the support of
their government. This meant keen competition for SIA right from the start.
There are some potential risks on getting attached with any airline alliance
though it is beneficial for some cases. First of all, any individual airline may
have poor standard on safety record, sometimes they might have poor level
on service delivery or employees’ performances standard are not up to the
mark. So the poor performance of one member of the alliance may effect on
the reputation on overall alliance. Secondly, some of the alliance member
may run their business in parallel with other airliners that might be rival group.
It would be very vulnerable for the alliance, as it would directly impact on the
business.
SIA has a very fresh and prolonged reputation on airline industry where very
few airlines of the world can dare to reach. But due to turbulent nature of the
airline industry SIA is getting forced to tie up with other airlines. If they do this
and get a partner with poor performance then certainly who are the regular
passengers of SIA will not show interest to board any of the aircraft of the
alliance. These will seriously damage the reputation of SIA. Due to the fault of
one airline the whole alliance including the SIA will suffer. Side business of its
partner with rivalry group also may jeopardize the business position of SIA as
well. A large chunk of passengers may migrate to different alliance or other
member of the SIA’s alliance who are getting benefited in a different way by
depriving SIA. So, both ways there are threats for Singapore airlines if they go
under alliance.
36 Group E
Case 2
The cabin crew employed in Singapore International Airlines hails from many
ethnicities within the South/Southeast Asian region. Besides Singapore itself,
the other countries are mainly Malaysia, Japan, Korea, India, Taiwan and
Indonesia. However, the pool of available talents within Singapore is
insufficient to draw from for long. Given the fact that SIA had some of the
lowest labor costs among leading carriers, this home-based cost advantage
had proven to be a critical ingredient in the success of the company. Any fall-
off in the availability of local talent could adversely affect the operating costs,
especially if it necessitated the recruitment of expatriate personnel. Expatriate
employees are generally paid much higher compensation compared to local
people. Not only is their base pay higher than those of local employees, they
have to be paid many additional benefits like housing allowance, schooling
expenses for their children, travel expenses, etc. Compensating expatriate
37 Group E
Case 2
When SARS broke out SIA discharged over 400 employees. In the meantime,
Iraq war broke out which made the situation worse. To cut operating cost they
cut the salary of senior managers, cabin and ground stuff. According to the
union of SIA, this decision of SIA’s management was unfair. The union felt
SIA has acted as skeptical. SIA should be more careful dealing with this
problem and should create a friendly relationship with union. SIA should try to
be fair to its union as they have to remember employees are a great resource
of a company.
The cabin crew employed in Singapore International Airlines hails from many
ethnicities within the South/Southeast Asian region. Besides Singapore itself,
the other countries are mainly Malaysia, Japan, Korea, India, Taiwan and
Indonesia. However, the pool of available talents within Singapore is
insufficient to draw from for long. Given the fact that SIA had some of the
lowest labor costs among leading carriers, this home-based cost advantage
38 Group E
Case 2
had proven to be a critical ingredient in the success of the company. Any fall-
off in the availability of local talent could adversely affect the operating costs,
especially if it necessitated the recruitment of expatriate personnel. Expatriate
employees are generally paid much higher compensation compared to local
people. Not only is their base pay higher than those of local employees, they
have to be paid many additional benefits like housing allowance, schooling
expenses for their children, travel expenses, etc. Compensating expatriate
personnel can only add to the rising costs experienced by Singapore
International Airlines.
39 Group E
Case 2
RECOMMENDATION
In the case of SIA, we have seen that the company doesn’t have many
problems that can push them back. It has reached its highest pick and the
goal has been achieved. The employee satisfaction is highest, the customers
are happy, the organization is earning a huge amount of money and every
thing is going fine with it. But recently, Singapore International Airlines has
been affected by various external effects that have led to fallouts. Firstly, the
breakout of SARS has had sever repercussions on the airline business of
various Asian countries. Singapore Airlines had to go through major re-
adjustments in its operations to cope with the decimated passenger traffic in
its prime Middle East markets. It had to lay off 400 employees along with 156
cabin crew staff and senior management salary was cut down by 22% on the
average.
Also, the fact that Singapore Airlines was in fact being largely supported and
financed by its government also caused a lot of discrepancies and created
conflict between the executive decision makers of the company and the ones
being laid off. People were under the impression that Singapore Airlines was
gaining unfair advantage over the other corporations of Singapore since it
received full backing of its government even during taking the critical decision
of laying off such a large number of employees. For that reason all the
recommendation should be based on it, which we have been mentioned
below.
the market there lies a problem of duplication. Here, it is seen that competitors
of Singapore Airlines are quick to copy or imitate the ideas as their own. Even
though Singapore Airlines was responsible for the formulation of many such
ideas it looses its credibility when others copy from it before Singapore
Airlines can gain the exclusivity for having it.
