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Singapore Airlines-The Way Forward

Singapore Airlines-The Way Forward

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Published by Dennis George
Current challenges faced by Singapore Airlines and how can it sustain a profitable future
Current challenges faced by Singapore Airlines and how can it sustain a profitable future

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Published by: Dennis George on May 25, 2013
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Singapore Airlines- The way ahead

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PROPOSAL FOR APPLIED RESEARCH PROJECT Singapore Airlines – The way ahead

GROUP 13 Dennis George Ramnath S

SP Jain School of Global Management

Singapore Airlines- The way ahead

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Singapore Airlines – The way forward

ACKNOWLEDGEMENT
This report is a result of efforts and detailed analysis on the topic and attempt has been made to make this study relevant and informative. Learning and value derived as a result of this project for academic purpose will be our parameter for success. We would like to mention the names of the individual whose support and guidance helped us to make this applied research project a very good learning experience. Our academic mentor, Ms. Irina Pismennaya was always available to guide us through and answer our queries. We are grateful for the insights and knowledge shared to us by her. Her valuable inputs helped us shape the report in the manner it stands today. We would also like to thank Dr. Balakrishna Grandhi, whose presence and contribution was crucial in channelizing this project at every stage. We would like to thank Mr. Deannath Kulathunge, Country head – Singapore, IATA for giving us valuable insights about the aviation industry with his experience. We would also like to extend our gratitude to Ms. Veena Jadhav for her inputs and guidance. We would like to thank the staff of SP Jain School of Global Management, Singapore for their support in making everything as comfortable as possible for learning. The contribution of people mentioned above is invaluable. Their guidance has made the applied research project a very valuable and memorable learning experience.

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DECLARATION
We hereby declare that the matter included in this applied research project entitled “Singapore airlines – the way forward” is the result of the study and interview carried out by us. We further declare that this is our original work and has not been published anywhere before. This project work has been carried out for the sole purpose of submission in partial fulfillment of the requirements of Global Masters in Business Administration at SP Jain School of Global Management, Singapore.

COPYRIGHT ASSIGNMENT
FOR THE GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the Project team (“Assignor”), hereby irrevocably transfers and assigns to S P Jain School of Global Management (“Assignee”), located at Dubai, Singapore, Sydney, its successors and assigns, in perpetuity, all right (whether now known or hereinafter invented), title, and interest, throughout the world, including any copyrights and renewals or extensions thereto, in (project title) IN WITNESS THEREOF, Assignor has duly executed this agreement. Date : Project Team: Dennis George GAPR12CMM101 Ramnath S GAPR12CMM118 (Sign) --------------------------(Sign) ---------------------------

Project Mentor: Ms. Irina Pismennaya Signature:

SP JAIN SCHOOL OF GLOBAL MANAGEMENT DUBAI - SINGAPORE

SP Jain School of Global Management

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Table of contents Executive Summary .............................................................................................. 7 Introduction of the airline industry ...................................................................... 8 History of the airline industry .................................................................................. 9 Asian airline industry ............................................................................................ 10 Present day – airline industry ................................................................................ 11 Singapore airlines .................................................................................................. 12 Research problem................................................................................................ 15 Scope of the research .......................................................................................... 15 Research methodology ........................................................................................ 16 Statement of problem ............................................................................................ 16 Problem Definition ................................................................................................. 17 Research Design and Plan ..................................................................................... 17 Sampling and Data Collection ................................................................................ 18 Qualitative study ................................................................................................... 18 Literature review ................................................................................................. 21 Books.................................................................................................................... 21 Articles and Journals ............................................................................................ 21 Academic Journals ................................................................................................ 24 Skytrax ............................................................................................................... 28 Skytrax reviews ..................................................................................................... 31 Primary Research ................................................................................................ 34 Demographic analysis ........................................................................................... 35 Factor Analysis...................................................................................................... 37 Perceptual Mapping ............................................................................................... 43 Relative scoring ..................................................................................................... 46 Summary of the complaints ................................................................................... 49 Cluster analysis .................................................................................................... 50

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Online Booking...................................................................................................... 53 Check-In Options .................................................................................................. 54 Green Initiatives .................................................................................................... 55 Key findings from the research ........................................................................... 56 SIA – Recent developments ................................................................................. 56 Recommendations .............................................................................................. 57 Limitations ......................................................................................................... 58 Future scope ....................................................................................................... 58

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Table of figures
Figure 1-Analytical hierarchical Method .................................................................... 22 Figure 3-complaint analysis ...................................................................................... 32 Figure 4 - Primary Research ...................................................................................... 34 Figure 5 - Age ........................................................................................................... 35 Figure 6 - Nationality ................................................................................................ 35 Figure 7 - Gender ..................................................................................................... 35 Figure 8 - Frequency of travel.................................................................................... 36 Figure 9 - Occupation ............................................................................................... 36 Figure 10 - Purpose of travel ..................................................................................... 36 Figure 11- Factor analysis – In-flight service .............................................................. 38 Figure 12 - Factor analysis - parameters to choose an airline ..................................... 39 Figure 13 - Regression – Loyalty Program .................................................................. 40 Figure 14 - Regression - Loyalty Program SIA ............................................................ 41 Figure 15 - Recommendation - Likert scale ................................................................ 41 Figure 16 - Regression - In-flight service .................................................................... 42 Figure 17 - Regression - Group - In-flight service ....................................................... 42 Figure 18 - Perceptual mapping – Nationality ............................................................ 43 Figure 19 - Price Comparison .................................................................................... 44 Figure 20 - Reasons for choosing other airlines above Singapore Airlines ................... 44 Figure 21 - Perceptual mapping - Rate SIA - SIA Fliers .............................................. 45 Figure 22 - Perceptual Mapping - Age - Rate SIA ........................................................ 45 Figure 23 - Perceptual Mapping - Occupation - Rate SIA ............................................ 46 Figure 24- Perceptual Mapping - In-flight service - Singaporeans ............................... 48 Figure 25 - Perceptual Mapping - In-flight service - SIA Fliers .................................... 48 Figure 26 - Perceptual Mapping - In-flight service-Loyalty program ............................ 48 Figure 27 - Cluster –In-flight service.......................................................................... 50 Figure 28 - Grouping of customers ............................................................................ 51 Figure 29 - Multiple comparison................................................................................ 52 Figure 30 - Nationality - Cross tabulation .................................................................. 52 Figure 31 - Occupation - Cross tabulation ................................................................. 53 Figure 32 - SIA Fliers - Crosstabulation ..................................................................... 53 Figure 33 - Occupation - Source of booking – Cross tabulation .................................. 54 Figure 34 - Age - Checkin options - Crosstabulations................................................. 54 Figure 35 - Green Initiative 1 .................................................................................... 55

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Figure 36 - Green Initiative 2 .................................................................................... 55

Executive Summary:
In a rapid changing macroeconomic conditions, constant increase in fuel prices and increased competition not only from other full service airlines, but also from budget airlines in south-east Asia. Singapore Airlines (SIA) has posted a loss of USD 31m for Jan-March quarter, 2012. This is the first time SIA is facing a loss since it became public in 1985. The biggest challenge for SIA is to live up to its own reputation of being a premium service provider and undisputed cost leader. SIA is also facing threat from Emirates, Qatar and Qantas airlines for flights originating out of Singapore. Our secondary study centered on Skytrax, to understand the passenger preferences and their preferred airlines. The primary survey conducted covered people from different nationalities, and age groups to understand the perception of the airline passengers. The main purpose of this study was to understand passenger‟s perception about SIA, the areas of SIA which needs to be addressed and to provide recommendations. Our secondary study, mainly from Skytrax indicated that SIAs main areas of concern are seat comfort, inflight entertainment and quality of food and beverage. This was revalidated by SIAs slip in the world airline ranking. Our primary survey revealed similar results suggesting the need for SIA to improve on the above mentioned parameter to continue to be profitable. However, recent updates about SIA reveal that they are investing to improve their inflight entertainment, seats and lounge facilities, which is actually a part of our recommendations.

