Singapore Airlines is the flag carrier airline of Singapore. It has faced significant financial difficulties during the COVID-19 pandemic due to a 98% reduction in passenger traffic with international travel restrictions. While it reported a record net loss of $4.27 billion in 2021, it was able to raise capital through various means to maintain a strong financial position compared to other airlines in the region. To survive, the company will need to better promote travel to more destinations globally to expand its customer base beyond popular short-haul routes. This includes promoting less traveled destinations to attract adventurous travelers and reduce overtourism.

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MGO403 Week 11 Individual Paper
1. Describe the company you are analysing.
Singapore Airlines is the flag carrier of Singapore, owned by the Singapore Airlines
Group. It has more than 20 subsidiaries, including numerous airline-related subsidiaries such
as the SIA Engineering Company which does aircraft maintenance, repair and overhaul
(MRO), Scoot, a low-cost airline, and Tradewinds Tours and Travel, which is the tour-
operating arm of Singapore Airlines and SilkAir (Singapore Airlines, n.d.). The airline
industry is key to global economic development by connecting cities all over the world by
enabling the flow of goods, people, capital, technology, and ideas through transportation
services via flights for passengers or freight. The industry consists of a variety of different
services, from a singular aircraft utilized to deliver cargo or mail, to a full-service airline that
operate internationally with many different aircrafts. Airlines are classified by the services
they offer: intra-continental, domestic, regional, intercontinental, or international. Airline
companies may lease or own an aircraft to provide these services, and sometimes they might
combine their services with that of another airline for mutual benefits. In the case of
Singapore Airlines, they have partnered with other various airline companies such as
Lufthansa Group, Scandinavian Airlines, Virgin Australia, and Air New Zealand. Some of
the mutual benefits from these partnerships include more connecting flights for passengers
through codeshare arrangements, access to more passenger lounges at airports worldwide,
and being able to earn more miles through the Frequent Flyer Programme (Singapore
Airlines, n.d.). Airlines are highly leveraged, and as such they must buy or lease new aircrafts
and engines on a regular basis, keeping in mind the goal of meeting market demand while
operating a fleet that remains economical for the company (MarketingResearch.com, n.d.). In
order to maintain the services an airline offers, they must handle the associated costs
effectively. Labour, IT services and networks, aviation insurance, engines, spare parts, fuel,

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handling services, training, sales distribution, food catering, and other equipment are some
examples of what goes into the operating costs of an airline. Most of the profit an airline turns
over from ticket sales is used to keep the airline in business.
Singapore Airlines’ largest competitor would be China Eastern Airlines, a subsidiary
of China Eastern Air Holding Co. which is based in Shanghai. Similarly to Singapore
Airlines, it is a provider of air transport services. It offers aviation services such as passenger
transport, cargo transport and mail delivery services (The Wall Street Journal, 2022). In
March 2022, a China Eastern Airlines flight going from Kunming to Guangzhou crashed into
the mountains in the Southern region of Guangxi, killing all 132 passengers and crew on
board. The airline was already struggling during the pandemic due to strict quarantine rules in
the country. It was forecasted in January 2022 that they would be facing a 2021 loss of 11-
13.5 billion yuan ($1.7-$2.1 billion), after a 11.8 billion yuan loss in 2020 ((Goh & Qiu,
2022). It’s losses are predicted to deepen after the group, including two subsidiaries,
grounded its fleet of 737-800s following the crash.
2. Explain the cause of the company’s financial difficulty and what the news says about
the cause and effect of that difficulty.
In May 2022, Singapore Airlines had posted its third annual loss of S$962 million for
the financial year 2022 to March, even as it disclosed that its sales for the next 3 months are
approaching pre-pandemic levels (Tay, 2022). Prior to this, the group had racked up a $4.27b
net loss in 2021 after the pandemic had caused passenger traffic to drop by 98% and forced
its fleet to be grounded at Changi Airport. This was preceded by a $12.16b, or 76% dive in
turnover to $3.82b due to passenger revenues decreasing across all three carriers of the group:
SIA, SilkAir and Scoot in what the group called “its toughest year in history” as they faced
their first loss in 48 years (Sreenivasan, 2021). The loss faced could have been worse if not
for a $758m, or 39% increase in cargo revenue to $2.71b. However, this is not the first year

