SWOT analysis Singapore airlines

1. We have to prepare:
What is the current situation?
What are the complications due to the current situation?
What is the recommended solution?
A Brief Background and the key facts of SIA:
SIA- Statistical Record – Some key facts:
Fleet (No of Aircrafts): 93
No of Employees: 14,254
Number of scheduled destinations: 119
Singapore Airlines (SIA)' history can be traced back to May 1947, when Malayan
Airways operated its first commercial flight linking Singapore with Kuala Lumpur,
Ipoh and Penang. The airline was later renamed Malaysian Airways (1963) and
Malaysia-Singapore Airlines (1967), which was split in two in 1972, creating
Malaysian Airline System (since renamed Malaysia Airlines) and SIA.
Over a period of more than half a century, SIA has earned a reputation as an
innovative market leader, combining a quality product with excellent service. SIA‟s
Goal from the outset was to offer superior service in every area, at competitive
prices,while yielding a surplus to finance expansion and modernization, and to
provide a satisfactory return to shareholders, all this while keeping employees
satisfied, happy and motivated.The SIA has always had a consistent approach
through the turbulent times during the earlier decades, In 2002, with a solid
grounding in the airline‟s past they have set their sights on positioning SIA for the
future. SIA enjoys premium positioning as the leading airline in the world.

2. Their strengths can be listed as follows:
-PAR EXCELLENCE IN CUSTOMER SERVICE – At the heart of SIA‟s service
reputation was the Singapore Girl, the idealized version of SIA cabin attendant. The
icon was recognized worldwide for delivering “a standard of in-flight service even
other airlines talk about. SINGAPORE GIRL”
The care and attention that Singapore Airlines gives its customers, symbolized by
the Singapore Girl, has earned the airline many industry and travel awards, including
Conde Nast Traveller's "Best International Airline" award in 19 out of the last 20
years.
Staff recruitment and training:
SIA translated the advertising image of the Singapore Girl into reality through a
rigorous process of recruitment and training. Recruitment of female cabin crew was
highly selective. SIA invested time in selecting training, supervising and guiding the
cabin crew. The chosen few went through a rigorous training program that was
popularly described as a cross between boot camp and finishing school.
Fleet Development and low maintenance cost:
SIA has one of the youngest fleets of any major airline, with an average age of just
over 6 years. The airline operates a fleet of MEGATOP 747s, JUBILEE 777s, A340-
500s They are moving towards not just being an international airline but a global
airline. Punctuality of flights and safety of passengers are top priority for SIA.
Over the years, it secured new air planes at bargain prices by taking advantage of
the various offers from the manufacturers. SIA statergy would be the first to try out
the latest model from a particular manufacturer, obviously at a much discounted
rate. SIA would dispose off an aircraft while it still retained high re-sale value SIA
was active in the used aircraft market having
Trend setter in adopting latest flight guidance technology and in-flight
gadgets:
SIA‟s in house system Kriscom and Krismax II which handled yield management. In
2001 SIA invested 20 million in Krismax II was designed to help SIA to match
seat capacity with the customer demand by wait listing customers in one market
while seats allocated to other markets remain unsold.
SIA has developed a reputation for being an industry trend-setter. The list of
industry-leading innovations by SIA includes being the first to offer free headsets, a
choice of meals and free drinks in Economy Class in the 1970s, and the first with
satellite-based in-flight telephones in 1991. The in-flight entertainment system
Krisworld, offered all passengers 22 videos and 12 audio channels as well as
Nintendo games.