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Introduction of the airline industry
The airline industry is an evolving industry. It caters to tourism, economic growth and trade among nations. It is therefore the focal point of globalization. The airline industry has grown by about 8% per year in the past decade 2000 to 2010. Business and leisure travel has grown strongly worldwide. Last year, the Airlines carried 1.75 billion passengers. The availability of large aircrafts such as the Airbus 380 Boeing 777 and Boeing 747 made it convenient and affordable to travel. Governments in developing countries have realized the benefits of tourism to their national economies. They have spurred the development of resorts and infrastructure. They have been successful in luring tourists from the prosperous countries in the developed Asian, Western European and North American countries. Tourists from developing countries also have a major say in the mass increase in the volume of traffic. (Kroo, 2010) Business travel has grown. Companies are going international with heavy investments in international markets. The supply and production chains and their customers are the new international market. The rapid growth of world trade has also contributed to growth in business travel. Profitability of the Airline Industry is closely associated with economic trade and growth. During the first half of the 1990s, the industry suffered from world recession and the aftermath of the Gulf War. The number of international passengers dropped for the first time. The financial difficulties were as airlines over ordered airlines in the boom years of the late 1980s, excess capacity in the market. Airlines suffered heavy losses of $20.4bn in the years from 1990 to 1994. (Kroo, 2010) Since then, airlines have recognized the need for radical change to ensure their sustainability. Many have tried to cut costs, reduce capacity growth and increase load factors. At a time of renewed economic growth, industry as a whole to returned to profitability: Airlines' profits were $5bn in 1996, less than 2% of total revenues. This is way below the level IATA believes is necessary for airlines to survive. They couldn‟t control their debts, build cash reserves and maintain sustainable investment levels. Many airlines remained unprofitable. To meet the requirements of their increasingly discerning customers, some airlines have invested heavily to improve the quality of service that they offer. Mobile Check-in, new interactive entertainment systems, and more leg space & comfortable seating are just some of the product enhancements that were introduced to attract and retain customers.

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A number of factors are forcing airlines to become more efficient. The European Union (EU) has put its foot down and ruled that governments should not support and subsidize their loss-making airlines. Elsewhere too, airlines are being privatized. To appease present and appeal to prospective shareholders, the airlines have to become more competitive and efficient. Deregulation is also stimulating competition. Many low cost budget airlines are coming into the fray. The US led the way in 1978 and Europe followed suit. The final stages of deregulation in the EU took place in April 1997. This allowed an airline from one member state to fly passengers within another member's domestic market. 'Open skies' agreements are beginning to dismantle some of the regulations governing which carriers can fly on some of the routes. However, the aviation industry is known for its strong nationalist sentiments towards their domestic 'flag carriers'. In many parts of the world, several airlines still continue to face limitations. Despite this, the airline industry has proceeded towards globalization and consolidation. This is a normal characteristics associated with many other industries. The establishment of alliances and partnerships among airlines has been good. The networks have expanded, thus aiding customers. Hundreds of airlines have entered into major alliances, which range from marketing agreements to code-sharing to equity transfers and franchises.

History of the airline industry
American aviation pioneers, Rufus Porter and Frederick Marriott, were the first to attempt to start airlines using airships in the mid-19th century. They focused on the famous New York–California route. They did not succeed. The airlines were struck by mishaps as the airships catching fire and the aircraft being ripped apart by spectators. DELAG, Deutsche (Luftschiffahrts-Aktiengesellschaft) was the world's first airline. It was founded with government assistance on November 16, 1909.They operated airships manufactured by The Zeppelin Corporation, headquartered in Frankfurt. The airlines that still exist are Australia's Qantas, Netherlands' KLM, Colombia's Avianca, , and Czech Republic's Czech Airlines. (Greenslet, 2006) Tony Jannus conducted the United States' first scheduled commercial airline flight on 1 January 1914 for the St. Petersburg-Tampa Airboat Line. Chalk's International Airlines began service between Miami and Bimini in the Bahamas in 1919. Chalk's is claimed to be the oldest continuously operating airline in the United States until its closure in 2008. World War II and World War I brought new life to the airline industry. Airlines from the allied countries foresaw a future demand for commercial air travel and transportion of cargo. They were eager to invest in air travel. Most of these new aircraft were based on American bombers such as the B-29. (Greenslet, 2006)

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In the 1950s, the airline industry in the West was dominated by Boeing 707, Douglas DC-8, De Havilland Comet, and Sud Aviation Caravelle, while the Eastern bloc had stateowned fleets of Tupolev Tu-104 and Tupolev Tu-124. The airlines saw a major boost in the 1970s. Boeing 747, McDonnell Douglas DC-10, and Lockheed L-1011 were inaugurated. The wide body jumbo jet service, which is still the standard in international travel, was initiated. The Tupolev Tu-144 and Concorde, made supersonic travel a reality. Concorde flew from 1969 to 2003. In 1972, Airbus began its operations. Airbus began producing Europe's most commercially successful line of airliners to date. Airliners were made with efficiency in mind. Airbus also featured modern electronic cockpits to enable pilots to fly multiple models with minimal training. William J. Tobin founded Travel Concepts, Inc. in 1971. Travel Concepts was the first company to develop travel kits for First Class and Business Class cabins. They also provided in-flight educational games for kids. The travel kits and educational game programs have become a necessity in airline travel and have been utilized for 25 years (Greenslet, 2006)

Asian airline industry
Philippine Airlines (PAL) is the oldest scheduled carrier still in operation. It was officially founded on February 26, 1941. It is also the oldest airline in Asia still operating under its current name. India was also one of the first countries in Asia to embrace civil aviation. Air India was one of the first West Asian airline companies. It started as Tata Airlines in 1932, a division of Tata Sons Ltd. The airline was founded by India's leading industrialist, JRD Tata. Tata Airlines was also one of the world's first major airlines which began its operations without any support from the Government. (Industry watchers, 2012) The outbreak of World War II, the airline presence in Asia came to a standstill. Many new flag carriers donated their aircraft for military aid. In 1945, regular commercial service was restored in India. Tata Airlines became a public limited company under the name Air India on July 29, 1946. Government of India acquired 49% of the airline. In return, the airline was granted status to operate international services from India as the designated flag carrier under the name Air India International. During the era of decolonization, new Asian countries embraced air transport. Malayan Airways Limited, Orient Airways (later Pakistan International Airlines), Cathay Pacific of Hong Kong, El Al in Israel, Garuda Indonesia, Japan Airlines, Thai Airways International, and Korean National Airlines came into the foray at this time. (Industry watchers, 2012)

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Present day – airline industry
The current Airlines industry is showing slow but robust growth, as it comes out of turbulent times. With competition and operating costs on a high, the concentration is on becoming a leaner and efficient. They also have to constantly learn from the crises and shocks. Then there are external sources like constant turbulences and challenges from natural disasters and political instability. The airline industry also has to keep track of rising oil prices, taxation, and carbon emission norms. The airline industry has shown resilience to sustain itself. The industry has recovered from the economic crisis of 2007-08 and is improving. According to IATA, in 2011, air transport passenger traffic grew 5.9% but profits fell by 50% due to the turbulent economic scenario. Air travel demand remains robust despite slow economic growth in many regions. (Tyler, 2012) But, despite the increase in passengers, the industry has struggled to make significant profits. Although revenues rose by 9.4% to $598 bn, profits earned were $7.9bn, which is half when compared with 2010. This was largely due to steep increase in the Brent crude oil, thus affecting aviation fuel prices; the average price of a barrel of oil rose from $79 in 2010 to $126 in 2012. (Tyler, 2012) In 2011, the industry had an addition of 865 direct services, bringing the total number of direct airport-pair connections to approximately 35,000, but there are variations in the passenger market performance geographically. South American airlines grew fastest at a rate of 11%. The airlines in Africa showed the weakest performance, due to political turmoil in the region. North American airlines showed a weak growth of 3%. This shows that the market is mature has saturated. The emerging Asia – Pacific market showed a steady growth of 5%, but

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lesser than last year due to the earthquake and tsunami in Japan.

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European airlines showed strongest growth, at 9%. They are also among airlines in the three largest regions. The domestic air travel industry shows a different pattern altogether. The domestic aviation markets are dominated by the United States & China, who take up 40% of the market share. The US market grew by just 1.3% in 2011 in comparison to the Chinese market which grew by almost 11%. The Indian domestic market grew by 16% even though it is just onetwelfth the size of the US market. Brazil, which grew by 14%, is also an emerging market with large potential. Japan‟s domestic market was the worst hit and was reduced by 15% due to natural calamities in early 2011. (Tyler, 2012)

Singapore airlines
Singapore Airlines Limited is the flagship carrier of Singapore. It is an iconic brand. It is a subsidiary of Singapore Government and holding company Temasek holdings. Temasak holdings own 54% voting share. Singapore government holds a golden share via the Ministry of Finance. Singapore Airlines began with the incorporation of Malayan Airways Limited in 1947. Singapore Airlines came into existence after a political disagreement between Singapore and Malaysia separated the airline Malaysian-Singapore airlines. (Glab, 2002) Operating from Changi Airport, Singapore, Singapore Airlines is an iconic brand. The airline is known for its exceptional quality of flights and service alike. Singapore Airlines takes pride in becoming the pioneers in the industry for various innovative and quality up gradations to enhance customer experience. They are known to be the pioneers in the providing in-flight food and beverage service. They revolutionized the use of technology by including in-flight entertainment, Kris entertainment, which is notches ahead of the previous technology used. (Glab, 2002) Singapore Airlines as a brand is also known for its iconic airhostess. They are called the „Singapore Girls‟. They are portrayed as gentle and caring. They complement Singapore Airlines slogan “A great way to fly”. They are part of all the advertising campaigning as they believe that

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the „Singapore Girl‟ is the face of the airline and an asset its competitors don‟t have. (Wirtz & Heracleous, 2009) Recently in 2006, Singapore Airlines was the first airline to fly the Airbus A380. With a fleet of 99, they are known to have one of the youngest fleets in the world. Low fleet age assists them in getting more air time and more fuel efficiency. (Glab, 2002)

The key to the success is that they ignore the crowd. When the competitors focused on cost cutting measures, Singapore Airlines focused on adding value to their customers experience and build loyalty. They focus on adhering to three focus points, Product leadership and network connectivity. They sincerely invest in training their team to ensure the upkeep of service standards. They have been year after year ranked in the Top 50 World‟s Most Admired Companies by the Fortune Magazine. They have the recognition of being the Best Airline in the Conde Nast Traveler magazine 23 of the 24 times, apart from various other recognitions and awards won year after year. They are also leaders in the business segment travel. (Glab, 2002) Off late last financial year 2011-12, even though they achieved a net profit of $226 million, they went into a loss of $34 million in the 4th quarter.