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of losses for the company. In the 2019/20 fiscal year, when Covid-19 first arose in the first
quarter of 2020, it posted a loss of $212m. According to the article by the World Economic
Forum in 2020, the travel and tourism industries were the first to be heavily affected
economically from the pandemic. In addition, the global airline revenues were expected to
fall by $4-5b in the first quarter of 2020 due to flight cancellations (Hutt, 2020). In the case of
Singapore Airlines, passenger traffic dipped by a whopping 98% due to the lack of a
domestic market, together with restrictions on international travel. In order to pad the effect
of the huge reduction in passenger traffic and income breakdown, Singapore Airlines turned
to flying freight including utilizing its commercial planes. Freight income rose by 38.8% to
$2.71b and represented 71% of revenue for the group (Cusmano, 2021). This resulted in a
positive effect for the group; in a press statement made by SIA, it was stated that in the
interest of focusing on carrying cargo instead of passengers, they had made improvements in
utilising their freighters, deploying passenger aircraft for solely carrying cargo, and removing
the seats from passenger cabins to create additional space for cargo. During the pandemic,
there was also a strong demand for air cargo, especially in key segments such as e-commerce,
pharmaceuticals and electronics. Through providing a strong support for both cargo load
factors and yields amid tight industry cargo capacity, it helped to partially mitigate the loss of
carrying passengers.
Despite record losses, unlike most other airlines in the region, Singapore Airlines had
managed to hold on to a strong financial position. In FY2020/21, the group had raised a total
of SGD14.6B (USD 10.98b) of capital through various means such as rights issues, issue of
convertible bonds and notes, aircraft sale-and-leaseback arrangements and new committed
lines of credit. In April 2021 (post FY2020/2021), it had secured an additional SGD 0.8b
through the completion of a sale-and-leaseback transaction. The airline also said that it will
undertake a further issuance of additional mandatory convertible bonds to raise gross

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proceeds of approximately SGD 6.2b. The investment arm of the Singapore government,
Temasek Holdings, which owns 55% of Singapore Airlines, has provided an undertaking to
pick any unsubscribed units (Cusmano, 2021). As of October 2022, Singapore Airlines is
slowly recovering as international travel restrictions have been easing up, creating a strong
demand across all routes except for East Asia as restrictions have not been lifted in key
markets. The recovery had helped to boost the company’s operating results in September
2022, as Singapore Airlines and Scoot carried 2.1m passengers in the month. This was a
2.5% increase in passenger capacity as compared to August 2022, and a huge jump in group
passenger capacity of 111.8% as compared to 2021. Across all markets globally, the
passenger load factor for both Singapore Airlines and Scoot had also improved, with a group
level passenger load factor of 87% in September 2022. This is a 1.6% increase from the
month before and a 68.5% increase from the previous year. Furthermore, this is about 67% of
pre-Covid-19 levels, which is a good sign that the group is well on its way to fully recovering
to pre-pandemic conditions (Cher, 2022).
3. Using critical thinking and supporting your positions, explain what you think the
company will have to do to survive the current situation.
To survive the current situation, I feel that Singapore Airlines could do better
marketing to promote travel to more places around the world. A survey was done by
consumer research firm Milieu Insight, where they had polled 2,000 Singaporeans aged 16
and above. 8 in 10 of those surveyed had plans to travel abroad for leisure within the next
year, with a quarter having already booked tickets, accommodation or both. The top three
destinations that those polled are travelling to are firstly, Japan, followed by Malaysia, then
Thailand (Ng, 2022). In October 2022, Singapore Airlines stated that they would be adding
more flights to key destinations in East Asia such as Japan, Hong Kong and Taiwan as their
entry requirements have been eased and demand for travel to these destinations rises. The

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SIA Group passenger network is projected to cover 110 destinations in 36 countries and
territories, including Singapore, on Nov 1, the company said in a news release. This move
would allow Singapore Airlines and Scoot to meet the buoyant demand for international
travel, especially towards the holiday season at the end of the year and in the first quarter of
2023 (Today, 2022). As they already have a stable base of consumers travelling to East Asian
countries, Singapore Airlines could possibly promote flights to destinations that are less
travelled to, such as countries in Central Asia like India and Nepal, or Eastern Europe which
consists of countries such as Croatia and Bulgaria. Everyone wants to go to destinations such
as Tokyo, Seoul, or Bangkok, but what about the lesser-known destinations that are often
overlooked? As a global airline, Singapore Airlines can appeal to a broader customer base as
the company that offers diverse, unique, and interesting holidays and not just the typical
destinations that everyone competes to offer. Post-pandemic conditions have propelled a
growing number of travellers to be more adventurous with their travel plans, so Singapore
Airlines could strike when the iron is hot and cater to the demands of this segment of
consumers. According to research done by Booking.com in 2021, 61% of travellers were
actively looking for far-flung destinations that were not on the radar initially. Due to
lockdowns and restrictions caused by the pandemic, travellers’ appetites for vacationing had
increased, and thus, they would like to make up for the lost time by travelling more (Fly Now
Pay Later, 2021). Research done by the Data & Development Lab ‘Bestemming Nederland’,
made up of the Breda University of Applied Sciences in the Netherlands, the Netherlands
Board of Tourism & Conventions and personal digital assistant service Travel with Zoey,
concluded that the information tourists receive about a destination influences their choices
while on vacation, but alternatively, directing tourists to lesser-known attractions and areas
doesn’t lead them to have a less satisfying vacation experience (Breda University of Applied
Sciences, 2022). Additionally, promoting destinations that are less travelled to would reduce