Before breaking into the market with a new idea, Singapore Airlines may
choose to go to the high authorities and legally enlist its services as different
individual commodities. Hence it can gain exclusive copyright over that
particular service and will be the only one legally allowed to provide that
service in the industry. For a certain period of time, Singapore Airlines may
gain exclusive permission to do this and after the expiration of that time
period, it may even get royalties from the companies who want to copy or
adopt that idea.
This way, Singapore Airlines will be recognized as the founder of its unique
ideas. Since the service that Singapore Airlines comes up with will be treated
as an individual commodity and it will be Singapore Airline’s sole registered
property. Through this method the ideas of Singapore Airlines will not only
stay its own, but others who are willing to adopt those ideas will also
compensate Singapore Airlines for it. Singapore Airlines will not only retain its
credibility for coming up with its ideas, it will also stand a chance to earn
revenue out of it. Inversely, Singapore Airlines can also counter this problem
by rearranging its resources in a way so that it does not dedicate too much
resource behind coming up with, and implementing new ideas.
Asia had been slow in responding to the phenomena of low cost carriers.
Meanwhile however, the industry has become heavily dependent on the
41 Group E
Case 2
tradition of low cost flight. All the companies are trying to minimize their
operating cost so that then can charge lower fare and attract more customers.
Despite all this, it is seen that fare of Singapore Airline’s first class cabin is
comparatively higher than other similar kind of flights. This allows the rival
airlines to capitalize on their low fare strategy and gain the upper hand on
Singapore Airlines.
There are various ways by which Singapore Airlines can counter this problem.
Firstly, it may choose to alter its strategy to suit the market norms better. It
may change its strategy to one, which concentrates on providing cost effective
and affordable traveling. This would be a major change in the company’s
overall strategy. Hence, the company has to go through major restructuring
and changes in its operational objectives and strategies.
This is likely to be successful in the long run since it involves tuning the
operation style of Singapore Airlines with the trends that has been set in the
market. Even though Asia may have been late in coming up with the idea of
low cost carriers, it may still very well adopt this concept since the trend has
already been set and established in the market.
42 Group E
Case 2
In order to carry this out, Singapore Airlines may have to come up with a new
plan of breaking into the market. It might think of possibly including a few new
planes for domestic flights and/or re-organize its flight plans to accommodate
the extra administrative duties that will come along with it. It may have to
design these flights to be specialized in providing domestic services so that it
can be differentiated as being the country’s own so that people are drawn to
choose Singapore Airlines over other available airlines.
43 Group E
Case 2
service and make money out of it, to lay dormant and let its competitors get
the bigger share of the profit. Being the national flag carrier, Singapore
Airlines can almost take for granted that domestic travelers (mostly consisting
of people from Singaporean nationality) will choose Singapore Airlines over
other airlines. Hence, this recommendations is more likely to be successful
than not.
SIA has limited routes compared to the other competing airlines. This is more
so in terms of having an extensive network in the United States and the
European region. They tend to concentrate mainly on regions of Europe,
some regions of Africa, and also in some Australian regions. But the number
of passengers from United States and Europe are comparatively more
frequent air travelers than the ones in other parts of the world. This means
that Singapore Airlines is loosing out on profits from a significant market,
which includes frequent travelers.
costly for Singapore Airlines, as they have to provide some extra facility to
them. These extra expenses are cutting the profit margin of the company
since training such large numbers of employees involves cost the airlines may
not be able to bear.
Singapore Airlines may chose to solve this problem by decreasing the amount
of resources they spend behind training and maintaining these expatriates.
They may set a requirement that states that in order to be eligible to become
an expatriate for Singapore Airlines an individual will need to be pre-trained in
the several aspects of working here. Inversely, they might even set up training
centers, which would provide training to the potential employees of any other
airlines along with those who seek employment in Singapore Airlines. This in
effect would mean that Singapore Airlines would be setting up a training
center for pilots and staff who seek employment in any airlines of the same
standard. This would ensure that Singapore Airlines would still be giving
training to its employees but instead of just investing behind their training,
they would in effect also be earning revenue from those who seek
employment in other airlines but have come to Singapore Airlines training
center for training. This would substantially cut down the cost for Singapore
Airlines.