This is caused because of increased number of competitor‟s flights to Singapore, better technologically equipped competition in the form of Air China, Qatar Airways and Emirates. The political tension in Middle East pushed the fuel prices to $130 per barrel. The European crisis and natural disasters such as the Japanese Tsunami and earthquake resulted in lesser

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no of passengers preferring to fly. Fuel cost is one of the most important cost components, taking a share of 39.8%. Yet considering their performance in the past 41 years Singapore Airlines is expected to get back to on track very soon. They have stated plans to introduce revamped seats and cabin interiors along with an upgraded in flight entertainment, to keep their nose ahead of their Asian and Middle Eastern rivals. They have already started the redesigning phase of their aircraft interiors by handing over the project BMW Group subsidiary Design works USA and James Park Associates to create the next generation in flight experience.

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Research problem
To analyze the customer behavior and recommend customer centric approach to Singapore airlines to cope with global crisis & increased competition from low cost carriers in a more liberalized market. Singapore Airlines is one of the best airlines in the world. It has been a pioneer in pursuing various customer centric evolutions in the airline industry. It is a trend setter and known for efficiency and customer friendly approach. Several studies have revealed that the Singapore Airlines business model is a benchmark for the airline industry worth replicating. The recent rise in competition from airlines across the globe, global economic crises and smarter customers has pushed Singapore Airlines to one of the lowest operational periods since its inception. This research will analyze the areas where the competitors of Singapore Airlines are scoring in terms of passenger feedback and suggest feedback on the areas of improvement to maintain supremacy in the industry.

Scope of the Research
The scope of this research is to concentrate on Singapore airlines, the consumer‟s opinion on their preferred airlines and the area of improvement for Singapore airlines. The earlier research focused on learning‟s from Singapore Airlines as an Iconic brand and a business model worth emulating. The recent evaluation on the performance of the industry and the Singapore Airlines states that competition is catching up. The high quality customer service and superior in-flight service for which Singapore Airlines was considered one of the best is now a mandate for the airline industry. Airlines are improving on the aspects of efficiency and modern fleet. The industry is a more level playing field as compared to a decade ago. The scope in this pretext is to evaluate the current trends which led to the drop in the performance of Singapore Airlines and recommend a future course of action. This will help Singapore airlines to get back to its position in the industry where it is known to be in.

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Research Methodology

The research was done on secondary and primary basis. The secondary research was carried out by gathering interpretations and data about the industry, consumer perception and Singapore Airlines, via literature review, academic review, journals and articles. Skytrax, a trusted online website with more than 5 million reviews on airlines and airports was another major source used to bolster the findings of the secondary research. A part of the primary research, Qualitative and Quantitative analysis was carried out on travel agents and airline passengers, strengthened with key insights from industry experts.

Statement of problem
Today‟s customer‟s buying habits are fast evolving due to dynamic macro and micro economical changes. The customer has evolved. Today they are spoilt by choice. They are aware of the products and services available. They expect quality at optimal prices. Hence the challenge for the airline industry lies in achieving maximum customer satisfaction with good value proposition. The airline that is able to deliver this strategy can become the market leader. Singapore Airlines is an iconic brand and market leader for the last 3.5 decades. But currently it is slowing losing its market share, to more competitive airlines. Hence there is a

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need to understand customer‟s perspective on airlines across the globe. Additionally there is a need to evaluate parameters affecting customer behavior. The inference of this project will provide insights on the way forward for Singapore Airlines. This project will aid Singapore Airlines to concentrate on the immediate problems at hand.

Problem Definition
The problem definition is to evaluate the customer‟s perception of the current airline industry and specifically Singapore Airlines. Our objective is to study the customer perception of Singapore airlines, and identify the factors that determine customer‟s choice to fly an airline. Thus, this will help us understand the gap between Singapore airlines deliverables against the customer‟s expectations.

Research Design and Plan
Our intention is to perform secondary research to understand the customer‟s choice for flying based on previous studies conducted on similar subjects and revalidate it with qualitative and quantitative primary research. Based on the secondary research and qualitative study conducted on travel agents, industry experts and frequent flyers two sets of questionnaire was prepared. One for the travel agents and the other were for the customers. Using Skytrax as a comprehensive data source, we made a conscious effort to link the primary findings into a comprehensive result oriented data. A hypothesis bases on the secondary research was built. A discussion guide was designed on the basis of the hypothesis to ascertain the customers, travel agents, frequent fliers and industry expert‟s views. Bases on the review of the discussion guide, a pilot questionnaire was put online and accessed to ascertain the degree and quality of data that can be inferred. Once the data was accessed the final questionnaire was put online and given has handouts. Two survey questionnaires focusing on Travel agents and airline passengers. The questionnaire for passengers was divided into 4 major parts. The first part covered the demographic analysis. The next three parts were devised to map the passenger‟s perception while booking tickets, checking in, in flight experience and gauging the competition with respect to the competition and other preferred airlines. Questionnaire related to check-in preferences, the green initiatives and baggage allowances criteria‟s were also mapped. The passengers were requested to rate Singapore Airlines on a set of parameters based on the overall airline operations and the in-flight experience in comparison to other preferred airlines. The travel agents survey questionnaire was built to map the preference of the travel agents and their customers. The questionnaire was even designed to map the passenger‟s preferred airlines and rating them with Singapore Airlines.

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Sampling and Data Collection
In order to evaluate if our research methodology and questionnaire were accurate and gave us relevant data, we conducted a pilot survey. A comprehensive evaluation of the pilot test questionnaire gave insights to improve the survey and make minor adjustments. The pilot questionnaire having 24 questions was perceived as lengthy by the respondents. The pilot study also revealed that there was a flaw in the structure of the questionnaire regarding the questions to be answered by the Singapore Airlines fliers and the non fliers. Moreover we even identified that the no. of people preferring a budget airline were more. This hampered our analysis of people who prefer full service carriers. Hence we ascertained the need to filter the respondents when considering the people according the preference of airline service. One question with the parameters on a likert scale was checked for factor analysis and a regression was run to ascertain the strength of the data. The primary research data collection was carried out on two mediums. The passengers online survey targeted 80 respondents (www.qualtrics.com) and the hard copy survey targeting 30 respondents was conducted at the arrival and departures lounge area of Changi airport. We received 104 responses online and 15 hardcopy survey responses. We discontinued the handout survey because respondents complained about the questionnaire being long to fill.

Qualitative study: Key insights from Industry experts:
After interviewing two industry experts the common opinions from them both about the airline industry in general and Singapore airlines are as follows:  Price sensitive customers: The customers are price conscious and expect to get maximum value when they travel by full service airlines. The full service airlines are not only competing with other full service airlines but also with budget airlines which eat up into their market share. Clearly, SIA is losing its share to price sensitive passengers.  No compromise on service: Firstly, service expectations have increased for passengers because they now have zero tolerance to faulty service. Moreover, if a passenger chooses a full service over other full service or even budget airlines, their expectations are now more than how much it used to be in the early 2000s. Secondly, since it is the buyers market, and the passengers are now free to post their experiences on blogs and social networking sites, it acts like word of mouth. Hence, a below par service by any airline will have its rippling effect. SIA is able to have high service standards.

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Long haul flights are not generally preferred: Due to the availability of carriers almost all over the world, people prefer to have a break in their long distance journeys. In general, passengers prefer having two medium haul flights rather than one long haul flight.

SIA services: Although both the experts rated SIA services as superior to most of the airlines, recently the industry experts who are also frequent flyers claim that there is a lack of consistency in the service standards across different sectors. For eg. A Singapore – Mumbai sector may receive a different level of service compared to a Singapore – Dubai sector.