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overtourism in popular tourist destinations, and promote tourism in countries that are facing
undertourism. By boosting tourism in under travelled places, it would help the economy of
said countries and its people.
Therefore, in order to survive the current situation and boost revenue numbers for the
company, Singapore Airlines should promote their flights to less popular destinations and tap
on that specific consumer segment who have travelled to many popular destinations and are
looking for their next adventure. By doing so, they would stand out from their other
competitors by providing a way for consumers to explore new destinations that other airlines
do not go to. This would help to expand their consumer base and target audience, which
would in turn boost profits for the company and help them to survive and bounce back from
the pandemic to what they were pre-pandemic.
4. Discuss how this course has helped you develop a better understanding of business
strategy.
The Covid-19 pandemic has changed the way education is carried out for both
students and educators. When the pandemic first arose, we had to adapt to online classes, and
it was a big change for everyone as learning over a screen was just not the same experience as
learning in a classroom. I am thankful that by the time I had to take this course, restrictions in
Singapore have relaxed to almost pre-pandemic levels. Because of this, I was able to take this
course in person, and it would have been a very different experience if it was online. In a
physical class, I was able to interact with my groupmates on the Business Strategy Game. I
think it would have been much harder to communicate if it was not done in person. The
pandemic also changed my perspective of the world by showing me that we have to learn to
adapt to situations quickly and make the best out of each situation, be it good or bad. Through
the Business Strategy Game, I was able to better understand the decisions made by leaders
throughout the pandemic to ensure the best for the company.

7. Cheryl Chia 50381328
This course has helped me develop a much better understanding of business strategy,
especially through the Business Strategy Game. Initially, the game was extremely confusing
to me, especially with all the different pages of decision entries. But, using the practice years
given at first, I was able to learn and figure out how to play the game, and I could count on
my groupmates and classmates for help when I needed it. In addition, the reports were more
confusing as there were so many numbers, rows, and columns to look at and analyse. But
after the first couple of practice years in the BSG system, I slowly learnt how to understand
the reports and how to analyse the data to decide what changes to make to the decisions for
the next year. Apart from the Business Strategy Game, I enjoyed the other games that we
played during the semester. It was a nice change from lectures, and being able to apply what I
learnt was fun and taught me what I should or should not do while making business
strategies. On top of that, the Plastico roleplay was a good experience for me as I got to
roleplay as one of the characters. That assignment taught me how to analyse situations and
better solve conflicts between team members. In conclusion, this course has helped me to
develop a better understanding in business strategy, and I am sure I would be able to apply
whatever I have learnt in my career soon.

8. Cheryl Chia 50381328
References
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information
Cher. (2022, October 18). https://www.businesstimes.com.sg/companies-markets/mobile-
spotlight/tailwinds-continue-to-push-sias-operating-results-for-september. Tailwinds
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Cusmano, J. (2021, May 31). Singapore Airlines posts its first loss in 48 years. Travel Daily.
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airlines-posts-its-first-loss-in-48-years/
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Forbes. (2022, March 26). China Eastern Airlines | Company Overview & News. Forbes.
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eastern-airlines/
Goh, B., & Qiu, S. (2022, March 23). Analysis: China Eastern faces more losses, regulatory
scrutiny after plane crash. Reuters. Retrieved November 13, 2022, from

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https://www.reuters.com/business/aerospace-defense/china-eastern-faces-more-losses-
regulatory-scrutiny-after-plane-crash-2022-03-22/
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loss-after-toughest-year-in-history
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red-for-fy2022-but-narrows-loss-to-s962m. SIA Still in the Red for FY2022, but
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https://www.businesstimes.com.sg/companies-markets/sia-still-in-the-red-for-fy2022-
but-narrows-loss-to-s962m

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The Wall Street Journal. (2022). 600115 | China Eastern Airlines Corp. Ltd. A Stock Price &
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data/quotes/cn/xshg/600115
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