3. In 2001 the airline became the first to introduce a global in-flight e-mail system to
all passengers. SIA has also taken in-flight dining to new heights with the formation
of its International Culinary Panel and World Gourmet Cuisine.
The current situation:
The tourism industry is still recovering from the after effects of 9/11.
Terrorism combined with global recession adversely affected Tourism, thus
bringing down number of flight takers.
Stiff competition from other Airlines SIA main competitors included Cathy
Airways, Lufthansa, and the Australian Giants Quantas All were well equipped
to provide world class services along with excellent backing on Technology
and Safety.
Low Cost carriers emerged, taking the market by storm.
Statergies adopted by SIA to address these challenges:
To tackle effects aftermath of 9/11, the board and senior management
volunteered a reduction in wages and director fees. Managers accepted salary
reductions of between 7 to 15% . All other staff followed suit, agreeing the wage
cuts of 2.5 to 5%. SIA worked to control costs and maintain service quality
while insurance premiums escalated and load factors fell. In response to falling
load factors, especially on routes to the US. Services were reduced or suspended
altogether.
SILK AIR is a no frills charter service to lower income destinations such as
Malaysia, Philippines and Myanmar. About 40% of the passengers were
connecting from SIA flights, thus adding further to SIA revenue.
Flier Miles: A mileage accrual/ frequent flier‟s program across all the three
classes. SIA also instituted the priority passenger service (PPS) which was
not a frequent flier‟s program but rather a premium passenger program
where members received special privileges and benefits.

4. Star Alliance: A global network of 15 airlines that include giants like United
Airlines, Lufthansa and Air Canada. Passengers could book flights seamlessly over
800 destinations in 120 countries thereby greatly expanding the SIA customer
base. There were also increased customer benefits for e.g. Straight baggage
checking, sharing airport lounges and help from any member‟s office.
Resolving servicer problems: The Company readily admitted their
mistakes/shortcomings and was proactive in taking up responsibility for any
unfortunate situation that would arise due to airline negligence, thus raising the
trust levels among the customers. Local level managers and ground staff were
empowered to settle customer complaints on the spot.
TRANSFORMING CUSTOMER SERVICE Special programs to motivate employee‟s
Special feedback mechanism that looks into customer complaints against specific
employees. 30% of general resources spent on renewing systems and
procedures.
Employee recognition: Every year Winning Ways award is given to attendants
who receive the best, unsolicited comments from customers. Every 2 years the
company‟s CEO presents a special citation to the top employee service providers.
Challenges faced:
Growing aggressively
Controlling costs
To adopt Space beds for losing business to competation.
GROWING AGGRESIVELY:
Initial growth was 15-20% a year
Present growth rate is 5-6% a year which is reasonably good compared to
others.
However, nearly all airlines depend on domestic routes for 25-30% of the
traffic

5. SIA cannot afford the luxury as you can drive from one end of the country
to another in a cab.
80% of SIA „s revenue came from foreign travellers and 20% from
Singaporeans.
Solution:
SIA purchased a 49% stake in VIRGIN ATLANTIC airlines It was a partnership of two
entrepreneurial companies with root structures SIA also acquired a 25% stake in Air
New Zealand SIA will continue to invest selectively in other airlines with desirable
roots. This is the best strategy which is working for SIA.
CONTROLLING COSTS:
Increase costs for top tier carriers, lucrative Europe Asia routes attracted fierce
competition for premium passengers by constantly introducing more sophisticated
and extremely expensive products.
SOLUTION:
SIA realised that although small in number business and first class passengers
generated roughly half the airline revenues. SIA decided to extend the first class
experience all the classes which included enhance on ground service, new in flight
cuisine. For its 1st class passengers, SIA went beyond expectations by upgrading to
advanced audio visual on demand (AVOD) units which gave passengers almost 200
entertainment options. Well managed financial operation where the carrying cost is
minimal and share holder funds are increasing on a day to day basis.
Space Bed:
British Airways has introduced lie-flat beds in economy class in 2000. This led to
some switching loyalties from SIA to BA. SIA contacted a Swiss Engineering firm to
design its own-state-of-the-art lie-flat seat, dubbed “Space Bed” However the new
Space Bed would reduce the number of seats in the economy class from 58 to 50

6. these space beds are extremely expensive to manufacture and maintain Already
millions have been spent on R&D and the total budget stands at $100 mIn the
uncertain environment following 9/11 attacks SIA is unsure about going ahead with
the Space Bed plan.
Solution:
They should go ahead with the Space Bed plan as it would give them an edge over
the competitors Increase their popularity with budget travellers which is essential
keeping in mind today‟s global economic scenario SIA has a strong financial backing
where their debts stand at US$1 billion while their shareholder funds are about US$
10 billion US$100 mil will not make much difference in long term financial stability.