Quality of interiors of SIA: Although SIA still have one of the youngest fleet in the industry, the interior is deteriorating. Again, it seems to be inconsistent as it varies between different sectors. However, this deterioration is when one compares to SIA‟s own standards. SIA is still better than most of the rest across the globe as far as interiors are concerned.

SIA staff – thorough professionals: SIA are very professional in their approach, they have a well written script for almost every aberration that passenger and staff is likely to encounter. Although this works out to be in favor of SIA on most occasions, passengers at times may term it as inflexibility in service.

Online presence and call centers: SIA still needs to catch up in their online presence. The website appears to be less user-friendly compared to others and also have limited presence in the third party websites. The customer care centers also are not as effective as most of its counterparts.

Key insights from frequent flyers:
A qualitative study was conducted on ten frequent flyers. They were asked open ended questions based on the discussion guide (refer appendix). The summary of the learning is as follows:  Preferred airlines: Besides SIA, Emirates, Qatar and Qantas are the other preferred airlines, which have a comparable service.

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Source of booking: Most passengers prefer to book through airline websites or third party websites when they are travelling for personal purpose, but use the in house travel house or travel agents to book tickets for official purposes.

Parameters considered before booking a particular airline: Punctuality, in flight service, convenience in terms of flight timings and frequent flyer program play a vital role in determining their choice of airline. However, when they travel for official purpose, it is more to do with the cap that is put on the airline fare which determines the choice of airline.

Go Green: Frequent flyers are generally aware of the go green initiatives of airlines. They are willing to travel airlines promoting green initiatives but are unwilling to bear the cost burden.

Key insights from travel agents:
A qualitative study was conducted on nine frequent flyers. They were asked open ended questions based on the discussion guide (refer appendix). The summary of the learning is as follows:  Price: According to the travel agents price plays the most important role when passengers choose an airline to fly.  Other parameters: Three travel agents out of the nine surveyed believe that passengers look at in-flight service, punctuality, baggage space and safety as other important factor for choosing an airline.  Flexibility of SIA: Travel agents in general believe that SIA is not very flexible in accommodating last minute requests of travel agents.

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Literature review Books:
According to Flying High, despite most of the airline companies facing testing times with rising fuel prices coupled with global economic slowdown, Singapore airlines is one of the very few airline to post profits consistently for the last three and a half decades. The authors attribute the success to the importance given to innovation, having a young fleet of aircrafts, rigorous training and selection process, empowerment, and profit consciousness and cost cutting was ingrained in every employee. Despite cost cutting measures, Singapore Airlines never compromised on quality coupled with constant innovations which led to the success of Singapore airlines. (Loizos Th Heracleous, 2006) The book, The Southwest Airlines Way describes how Herbert Keheller achieved high performance using the power of relationships. Southwest Pioneer of budget airlines – South west airlines achieved high performance by using the power of relationships. airlines have been the pioneers in budget airlines. The airlines success story is again due to innovation and maintaining different communication techniques to different stakeholders such as Frequent, timely and problem solving communication. (Gittell, 2004) SIA focused on innovation, young fleet, rigorous training and selection process, empowerment, and made employees profit and cost conscious. This helped them achieve their desired top and bottom line.

Articles and Journals:
According to IATA 2012, Airlines are an essential component of the travel and tourism industry and arguably the largest industry in the world. Process and development in the transportation sector is the backbone for the economic prosperity of the country, both domestically and internationally1. Despite all this the airline industry is facing tremendous turbulence since the deregulation. Post the deregulation between 1977 and 1992, airline industry earned a gross revenue of USD 2 trillion Globally, post the deregulation between 1977 and 1992, airline industry has earned profits of only 0.6% of their total revenue.

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whist its operating expense was as high as USD 1.96 trillion, spiraling to just 0.6% net profit of the total revenue. (Tyler, 2012) According to IATA (January 2012), the international scheduled passenger traffic measured in RPKs i.e. Revenue Passenger Kilometers is constantly increasing since 2002 barring two setbacks in 2003 and 2008 owing to the global financial crisis. The RPK has increased from 150 billion per month in Jan 2003 to 275 billion per month in Jan 2012. As per IATA, the major contributors to worldwide RPK is Europe (120 billion / month) and Asia pacific (100 billion/ month). (Tyler, 2012) Andrew Cook, Graham Tanner, Stephen Anderson in their research paper titled Evaluating the true cost to airlines of one minute of A sixty five minute flight delay could cost the airline upto 150 Euro per minute. airborne or ground delay: describe the various reasons and types of aircraft delays and the direct cost implications. They have arrived at startling facts such as a 65 minute flight delay may cost up to 150 euro per RPK has increased from 150 billion per month in Jan 2003 to 275 billion per month in Jan 2012.

minute for only holding the aircraft. (Cook, 2004)

Figure 1-Analytical hierarchical Method

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According the primary and secondary study conducted by Adli M, Jia-Pei and Siaw-Peng L from Universiti Sians Malaysia, Malaysian airlines, Cathay pacific and Singapore airlines were most efficient in terms of service quality for flights landing at Penang, Malaysia of 7 airlines considered. From air travelers, weights for each criterion were determined using pair wise comparison methods. The variables used are tangibility, reliability, Responsiveness and assurance, courtesy of cabin crew, cabin safety procedure, comfort and cleanliness. Analytical hierarchical method was used to evaluate the service quality of airlines. (Mustafa, Jia, Peng, & Hamid, 2005) Airline safety and security has also been an integral part leading to the profitability of airlines. SAE International safety, conducted a primary study on aircraft accidents. However, this study has further scope for improvement as the security aspect of the 9/11 attacks was not considered. (Mathews, 2000) Loofsgard primarily focused on the European carriers and how to manage the safety standards of airlines during the times of deregulation. Author in „letting loose‟ describes the security issues in the world, changes in security techniques and problems with obsolete security system and how it has impacted the brand of the airlines. (Loofsgard 1990) According to a secondary research conducted by Chia A and Phau I : The paper studies two asian airlines namely Malaysian airlines and Singapore Airlines, the perceived quality is the difference of their expectations and perceptions formed about the airlines. It also states that corporate culture effects service quality. The variables used in the articles include Timeliness, comfort, convenience and Time convenience is the most important factor for frequent and moderate flyers and destination is the sole important criteria for light flyers. For flights landing at Penang, Malaysia - Malaysian airlines, Cathay Pacific and SIA are most efficient in terms of service quality.

Obsolete security system has a direct impact on the brand of the airline.

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destinations. Further the research mentions that convenience is the most important criteria for frequent and moderate fliers where as light fliers (< two trips a year) ranked destinations as their main preference. (Anthony Chia, 1999)

Academic Journals
According to Prof. David Wessels, Consumers although aware of their choices still choose their preferred airline. Price is the key factor, meals and upgrades are less important, and many don‟t even perceive a difference in low cost

Passenger loyalty is significant along with price. Meals and upgrades are less significant in comparison to price.

carriers and full service carrier. Leisure travelers deal with airlines ultimately for booking, and business traveler‟s deal with TA. Prior to 2001, convenience and loyalty program were the important factors considered for choosing an airline. Media Sources used when booking, no. of airlines considered, frequent flyer membership are the different variables used. (Wessels, 2006) According to Atilgan E and Akinci S, the gap Gap between perceived and expected services determine the satisfaction level of customers. Internet and food & beverage are the two most important criteria to determine passenger satisfaction. between expected service and perceived service determines the satisfaction level of customers. The factors that prompt an individual to expect a quality of service is word of mouth, personal needs and past experiences. Internet, Food and beverage, cabin, aesthetics, convenience, dependability and in-flight activities are the key variables considered. Internet and Food and beverage were the two most criteria which had the maximum differences in this primary study which was chartered airlines customers with majority of its customers from Germany. (Atilgan, Akinci, & Aksoy, 2008) According to Lapre M and Tsikritsis N, airlines learn from operating experiences in the short term to reduce customer dissatisfaction and follow the U shaped function of operating experience in the long run to learn to handle customer dissatisfaction. Customers increase their expectations based on their past experience. According to Haskett (1997), companies achieve high profitability by either focus Passengers increase their expectations based on past experiences. Airlines learn from their operating experiences to reduce passenger dissatisfaction in the short term.

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on operations (in the service delivery system) or focus on market (in the target market).The variables considered are mishandled baggage, over sales, Denied boarding, late arrivals, long flights and connections. Most full service airlines learn faster than focused airlines. Most airlines pin pointed to one another for complaints received where as South west airlines used a collective approach, not playing the blame game and was fastest in the learning curve. (Lapre & Tsikriktsis, March 2006) According to Zeithaml V and Berry L and Parasuraman A, there is a zone of tolerance separates the desired services from adequate services and varies across customers. It also expands and contracts within the same customer and the desired level of service is subject to change lesser than the adequate service level. A positive relationship exists between the level of personal needs and desired service. The paper also states that the higher the level of explicit service promises, the higher is the level of desired and predicted service. Level of desired and predicted service is elevated because of positive word of mouth. (Zeithaml, Berry, & Parasuraman, 1993) Current performance scores can be compared to competition best practice standards to identify current service levels. Perceptions and expectations of different customer groups can be identified and compared.