45 Group E
Case 2
46 Group E
Case 2
In order to sort out these issues, Singapore Airlines may bring a proposal
formally to the Singaporean government. The proposal should include an
appeal for diplomatic and perhaps financial aid. Even thought the government
maintains a stance of not giving financial aid to its companies, it still may
provide Singapore Airlines with logistical and diplomatic support. This way
Singapore Airlines will be benefited by having the backing of its government,
and in case of any disputes with any foreign nationalities, it will be able to
have a solid backing which will put Singapore Airlines in a more formidable
position.
47 Group E
Case 2
This method is likely to be successful even though the subsidies from the
government may be a bit far fetched. Getting logistical and political backing
from the government can also be a huge advantage for Singapore Airlines.
There are many airlines, which do not have such a backing from their
respective governments. Furthermore, considering the strong stance of the
government against subsidizing its companies, this proposal might seem to be
the next best option for the government. Compared to those, Singapore
Airlines will have the upper hand.
48 Group E
Case 2
It has been seen that the customer demands in the airline business is very
critical. Under the free skies policy, an airline can land on a foreign airport
depending solely on the free-market demands. This means that where there is
demand for an airline, it will be able to go to that location without any
extensive barriers. Thus we can assess the importance of customer demands
in this business.
These recommendations may prove beneficial for the company since this will
ensure the proper orientation of Singapore Airline’s service with the demands
of the market. This would help the airlines gain popularity and increase its
general demand.
It has been seen in the recent years that the formation of alliances has
become a major trend in the airline business. However, despite this fact,
Virgin airways have refused to join the Star Alliance. Singapore Airlines has
been a part of this alliance and was counting heavily on Virgin joining it. This
has brought about several setbacks for Singapore Airlines. Along with this it
has also been seen that Singapore Airlines has was considering an
acquisition with Virgin Airways. Here, lies a problem of having a big difference
in the managerial styles of the two companies. Furthermore, the equity
partnership that was taking place among Singapore Airlines and Air New
Zealand did not prove to be successful to the extent that was expected. Also,
the coming up of Air Asia as a significant competitor of Singapore Airlines has
made it tougher for Singapore Airlines to make profit and expand. To counter
this problem, Singapore Airlines has to take drastic measures to become
more competitive.
49 Group E
Case 2
This recommendation is likely to succeed since it has been tried and tested in
the past. It has been seen that unless two companies are similar in some
aspects and the acquisition can benefit both parties instead of conflicting with
each other, one should not carry out an acquisition. This may prove to be an
important determinant for Singapore Airline’s success.
50 Group E
Case 2
IMPLEMENTATION
Over the period of time, the Singapore International Airlines has done a
tremendous good job. This is mainly due to the dedication of its employees
and the strategies of the organization. But recently, Singapore International
Airlines has been affected by various external effects that have led to a fall.
Firstly, the breakout of SARS has had sever repercussions on the airline
business of various Asian countries. Singapore Airlines had to go through
major re-adjustments in its operations to cope with the decimated passenger
traffic in its prime Middle East markets. It had to lay off 400 employees along
with 156 cabin crew staff and senior management salary was cut down by
22% on the average. Also, the fact that Singapore Airlines was in fact being
largely supported and financed by its government also caused a lot of
discrepancies and created conflict between the executive decision makers of
the company and the ones being laid off.
51 Group E
Case 2
SIA Should Gain Copyright of Certain Services and Get Recognition and
Possible Revenues from these Ideas
52 Group E
Case 2
Legal authorities: Legal authorities should also help SIA in the copyright
process. They should also make sure that any other competitors do not
copy these services and anybody violating the law, gets punished.
The establishment of copyright system is not minor issue and will give rise
to a lot of rethought and debates regarding this decision. It can have long
term strategic implications for Singapore Airlines therefore adequate time
should be allocated to the implementation of this strategy. It is estimated
that the establishment of a strong and proficient copyright system could
take anything from 6 to 12 months. Moreover, sufficient time should also
be given so that the overall operations of the organization can be properly
adjusted.
Expected results
If SIA can ensure the copyright protection and get all of its new services
patented, it will be able to make a brand image in the market. Moreover
the customers will be attracted to fly with SIA as they will be assured with
the modern and unique services. In the same time, this thing will
encourage developers to come up with the new ideas of customer
services, as they will get the appreciation and fame for doing this. In this
way, SIA can continue with an ever-developing process of unique
customer service.