Figure 2

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As per a study conducted by Tieren S (2008) EU’s perception score is more than US in terms of on time flight arrivals, baggage reports and flight cancellations. on three aspects of airline service quality namely time flight arrivals, baggage reports, and flight cancellations, EU‟s perception score are more than those of US sample indicating a more positive disposition towards airline industry. Three key areas of airline service quality; on time flight arrivals, baggage reports and flight cancellations actual reported data on service quality are the variables used. Infact, in US, actual survey reveals that actual consumer perception are worse than reported in US air travel consumer report. (Tieren, 2008) According to Janawade V, alliances impact the perceived quality of airlines and passengers expect the same level of service while travelling in partner airlines irrespective of the airlines. The variables considered are On-time percentage, flight issues, denied boarding‟s, refunds and fare complaint. On-time experience, refund procedure etc. have a greater impact on the passenger‟s experience than the in-flight experience. (Janawade, 2010) As far as low cost carriers are concerned Arrifin A, Salleh A, Aziz N, Asbudin A (2010), despite travelling in a low cost airline although affordability is the prime criteria, passengers still expect caring and tangible aspects of service.They must be visually appealing and neat in appearence at all time. This indicates that low cost airlines, if the suffice the must On time experience and refund procedures etc. have a greater impact than in-flight experience.

Although affordability is the prime criteria for budget airlines, passengers continue to expect caring and tangible aspects of service posing a threat to full service airlines.

have parameters, can pose a threat to the full service airlines. (Arrifin, Salleh, Aziz, & Asbudin, February 2010) Other studies also indicate that websites have an impact on buying decisions. According to Powell M (2010), there are three aspects that determine the effectiveness of a website – controllable, semi-controllable and uncontrollable. Controllable factors include colour, font, screen layout, navigation. The semi-controllable include perceived security and uncontrollable include perceived security. Variables included Controllable aspects such as font, color, orientation in an airline website has a better influence in the buying decision.

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are Font, color, orientation and other visual variables were individually measured, ease of ordering and quality of help. The study states that controllable aspects have more influence in buying decision than semi controllable and human response is affected by colour, orientation, size and information density. (Powell, 2011) According to Clemes M, Gan C, Kao T, Choong M (2008) in their journal “An empirical analysis of Timeliness in air travel is the least important factor affecting the customer satisfaction. customer satisfaction in international air travel”, surprisingly, timeliness is the least important dimension as perceived by airline passengers. Findings indicate that passengers perception of international air travel service quality will differ according to passengers‟ age, gender, income, occupation and marital status. The parameters considered in this study are Timeliness, assurance, convenience, helpfulness, comfort, meals, and safety and security. (Clemes, Gan, Kao, & Choong, 2008) A Harward Business case study The Globe: Singapore Airlines balancing act by Wirtz H(2010), states the dual strategy of SIA – Premium service provider and cost leader. SIA considers many factors to be the undisputed cost leader in the airline industry. SIA spends more than its competitors in few key areas like buying new aircraft, training, labour cost on flights and innovation. As a result it spends less on Price per aircraft, fuel maintenance and repair due to their young fleet of aircrafts, low salaries, they attract young hard workers because of the airlines reputation. Also, the sales and administration cost is less by having a lean corporate head quarters, having maximum loyal customers and spending minimum on back office technologies in areas that does not affect customer experience. (Wirtz H. , 2010) According to bloomberg businessweek SIA is facing a threat from Qatar and Emirates. Owning A-380 is no more a differentiator since Malaysian airlines and Thai airways also own them. (2012,May) SIA is facing stiff competion from the airlines of middle east namely Emirates and Qatar. SIA witnessed the biggest drop in share prices and Quarter4 2011-12 loss of USD 31m. Fuel accounts to 41% of the cost which is the major cause for SIA has successfully been able to balance their dual strategy of being premium service provider and undisputed cost leader.

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concern.Emirates and Qatar pose a threat due to better service. MAS and Thai airways have purchased A380, so SIA does not have a differentiation in terms of its fleet. SIA has a 7.3% drop in seats by paying passengers since 2008. (Fickling, 2012) Thus, the airline industry in the world today seems to be the one with lots of highs and lows, dependent on various factors beyond the organizations direct control such as global economic crisis, European crisis, weather, volcanic ash etc. Despite the challenges, IATA(2012) is optimistic about brighter days ahead for the industry worldwide anticipating a growth in RPKs to 280.

Skytrax:
Skytrax is a UK based consultancy which has been operational since 1990s. It is well recognized by all airlines across the world. It conducts thorough professional audits and product and service quality benchmarking programs. The airline industry‟s most product and service quality program, the Skytrax Airline Quality Audit (SAQA) is institutionalized for the last twenty years. The Quality certification provided is a global recognition of front line standards and it is in compliance with the standards of World Airline Quality Audit (WAQA). (Skytrax, 2012) SAQA applies its evaluation system to assess product and service quality for airlines and airport operations. These standards are reviewed for compliance on an annual basis. The ground service operations include website operations and all front line operations such as ticketing, check-in, security, lounges etc. at the airline‟s base hub. The onboard service analysis is a more detailed one including core product standards and service and delivery efficiency across various parameters. Based on the audits, Skytrax provides star rankings to airlines. This helps the airlines obtain accurate, independent, quality analysis and benchmarking on relative performance. More than 800 aspects are considered before providing a ranking. Skytrax is also a well known platform for passengers to provide reviews about airlines and airports. Besides, Skytrax‟s annual world airline award is very prestigious and popular. Airlines are awarded on various categories such as airline of the year, best in flight entertainment award, cabin staff award, and best seat award, best catering award and regional airlines awards as well. The awards are decided after a detailed survey conducted over a period of ten months. Approximately eighteen million passengers across 100 different nationalities are studied. Thirty eight parameters and almost 200 airlines are considered for these awards. It has a poll breaker program to ensure that there is no duplication of respondents in the survey. (Skytrax, 2012)

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Below are the results of the World airline awards for 2012. To understand the position of Singapore airlines amongst other international players across different parameters, we have studied the data since 2010.

SKYTRAX – Airline of the year award. (Skytrax, 2012)- Table 1

Qatar Airways is voted as the best airlines for the last two years. Although Singapore airlines appear consistently in the top three airlines of the year, it has slipped from the 2nd position in 2010 and 2011 to 3rd in 2012.

SKYTRAX – Best in-flight entertainment award (Skytrax, 2012)-Table 2

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Emirates have consistently received the best in-flight entertainment award for the last three years. Again although Singapore airlines are amongst the top three, it has slipped to the third position in 2012.

SKYTRAX – Cabin staff award (Skytrax, 2012) - Table 3

Malaysian airlines and Asiana airlines occupy the first and second position respectively whilst Singapore airlines has been slipping in rank since 2010 and currently is not amongst the top three airlines of the world in terms of cabin staff excellence.

SKYTRAX – Best seat award (Skytrax, 2012) - Table 4

As far as the best seat award is concerned, Oman airways has the best business class seat and Asiana in the economy class category. Again, Singapore Airlines has been slipping in rank in the business class category and appears at the third position as far as the economy class is concerned.

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SKYTRAX – Best catering award (Skytrax, 2012) - Table 5

In the best catering award category, Etihad, Swiss, Qantas and Singapore airlines receive the award for first class, business class, premium economy and economy class respectively. Singapore airline does not appear among the top three in three of the four categories.

Skytrax reviews
The Skytrax reviews were studied for the passenger comments and feedback posted on the website. This helps us to understand the passenger expectations and concerns while flying SIA. In order to compare SIA with other competing airlines, we studied the reviews of Emirates, Qatar, Cathay pacific, Malaysian airlines, Asiana and Qantas as well. We studied 100 reviews of SIA and thirty each of the other airlines in detail. The period of study is between April to August 2012. (Skytrax, 2012) Out of 100 reviews of SIA, thirteen passengers would not recommend SIA to others. On a scale of five (with five being excellent) 19, 17, 15, 15 and 24 passengers rated value for money, seat comfort, staff service, catering, and entertainment as below four. After studying the comments it is evident that the maximum complaints are because passengers are not satisfied with the in-flight entertainment, seat comfort and quality of food. (Skytrax, 2012)

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Figure 3-complaint analysis
Out of the 100 reviews studied, sixty passengers had a total of ninety complaints. Out of these 19 complaints were related to in-flight entertainment, fourteen to seat comfort and 12 to quality of food. Visibly, these are the three major areas of concern for SIA from a passenger‟s point of view. The summary of the findings from other reviews is depicted in the table below.

Table 6- Nature of complaints

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The above table reiterates the fact that in-flight entertainment, seat comfort and quality of food is the area of concern for SIA. Besides, it appears as if these parameters are the area of concern for most of the other airlines as well. It is evident from the above table the Emirates has minimum complaints in in-flight entertainment, which re-emphasizes that Emirates is the award winner in this category in the Skytrax-world airlines award. Qatar Airways seem to have minimum number of food and catering related complaints. Most of the other parameters seemed such as staff service, loyalty program, website and loyalty program did not seem to be an obvious area of concern for the airline passengers. (Skytrax, 2012)

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Primary Research

Figure 4 - Primary Research Research Strategy:
Based on the literature review we found out the need to do analysis in three ways:    Discussion guide was shared with travel agents and frequent fliers for qualitative information. The focus questions added into the questionnaire. Factor analysis – understand the grouping of the parameters and which segments of the demography lay in the zone. Cluster analysis – to find out for which segments are certain parameters important Perceptual mapping - to understand core areas of focus for Singapore Airlines

Limitations:
The constraints and limitations experienced during the course of study were :     Limited number of quality respondents and focus group After 15 respondents complained that the questionnaire was too long, the hard copy of the survey had to be discontinued. Dependency on the hard copy increased. Very few passengers at the airport made an effort to fill the survey. The survey was conducted at a timeframe of 15 days. The 31 travel agents respondent‟s data did not reveal a trend or inference.

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Demographic analysis:Age
The majority of the respondents were from the age category between 18years and 45 years, who were 79% of the entire survey.

Figure 5 - Age

Nationality
The majority of the respondents were foreigners. We targeted a large number of foreigners as we wanted to collate inference of the perception of travel worldwide about Singapore Airlines. The Singaporeans travelling Singapore Airlines have a loyalty factor, which could have skewed the data. Hence the addition of a large number of foreigners ruled out any skewed data. Figure 6 - Nationality

Gender
We managed to capture data from a number of females. The only requirement of having frequent fliers on the survey hampered the reason for getting more females on the survey. Figure 7 - Gender

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Frequency of travel
The survey managed to capture a large number of respondents who travel 2 to 4 times a month and 4 to 8 times a month. The majority of the respondents fell into the less than 2 times a month category. We considered 22 respondents who fall fly more than 4 times a month as frequent fliers. Figure 8 - Frequency of travel

Occupation
The survey was filled by the majority of professionals and businessperson / entrepreneurs. The 44 professionals and 34 businessperson / entrepreneurs encompassed most of the frequent fliers. Figure 9 - Occupation

Purpose of travel
The majority of respondents i.e. 40 captured were from the category of both travel and leisure. The respondents who travel solely for Business or Leisure comprised of a large percentage. Figure 10 - Purpose of travel

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Factor Analysis:
The factor analysis was carried on three major questions which were on the likert scale. These questions considered key parameters on which the respondents measured:   The parameters of importance while choosing a full service airline Rating Singapore Airlines in comparison with other preferred airlines Rating the in-flight service of Singapore Airlines in comparison with the in-flight of other preferred airlines. We tested “How do rate Singapore Airlines in comparison to other airlines” on the basis of factor analysis and found a grouping of certain factors together.

Table 7 - Comparison of SIA with other airlines

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Table 8 - Comparison of In-flight service of SIA with other airlines

From the analysis we inferred that the when passengers compare and evaluate Singapore Airlines with other airlines, they consider the loyalty program; call center efficiency, lounge facilities, baggage handling, time convenience and complaint redressal. This is a very customer service driven choice. The other category of people considers punctuality, destination connectivity and inflight service as the criteria and parameters to compare Singapore Airlines with other preferred or flown airlines of the world.

Figure 11- Factor analysis – In-flight service

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We tested the “parameters that you consider while choosing an airline” on the basis of factor analysis and found a grouping of certain factors together.

Table 9 - Important Parameters

We inferred that when a passenger chooses an airline due to seat comfort, he/she even considers in-flight service, punctuality, call center efficiency. The passengers consider loyalty program with lounge facilities. Passengers who consider fare as an important parameter also consider the baggage allowance offered by the flight. The factor analysis was carried out on the loyalty program. The analysis inferred that the loyalty program members have different requirement s from those who are not loyalty members. The loyalty program members consider the connectivity of flight and punctuality with seat comfort. They consider lounge facilities along with the loyalty program. When they consider the price of the ticket, loyalty program members even consider the baggage allowance to make decisions. Figure 12 - Factor analysis - parameters to choose an airline

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Figure 13 - Regression – Loyalty Program

As for the non-members, when making a choice of airlines in the full service options, they consider seat comfort, in-flight service, punctuality, and call center efficiency and destination connectivity as one component. A certain set of non-member respondents consider timing of flights when they consider the fare. Like loyalty program members, the non-members consider the lounge facilities when they consider using a loyalty program.

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Figure 14 - Regression - Loyalty Program SIA When the factor analysis on the loyalty members of Singapore Airlines was carried out, inference brought to light different sets of parameters. They considered baggage allowance, call center efficiency and in-flight service as one component. Another grouping was made in the connectivity of flights, punctuality and lounge facilities. This clearly differentiates the respondents were passengers from long haul flights. An interesting fact was about the grouping of the fare with seat comfort. There is an inverse correlation in the fare and seat comfort. The passengers who are price conscious will not have a preference in the seat comfort. Those who are willing to pay a premium expect high standards in seat comfort. A regression analysis was carried out on the likert scales which compared the in-flight service of Singapore Airlines and with other airlines. This was measured with the dependent variable: would you recommend Singapore Airlines to others.

Figure 15 - Recommendation - Likert scale The result showed that Seat comfort with a Sig. value of 0.001 was the most important criteria for the passengers followed by food & beverage and airport assistance. The in-flight service was not criteria due to a poor score. The passengers will not recommend this parameter. This certainly shows that in-flight entertainment is one of the areas where they consumers are not happy about. The other possibility is that the competitors like emirates and Qatar Airways have better in-flight entertainment options available.

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Figure 16 - Regression - In-flight service

The above equation was formed taking into consideration all the parameters and put together to make an inference while recommendation when recommending Singapore Airlines. Seat comfort and airport assistance scored the best Sig. value and these variables are those require attention as the passengers will recommend Singapore Airlines depending on the performance of these variables.

Figure 17 - Regression - Group - In-flight service

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To prove the authenticity and accuracy of the data, a data reduction was done on the in-flight service parameters, seat comfort, courteousness and responsiveness of staff, in-flight entertainment, quality and options of food and beverage options and airport assistance. All the parameters were considered as one component of in flight service and a regression was run to check dependency of the “would you recommend Singapore Airlines to others” option with the in-flight service. The result revealed that the passengers will recommend Singapore Airlines to others only when they are happy with the in-flight service of Singapore Airlines. Singapore Airlines has one major area to focus on. They need to focus on the parameters of in-flight service to hold off competition from taking away their share of the market. Passengers are now evaluating Singapore Airlines in terms of the in-flight service performance with other full service carriers.

Perceptual Mapping:
Perceptual mapping was carried for all the parameters available with the segments with adequate no. of respondents voting for the parameter. The perceptual mapping was carried out on the nationality basis. The results showed that for Singaporeans fare, timing of flights, Baggage allowance and punctuality was very important. They were indifferent about the lounge facilities and customer care efficiency.

Figure 18 - Perceptual mapping – Nationality

The foreigners considered fare, Baggage allowance, destination connectivity and timing of flights as the most important factors on which they decide on the airlines. Like the Singaporeans, the foreigners also did not consider lounge facilities and customer care efficiency as an important criteria will choosing an airline.

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Figure 19 - Price Comparison The perceptual mapping showed the importance of pricing when Singaporeans and foreigners choose an airline. A pricing comparison of some of the major destinations across the globe brought into the perspective the pricing policy of Singapore Airlines. The result showed that Singapore Airlines has one of the highest fares in the industry. This is an important factor to consider.

Figure 20 - Reasons for choosing other airlines above Singapore Airlines

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In the survey that was carried out, fare was voted as the second most important criteria because of which also an important criterion for Singaporeans and foreigners. Singapore Airlines pricing need to be considerate to the current trends. To charge a premium, Singapore Airlines must continue to offer best possible customer service.

In the results of the perceptual mapping it was stated that the passengers who have flown Singapore Airlines were unhappy with the inflight service standards and destination connectivity in comparison to the other preferred airlines. The passengers are not happy with the fare, but don‟t complain about it. They don‟t mind paying for the service as long as Singapore Airlines keeps providing them with the best possible service. Figure 21 - Perceptual mapping - Rate SIA - SIA Fliers In comparison to other airlines, the Singapore Airline fliers were very happy with the loyalty program, lounge facilities, complaint redressal and timing of the flights. Some passengers were not happy with the destination connectivity as they are hooked to Singapore Airlines and would prefer to travel only via this airline.