53 Group E
Case 2
SIA should Change its Corporate Strategy and Making it More Compatible
with the Demands in the Market by Upgrading to an Exclusive Level and
Shifting the Target Market
What is to be implemented?
By considering SIA’s services to an exclusive level; passengers will be
able to differentiate largely between the services provided by SIA and
other airlines, especially for those, who are looking for exclusive and
luxurious flights only. This may not seem to be a feasible for a widely
recognized airline but given a certain amount of time, SIA will be able to
establish itself as an exclusive service provider and become popular
among a different class of passengers. To implement this, SIA must make
a change in the target market.
54 Group E
Case 2
Changing the services & target market efficiently passengers can easily
differentiate the services between SIA and other airlines competitors.
While the market is aiming to attract travelers who are willing to travel
cheaply, Singapore Airlines should set itself aside from other airlines as
being different and special in various ways. Though the target market may
shift, in time Singapore Airlines may find it to be a profitable concept.
The policy makers: The policy makers of SIA are the main persons who
take care of all these matters and they are the right persons who know that
where should SIA move its target market. They are the persons who
should be concerned about where SIA is moving in regards to its target
customer and what policies should be taken over.
The customers: They are also an important element for fulfilling this
purpose. SIA’s target market includes those persons who are not use to
look at the price but definitely at the service. And that is what SIA wishes
to achieve.
Place is particularly very important factor for the SIA as they operate
beyond its own country border. We strongly recommend the company to
develop this strategy in Singapore at their company main office at first as
soon as possible.
55 Group E
Case 2
Expected result:
If SIA can make it workable, it is going to help SIA a lot. In one sense, it is
risky for going for the high price and for a selective target market. But if it
works they are going to get a good profit, because they are keeping good
margin here.
SIA should increase the Number of Domestic Flights and Operate in More
Routes in United States and European Regions
The problem, we can see in SIA is that they are not offering the necessary
number of domestic flights. This has narrowed their target market as well
as caused their competitors to come into Singapore’s domestic market, as
we know that Singapore is a free sky country. From this other airlines
companies are earning profits, which should have ideally been earned by
SIA itself. It should be reasonable for SIA to break into the domestic
market with flights; and earn more than others since it already has
consumer trust and preference engraved in its name.
56 Group E
Case 2
What is to be implemented?
In order to carry this out, SIA should come up with the new plans of
breaking into the market, which should include the domestic flights and/or
re-organize its flight plans to accommodate the extra administrative duties.
Another aspect where SIA should focus on the routes; which is limited in
compared to the other competing airlines. They should have an extensive
network in the United States and the European region means they should
concentrate mainly on regions of Europe, some regions of Africa, and also
in some Australian regions, because the number of passengers from
United States and Europe are comparatively more frequent air travelers
than the ones in other parts of the world. So that SIA should make more
flights available to and from the Europe and US regions. Restructuring in
plans and strategies need to take place in this case.
57 Group E
Case 2
The policy makers: Again the policy makers have come here. Actually all
the recommendation that they should implement, are evaluated by the
policy makers. And they are the one who basically suggest any company
to take any decision. Here also the policy makers should make such plans
and come up with such ideas that will help SIA to run their business in the
domestic market also and in increase their route through the United States
and the European Region.
Expected Result:
If SIA can implement this in their business, a new side of business and
getting profit will be open in front of them. They will get an exclusive local
customer satisfaction if they provide them domestic service. Moreover, if
they get into the United States and the European Region, they will be able
to compete with the other competitors those are giving services in a
cheaper way now a days.
58 Group E
Case 2
SIA should Form Independent Training Centers for Pilots and Flight Staff
so that They Can Reduce the High Expense of the Top Personnel
What is to be implemented?
SIA should solve this problem by decreasing the amount of resources they
spend on training and development and maintaining these expatriates.
They should set a standard of eligibility those are needed to become an
expatriate for SIA such as- an individual will need to be pre-trained in the
several aspects of working here. It will be easy for SIA also then to make
them familiar with their culture. At the same time, they should set up
training centers, which would provide training to the potential employees of
any other airlines along with those who seek employment in SIA. This will
also ensure that SIA would still be giving training to its employees but
instead of just investing behind their training, they are earning revenue
from those who seek employment in other airlines but have come to SIA’s
training center for training.
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What job roles do people possess? How are these roles defined? What is
common among the roles? What skills or competencies support each role?