Figure 22 - Perceptual Mapping - Age - Rate SIA

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The perceptual mapping of demography according to age also considered that Singapore Airlines lagged behind its competition in in-flight service. There were also other components as destination connectivity and punctuality where Singapore Airlines lagged behind for some respondents. Fare was also a factor that had fallen out of favor in some of the respondent‟s perspective. There seems to be a clear correlation of people unhappy with the inflight service because of which they are not happy with the fares charged by Singapore Airlines.

Figure 23 - Perceptual Mapping - Occupation - Rate SIA The trend of respondents unhappy with the in-flight service is also seen when checked according to occupation. The professional and businesspersons/entrepreneurs also considered in-flight service of Singapore Airlines losing ground to the other preferred airlines. Fare is also a factor that is constantly seen as a problem area. Singapore Airlines is not able to justify the premium fare rates with in-flight service options that is lagging behind its competition.

Relative scoring:
Relative scoring is a method to compare SIA with the other airlines considered against parameters. The source of the data is the respondents who have answered two related questions.

Calculation:
The scores are calculated based on the following table. For eg. if a passenger has selected Malaysian airline as the preferred airline and has rated SIA as excellent compared to Malaysian airlines on a parameter, one point is awarded and so on. If the airline is rated at par with SIA three points is awarded. The same method is continued for all the other parameter and then the average is taken.

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Table 10 - Relative score rating

The relative scoring of the airlines for the following two questions from the questionnaire is calculated. ▫ ▫ Which airline do you prefer? How do you rate the Singapore airlines with the most preferred airline?

Table 11 - Relative scoring - Rate on Parameters The above relative scoring indicates that most of the airlines scores better than SIA in terms of fare. Qatar Airways consistently scores either above or at least at par with SIA on the above mentioned parameters. This again supports them being awarded the best airline of the year.

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The perceptual mapping of the inflight service revealed the problem areas where Singapore Airlines need to concentrate. According to the Singaporeans, the Quality of food and beverage was below par and scored lower than the ones offered in the other preferred airlines. Figure 24- Perceptual Mapping - In-flight service - Singaporeans

The people who travel by Singapore Airlines also feel that the in-flight entertainment and the courtesy & responsiveness of staff are below par in comparison to the other preferred airlines of the world. The seat comfort parameter has also moved out of the safe zone and moving towards negative zone, showing the decline in the passenger‟s perception on seat comfort. Figure 25 - Perceptual Mapping - In-flight service - SIA Fliers

The loyalty members of Singapore Airlines are unhappy with the in-flight entertainment, quality of the food and beverage and the options available in food and beverage. They are very happy with the seat comfort because their preferences are met and Singapore Airlines takes special attention and care to fulfill their needs. Figure 26 - Perceptual Mapping - In-flight service-Loyalty program

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The second relative scoring is calculated ▫ ▫ Which airline do you prefer? How do you rate the in-flight service of Singapore airlines with the most preferred airline?

Table 12 – In-flight service The above relative scoring indicates that Qatar airways scores over SIA in seat comfort and F&B and Emirates scores over SIA in in-flight entertainment. These are the problem areas of SIA and its Middle East counter parts have an edge. Clearly, SIA must consider learning from Qatar Airways to improve on these parameters.

Summary of the complaints:

Table 13 - Summary of complaints The summary of the complaint analysis from the survey stated that 17 fliers of the 48 fliers of Singapore Airlines did not consider the parameters “Seat Comfort” and “Food & Beverage Quality” Singapore Airlines to be superior to th e other preferred airlines. 13 and 10

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fliers complained about the food and beverage options available on board and the in-flight entertainment respectively.

Cluster analysis:
a,b Rotated Co mpo nent Matr ix

In f light Serv ice Seat Comf ort Punctuality Call centre ef f iciency Timing of f lights Destinat ion connectiv ity Loy alty Program Lounge f acilities Fare Baggage Allowance

1 .838 .818 .727 .702

Component 2

3

.916 .834 .783 .684

Extract ion Method: Principal Component Analy sis. Rotation M et hod: Varimax with Kaiser Normalization. a. Rotation conv erged in 4 iterations. b. Only cases f or which Gender = M ale are used in the analy sis phase.
Figure 27-Cluster – In-flight service Based on the preferences, passengers can be segmented as follows:    Service oriented: Who give importance to In-flight service, Seat comfort, punctuality and call centre efficiency. Loyal passengers: Who give importance to loyalty programs and lounge facilities. Cost oriented: Who give importance to fare and baggage allowance.

Wards cluster analysis was conducted since Cluster membership is assessed by calculating the total sum of squared deviations from the mean of a cluster. The criteria for fusion are that it should produce the smallest possible increase in the error sum of squares. The agglomeration re-emphasized on selecting three clusters. Fifty one respondents fall under cluster 1, twenty seven in cluster 2, and twenty three in cluster 3. Post the Ward cluster analysis, we conducted a one-way ANOVA to determine on which classifying variables are significantly different between the groups because there would be a large number of respondents.

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F values and significance levels to show whether any of these mean differences are significant. The between groups means are except for cost oriented, indicating two of the three variables reliably distinguish between the three clusters. With a significant ANOVA and three or more clusters, as in this example, a Tukey post-hoc test is also necessary to determine where the differences lie.
ANOVA Sum of Squares 51.716 48.284 100.000 64.167 35.833 100.000 3.089 96.911 100.000 df 2 98 100 2 98 100 2 98 100 Mean Square 25.858 .493 32.083 .366 1.544 .989 F 52.482 Sig. .000

Serv ice orient ed

Loy al customers

Cost oriented

Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total

87.745

.000

1.562

.215

Figure 28 - Grouping of customers The Tukey post hoc-test reveals that service oriented score and loyal customers reliably differentiate three clusters through their cluster means and high significant number. Cost oriented passengers do not significantly differentiate the three clusters (table below). Cluster 3 has got most number of service oriented customers and cluster 2 has got most number of loyal customers.

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Multi ple Comparisons Tukey HSD Mean Dif f erence (I-J) -.21525336 -1.7672839* .21525336 -1.5520305* 1.76728385* 1.55203049* -1.9049764* -.73525822* 1.90497644* 1.16971821* .73525822* -1.1697182* -.17103481 .32136267 .17103481 .49239748 -.32136267 -.49239748

Dependent Variable Serv ice orient ed

(I) Ward Method 1 2 3

Loy al customers

1 2 3

Cost oriented

1 2 3

(J) Ward Method 2 3 1 3 1 2 2 3 1 3 1 2 2 3 1 3 1 2

St d. Error .16705911 .17630178 .16705911 .19917235 .17630178 .19917235 .14391626 .15187853 .14391626 .17158082 .15187853 .17158082 .23667582 .24977008 .23667582 .28217125 .24977008 .28217125

Sig. .405 .000 .405 .000 .000 .000 .000 .000 .000 .000 .000 .000 .751 .406 .751 .194 .406 .194

95% Conf idence Interv al Lower Bound Upper Bound -.6128279 .1823212 -2.1868545 -1.3477132 -.1823212 .6128279 -2.0260296 -1.0780314 1.3477132 2.1868545 1.0780314 2.0260296 -2.2474746 -1.5624782 -1.0967054 -.3738111 1.5624782 2.2474746 .7613827 1.5780537 .3738111 1.0967054 -1.5780537 -.7613827 -.7342863 .3922167 -.2730511 .9157764 -.3922167 .7342863 -.1791260 1.1639210 -.9157764 .2730511 -1.1639210 .1791260

*. The mean dif f erence is signif icant at the . 05 lev el.

Figure 29 - Multiple comparisons Crosstab analysis of the nominal variables gender, nationality, age, occupation and whether the respondent has flown by SIA or not produced some significant associations with clusters. Among the 29 Singaporean respondents, only two are fall in cluster 3 (predominantly service oriented) where as 13 respondents (nearly 45%) fall in cluster 2 who predominantly are loyal customers.
Nationality * Ward Method Count Clust er 1 14 37 51 Ward Met hod Clust er 2 Clust er 3 13 2 14 21 27 23 Total 29 72 101 Crosstabulati on

Nationality Total

Singaporean Others

Figure 30 - Nationality - Cross tabulation As far as the age group is concerned, 18-30 year old respondents fall into all three clusters. This indicates that they are equally loyal and service oriented. One third of the respondents between 31-45 years fall in cluster 2 which is predominantly loyal customers.

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In terms of passenger preferences based on occupation, out of 27 respondents who fall in cluster 2 who are most loyalty oriented, more than one thirds is professionals. The same holds true for cluster 3, who are most service oriented. Other groups form an insignificant number to have any concrete conclusion.
Occupati on * Ward Method Count Clust er 1 4 4 19 1 22 1 51 Ward Met hod Clust er 2 Clust er 3 1 2 5 5 10 12 1 0 9 1 27 3 1 23 Total 7 14 41 2 34 3 101 Crosstabulation

Occupat ion

Gov ernment Employ ee St udent Prof essional House Maker Business person / Entrepreneur Other

Total

Figure 31 - Occupation - Cross tabulation It is evident from the crosstab that only ten out of 48 people who have flown SIA fall under cluster 2 and seven in cluster three. Since thirty one respondents who have flown SIA fall under cluster 1, which by itself does not have any dominant factor representing the cluster, it is difficult to draw inferences from the below table.

Have you flown Singapore A irli nes? * Ward Method Crosstabulati on Count Clust er 1 31 20 51 Ward Method Clust er 2 Clust er 3 10 7 17 16 27 23 Total 48 53 101

Hav e y ou f lown Singapore Airlines? Total

Y es No

Figure 32 - SIA Fliers - Cross tabulation Thus cluster analysis clearly indicates the behavioral pattern of passengers based on the three defined segments.

Online Booking:
A crosstab was run where the respondents responses for the source of booking was measured. The results revealed that the 74% of professionals choose either travel agents or the airline websites to book their travel tickets. This is not the result seen in case of a businessperson / entrepreneur. 50% of them preferred travel agents to get the tickets booked.

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No definite trend could be seen for government employees, students and others due to less number of respondents.

Figure 33 - Occupation - Source of booking – Cross tabulation

Check-In Options:

Figure 34 - Age - Checkin options - Crosstabulations Nowadays airlines offer different check-in options for the convenience of passengers. The survey was carried out to understand the trend in the preference of the check-in service. The cross tab was run with the various online check-in options with the different segments of the age group. The very clear distinction was seen in the usage pattern. 52% of the respondents of the age between 18 to 30 years preferred online check-in. This strengthens the

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claim that people of the 18 to 30 years category are tech savvy and prefer online service. The trend is different with the respondents between the age of 46 to 60 years. 42% of these respondents prefer to check-in at the counter. They are not used to technology and prefer to get some assistance.

Green Initiatives: Would you prefer an Eco-friendly airline?

Figure 35 - Green Initiative 1 When the respondents were asked whether they would prefer an eco-friendly airline, 90% of the respondents voted that they would prefer one. This shows an increase in the awareness of the current global environmental crisis.

Would a price increase due to “green initiatives” impact your buying decision?

Figure 36 - Green Initiative 2 76% of the respondents stated that the price increase would impact their buying decision. This shows that though the respondents are happy that the airlines of their choice are carrying out “green initiatives” they are ready to take the cost on their tickets. They are very clear that incase the fares rise due to “green initiatives” they might switch their loyalty to other cheaper airline options.

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Key findings from the research:
From the qualitative, primary and secondary research conducted, it is evident that SIA is one of the most preferred airlines across the globe. The research helped in finding the current challenges and concern areas for SIA. Price plays an important role in determining the choice of flight by the passengers. Although SIA charges premium and is by and large the most expensive carrier, as long as the passengers perceive value in paying the premium, SIA does not have a threat. But, with inconsistency in service off late, reflected in SIA posting a loss in quarter four of 2011-12, it needs to justify the premium it is charging. SIA has deteriorated as far as in flight entertainment, seat comfort, quality of food and beverage and having a standard in-flight service. This was evident from the secondary research and Skytrax reviews which was revalidated with the qualitative and primary research conducted. It is also supported by the fact that SIA has slipped in world airline rankings in the mentioned parameters. In its own hub, SIA is facing a threat from Emirates, Qatar and Qantas as SIAs share on the number of flights operating has reduced from more than 50% in 2008 to 33% in 2012. (2012, May, Bloomberg business week) Besides the in flight service aspects, SIA is lacking in their website appearance, presence in the internet and third party websites. Efficiency of the SIA call center is an immediate area of concern. Also, travel agents perceive SIA as less flexible in accommodating last minute requests. With most passengers falling in age groups that are tech savy and internet oriented it is about time for SIA to make its presence felt and not rely solely on its brand name.

SIA – Recent developments:
SIA has posted a loss for the first time, the slip in world airline rankings and passenger dissatisfaction rate increasing in the recent past, has prompted SIA to invest in different areas to enhance passenger satisfaction. As on September 2012, SIA has tied up with Panasonic Avionics and is investing approximately USD 400m to provide latest in-flight entertainment in more than forty new aircrafts. This will provide latest and exclusive video games, wider range of programs, and provide hardware upgrades. In August 2012, SIA‟s Senior VP, Product and service has announced the appointment of ONG & ONG, to improve lounges in the next five years. Silver Kris lounge at Sydney airport will be the first to have the new design and concept.

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SIA has appointed Singapore and UK based James park associates and Dreamworks USA, a BMW subsidy to have next generation cabin products, revamp the seats and have improved cabin interiors beginning in mid 2013. The next generation of cabin products will be implemented across all classes on flights including economy class. (Singapore Airlines, 2012)

Recommendations:
Post performing the factor analysis, the three distinct segments which appeared namely service oriented, loyal customers and cost oriented passengers. Cost oriented passengers were insignificant for study purposes. After performing the cluster analysis it was clearly evident that none of the clusters have distinct common features. Hence SIA must focus primarily on service excellence, thus developing a loyal customer base. The following recommendations may be insightful to implement:  Improve in-flight service: SIA must aim to improve its in-flight service in parameters including seat comfort, leg room for long hauls, keeping in mind the profitability and not forego revenue opportunities due to lower capacity. SIA must focus on Food and beverage options and portion size because although it may not be an option to consider SIA, but it can definitely be a reason not to choose SIA. In-flight entertainment needs to be up to date and SIA must take a leaf out of Emirates. All of the above should be complemented with a consistent service across all sectors since, flyers will compare not only between two airlines but will also compare their experiences with the same airline, across different sectors and throughout the year.

Fares: SIA must ensure that the passengers must find value in the premium it is charging. It must maintain its fares, keep status quo and provide best and standardized in-flight experience possible. Also, SIA must ensure that it should continue to take up green initiatives without passing the cost burden to the passengers.

Improve online presence: Although SIA has strong brand equity, it must ensure that it is not diluted in the age of the internet by having minimal presence. It must ensure that it does not lag behind in online and presence in the third party website.

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Limitations:
Although the number of respondents was more than 100, they were inadequate when the respondents were broken down into segments. Concrete responses were not obtained from the travel agents. Hence, we were not able to get quality information on the travel agents perceptions on airlines. This study does not cover the subsidies of SIA namely Silk air, Scoot and Tiger airways and its impact on Singapore airlines and the cannibalization effect.

Future scope:
Although this project studies SIA in detail mainly using Singapore airlines as a hub, it will be interesting to study SIAs performance across the globe to understand if its service standard is consistent. There is a scope to study the subsidies of SIA along with SIA itself to understand the impact of cannibalization or to what extent has it been able to eat up into the other carrier‟s share. It will also be interesting to know how SIA is able to maintain its service excellence with multiple brands and carriers.

SP Jain School of Global Management

Singapore Airlines- The way ahead APPENDIX – 1 - DISCUSSION GUIDE FOR FREQUENT FLYERS

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The discussion will be focused on the topic “consumer preferences in airline travel”. We would like to understand the present needs and requirements of frequent flyers. Through this feedback we intend to develop a questionnaire to map the consumer perception on airlines. There are no ‘right’ or ‘wrong’ answers for the questions asked. Kindly feel free to voice your opinion. Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7 Question 8 : : : : : : : : Are you a frequent flyer? Have you enrolled yourself into a frequent flyer program? If yes, which one? What is the purpose of your travel? Which airline service do you prefer? What are the factors that you consider when you choose an airline? How do you book your tickets? Are you aware of the “go green” initiatives of the airlines? Will you choose an eco friendly airline over an ordinary one?

APPENDIX-2 - DISCUSSION GUIDE FOR TRAVEL AGENTS The discussion will be focused on the topic “consumer preferences in airline travel”. We would like to understand the present needs and requirements of travel agents and current flyers. Through this feedback we intend to develop a questionnaire to map the consumer perception on airlines. There are no ‘right’ or ‘wrong’ answers for the questions asked. Kindly feel free to voice your opinion. Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7 Question 8 Question 9 Question 10 Question 11 Question 12 : : : : : : : : : : : : What kind of bookings do you receive? Do you receive bookings from frequent flyers? Majority preference of airline service What are the consumer reasons to fly? Which airlines is most pro travel agents What are the parameters consumers look for Preference of payment of excess baggage Challenges you face as a travel agent Which airlines is most flexible to travel agents What are the basic requirements of the consumers? What are the in-flight concerns of the passengers? Are the consumers aware of the go green initiatives carried out by airlines

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APPENDIX -3 - QUESTIONNAIRE FOR PASSENGERS

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