What learning events (courses, meetings, demonstrations, on-the-job training,
etc.) support and build these competencies? How does a new hire begin their
training? This may seem daunting, but defining existing job roles is
worthwhile, and brings many insights into the company's needs for competent
performance. The data from such surveys also helps to build measurable
ways to determine when employees attain needed skills, and conversely, may
identify training needs that are not yet met.
If more and more applicants for these training programs are called from the
home country and neighboring countries then the cost pressure exerted due
to the expatriates will soothe down significantly. SIA is highly depended on the
expatriate due to shortage of labor I the home country and also not all the
employees available have the required level of skill. This is where the training
can come into use. The potential candidates form home and neighboring
countries can be trained and molded as per the needs of the company so that
SIA can reduce its dependency on foreign employees.
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Human Resource Managers: They are the most important persons here
because they have the main authorization of recruiting and defining the
salary, according to their job value. They are the people who make sure of
this that they are recruiting those people who have some basic training at
least. They should make sure of it that they are managing their budget
properly and not wasting anywhere.
Place is particularly very important factor for the SIA as they operate
beyond its own country border. We strongly recommend the company to
develop this strategy in Singapore at their company main office at first as
soon as possible.
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Expected result:
It will help SIA in a large extent as they are getting the best employees as
they are providing the training by themselves. Also it will be a source of
income to SIA. They are also getting a chance of getting the new recruits
easily and at a lower cost by opening a training center by them. So it
should be beneficial to SIA if they continue this process.
Increasing employer efficiency and empowerment to get the best out of the
available number of employees
It is better to implement the plan first on the top management and then
after a few months on the low paid staffs to avoid any discriminatory
conflicts.
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The junior level staffs are always more or less defensive towards pay cut
or freeze or any such measures. They suspect the company of trying to
take advantage of an economic situation to make even larger profits at the
cost of their well deserved salary. What the company can do is, introduce
this plan first on the higher level management and then gradually move
down the hierarchy. In that way the lower level managers won’t feel
exploited as they can well perceive it as a company emergency situation.
A formal letter from HR signed by the chairman and CEO should be issued
which laid out the process. Clearly mention in this letter that the Staff can
earn back the salary they've sacrificed – plus a bonus – should the
company achieve a 50% or better income to cost ratio taken on a month-
by-month basis. Possibility of bonus for taking a cut: People taking a 15%
salary cut could get back their salary plus 7%. 20% salary sacrifice earns a
salary return plus a 17% bonus, while a 25% cut would repay salary plus a
25% bonus and so on.
Assure the employees whenever and however possible that these are
temporary steps to ensure the survival of the company in hard times. As
soon as the company sees the light of success their pay and salaries will
go back to the original level. These are alternative action plan to layoff. So
in a way employees are benefiting form these measures more than
anybody else.
There might be attempt to sabotage the company the law suits and other
legal actions when such sensitive decisions are implemented. The
employees become resentful and thus may wan tot attack the company.
Therefore it is absolutely necessary the at all the legal angles relating to
such steps are properly explored and studied so that these actions are
lawfully executed.
Continuous review of the plan is necessary for proper and time updates.
The HR department must be always on the toes to ensure that the plan is
executed with peace and harmony through out the organization and it
does not be come a source of resentment towards the company. Also
what is necessary is to assess that if the company is truly benefiting form
all these. There are certain cost associated with pay cuts and freeze
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The place where the plan would be implemented is also an important issue
for the SIA. They operate all over the world. However, uniformity is a very
important consideration when it comes to such a decision. Thus it should
be implemented through out the organization so that nobody feels that
other was treated more favorably.
They must target a date within which they will operate. We suggest that it
is done as soon as possible. They need it for their survival in the economic
crisis the world is facing today. If it is too late the plan might not be
effective anyway.
Expected result:
Singapore Airlines may expect the depleted workforce to be productive to
its highest extents. The capabilities of each employee will be used
appropriately if allocated properly. This will help Singapore Airlines
maintain the quality of its service even with a smaller sized workforce.
SIA should make appeal to the Government so that they will be eager o
give them subsidies so that they can compete in the local as well as the
global industry
This states the fact that the government of Singapore will not be
subsidizing much for any of its local companies. It wants its industries to
survive and thrive on their own with no help or subsidies from the
government. The government is allowing free competition within the
economy, which is proving to give Singapore Airlines less than it probably
deserves. There has also been a recent development in the concept of
“free skies” in Singapore. This essentially means that any airline of any
nationality will be able to land in the airports of Singapore. Although the
reverse is also true for Singapore, this has turned the airways of
Singapore into a free airspace that anyone can use. This has proven to
cause substantial stress for Singapore Airlines.
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for subsidies, asking for the backup and support of a government would
involve extensive browsing through government law and regulations.
We all know that for implementing any plan into the reality the person
plays the vital role for its success. No plan can be successful if it is not
implemented in proper manner by the right person. It will be best
implemented by the CEO as per the authorization of the directors.
Implementing any plan without proper timing has no value. Though it’s a
governmental issue so it would take time for the both SIA and also the
government. So the SIA must implement the plan within a specific time.
They must target a date within which they will operate.
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Expected result:
Singapore Airlines may expect a favorable feedback from the government.
The proposal, if made properly will convince the government that
Singapore Airlines has made a reasonable request, which will be
beneficial to both the airline and the country in general.
SIA should go for Massive Market Survey and According to that Survey
They should meet the Demands of the Customer
Under the free skies policy, it has been seen that an airline can land on a
foreign airport depending solely on the free-market demands. This means
that where there is demand for an airline, it will be able to go to that
location without any extensive barriers. Thus we can estimate the
importance of customer demands in this business.
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Expected result:
Through this method, Singapore Airlines will be able to get a clear picture
of the demands of the customers. It will be able to change or adjust its
strategies to make it more suitable and consumer friendly. This will ensure
them the satisfaction of the customers and in turn increase profitability.
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It will be better for SIA if they implement this as early as possible because
it’s a matter of competition. So to defeat the competitors it should
implement within a month in the head office then other offices.
Expected result:
The results from this idea can be expected to be beneficial to Singapore
Airlines when it is considering acquisitions or mergers or any
organizational excursion involving other companies. It may gain the best
results out of any acquisition or merger it undertakes.
SIA can start recruiting their male cabin crews exactly the same way they are
recruiting their female cabin crews. Then there will be no question of
discrimination or violation of Equal Employment Opportunity (EEO). Also if all
jobs are on contract, then it becomes easier for SIA to replace or shift
positions easily.
SIA hires the male employees as regular employees whereas the female
employees are hired on the basis o five years contract. This is an act of
sexual discrimination. On the basis of your sex the term of your employment
is made. This is an unethical practice. SIA can argue that the fitness and
outlook of the Air hostesses are important criteria on the basis of which they
should be retained. However, it can be counter argued that if any individual is
indeed not fit to provide service on the flights after say five years than she can
be provided a position on the ground or on the training arena or anywhere
else. It is not only to suit the company from EEO violation but can actually
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help the company in many ways. These employees of five years experience
are well known with the norms of the organization and thus can use their
experience in various other positions of work for SIA. Moreover the
motivational aspect of such a step is also incredible.
HR and EEO have a long bitter history with one another. The HR department
has been on more than one occasion been harassed by the EEOC. Thus it is
mandatory on today’s world to dedicate an active unit within HR which is
going to oversee and handle the EEO issues arising in the company. Gender
equality is a fundamental human right and an essential condition for achieving
effective democracy. The Constitution of the International Labor Organization
(ILO) affirms that "all human beings, irrespective of race, creed or sex, have
the right to pursue both their material well-being and their spiritual
development in conditions of freedom and dignity, of economic security and
equal opportunity". Countries are increasingly committed to the promotion of
equality of opportunity and treatment for women and men in the world of work.
But governments and the social partners face difficulties in making the
principles and provisions of international instruments effective in national law
and practice. They often seek information and advice from the ILO on the
different approaches taken in different parts of the world to give practical
effect to gender equality principles.
Prepare a formal guideline that includes all the rules that must be complied
with and the action that would be taken on non-compliance
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• Encourage and invest in staff development, ensuring that all staff have
access to opportunities.
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Complaint Procedures
Informal Complaint
If, however, the employee does not wish to discuss the concern with the
immediate supervisor, the employee may talk with an EEO counselor. The
role of the EEO counselor is to serve as a bridge between employees and
management and to resolve EEO problems on an informal basis.
Formal Complaint
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A formal complaint must be made in writing and must give the name and
address of the complainant, state the basis of the complaint and indicate
whether the alleged discrimination was based on race, color, national origin,
religion, gender, age, disability, marital or veteran status or any other legally
protected status. The complaint must be submitted within 180 days of the
conduct giving rise to the complaint. A complainant will at all times be free
from reprisal.
must implement the plan within a specific time. They must target a date
within which they will operate. We suggest that it is done as soon as
possible. They need it for their survival and good image.
Expected Results:
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