Singapore Airlines

Customer Service Innovation

Group 6

Date : 01-08-2015.

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Contents
Introduction................................................................................................................ 3
BACKGROUND......................................................................................................... 3
Situation Analysis:...................................................................................................... 4
Customer Satisfaction:............................................................................................ 4
Competition Faced:.................................................................................................. 4
Opportunities in Market place:................................................................................5
Problems Faced by Protagonist...................................................................................5
Solution to the Problem and Implementation:............................................................6
Group Members.......................................................................................................... 7
Jitendra Bherulal Jain - DM 16219...........................................................................7
Ankil Kumar Sanghavi DM 16106..........................................................................7
Nitish Nijhawan DM 16232.................................................................................... 7
Shruti Balabhadra DM 16144................................................................................7
Shubham Agarwal - DM 16245................................................................................7

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Introduction

The airline industry was just recovering from a terrorist hijack incident
comprising 4 air fights. Thus the already cash constrained industry suffered a
major setback.
The SIA: Singapore Airlines was the worlds premier airline for many years.
However, it suffered major setback in terms of intense competition in the
1990s using rice cut and service strategies.
The SIA management was now at the deciding edge to confirm whether the
company was ready to implement lie flat seat belts in its raffle class to
compete against the new services offered by British Airways. The company
intended to spend US$100 Million in the venture in an attempt to uphold its
reputation.
Of late the business class sales had been affected in the light of the attacks
thus the expenditure amount was substantial in nature.

BACKGROUND

The company was created after the division on Singapore and Malaysia as a
government initiative.
They believed in the strategy of turning over the aircraft on a periodic basis
and hence maintaining a young fleet of planes.
Further it invested extensively in cabin crew and employee training hence
customer satisfaction. Further, it aimed at the highly profitable premium class
segment.
SIA introduced the extremely successful ad campaign, Singapore Girl.
Also, another advantage was the modern and world in class Singapore
Airport.
It also extended into various airline related segments like: Singapore Terminal
Services, SIA Engineering Company, SIA Cargo and Silk Air.
SIA was the largest private employer in Singapore.
The organization was partly held by Singapore Government, foreign
ownership and some private investors.
By 2001, SIA had revenue of US$5.7 Billion and a profit of US$913.7 Million.
And the airline accounted for almost 93% of the Groups revenue.
SIA was all set to be the first airline to operate massive aircrafts by a
purchase of a fleet of Boeings and Airbuses in 2006.

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Situation Analysis:
Customer Satisfaction:

Since its inception in the year 1972, SIA basically relied on providing superior
customer service which differentiated itself at a time when most of the other
airlines concentrated on providing an affordable service.
SIAs business strategy had 3 pillars of its business strategy:
o Superior in-flight service.
o Maintaining the Worlds youngest modern fleet of aircrafts.
o Outstanding Service on the Ground (OSG) (1987) renamed in the year
2000 as Transforming Customer Service (TCS).
OSG only involved superior ground staff experience. With the reframing of
OSG into TCS it took into it the operations of pilots, cabin crew, ground staff,
reservation staff etc.
SIA used various tools to measure satisfaction and quality of service
provided.
o Compliment/complaint ratio : With this tool it measured the comments
from passengers both good and bad and tried resolving the bad ones
at the earliest and learnt from their mistakes. In 2001 the ratio was
34:1.
o Service Performance Survey (SPS) : It studied the customer sentiment.
Conducted a survey in which it measured 78 key performance
indicators divided into ground, in-flight and overall performance.
o Global Airline Performance (GAP) : Conducted by IATA where opinions
of fliers across various airlines was studied.
Had a connect with customers maintained a complete preference data of its
premium passengers. Thus through this, the crew voluntarily themselves
provided them with their favorite magazines, champagne.
The regular fliers with SIA were so obsessed with SIA services that any small
mismatch in the service seemed to a huge lag in the service enjoyed.
In 1990, Silk Air a low cost subsidiary of SIA provided regularly scheduled
services to regional destinations. About 40% of passengers of Silk Air were
from connecting flights of SIA.
In 1984 SIA launched a Priority Passenger Service (PPS) for its business and
first class flyers, where the fliers when travelled a certain numbers of miles
were eligible for extra benefits. Similarly in the year 1999 it launched a
mileage accrual program called KrisFlyer which covered all the 3 classes of
flyers i.e., first class, business class and economy class.

Competition Faced:

Nearly 80% of the SIA passengers were non-domestic. And most of its routes
were international. At an international level the airlines like British Airways,
Qantas, Lufthansa and Cathay Pacific tried to go on a head on with SIA in its
long distance premium offering.

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From the year 1981, most of the international airlines started providing
mileage programs attracting many of the frequent fliers.
British Airways in the year 2000, introduced lie-flats bed in its business class.
This led to a significant migration of SIA Raffles Class passengers to BA.
At the start of 21st century it become difficult for SIA with its huge operations
to grow at the similar rate of 15%-20% which it used to previously. Now it
grew at a rate of 5%-6%.
On the lucrative routes of Europe and Asia, international carriers like BA,
Cathay and Qantas competed fiercely on premium passengers by their
sophisticated and expensive offerings.
SIA low cost labor advantage has vanished with the booming of Singapores
economy along with South Korea, Taiwan and Hong Kong. Thus, now it had an
additional expenses of expensive labor in its income statements.

Opportunities in Market place:

They want to expand their reach at some of the tourist destination at

southeast Asia countries.
SilkAir, the subsidiary carrier for SIA, was planning to expand its fleet from 9
to 15 aircraft by 2006
SIA want to introduce Seat belt in their 45 aircrafts with the cost of 100million
$. Because they have seen migration of Raffles class passengers to BA.
SIA's 20% revenue of total revenue come from Singaporeans so they can give
some promotion to Singaporean to attract them.
SIA can buy some stake of another airlines to create its network in another
country like he bought 49% stake in Virgin Atlantic and 25% stake in Air New
Zealand.
They can start one more subsidiary which offers premium class at lower price
to compete with Thai international and Malaysia Airlines.

Problems Faced by Protagonist

In the ever changing environment Singapore Airlines faces some very prominent
challenges and SIA need to pay attention to them for the development of the
airlines.

One of the biggest challenges is the continuous rise in labor cost. During the
formative years of Singapore airlines the labor cost was one of the biggest
advantage for SIA but now it has become one of the biggest problems for
them.
Another major problem is the ever increasing demand of the customers and
even though SIA has taken several actions like Global Airline Performance

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and Service Performance Survey for measuring it but SIA still faces problems
solving Customer issues.
The whole concept of challenges for SIA comes from the industry
competition which was simple in the starting years but now industry
competition has affected SIA in all terms of industry.
The On board innovation cost is also one of the major problems that SIA
faced as that cost has been going very high for the new planes.
Now the biggest problem that lies for the protagonist faces is whether SIA
should switch to Spacebed as similar decisions has been taken by
competitors like British Airways.

Solution to the Problem and Implementation:

Data shows that customers of SIA had shifted to British Airways owing
to better seats. This issue needs to be immediately addressed as the
airline cannot risk losing its loyal customers.
The Net Profit of SIA for 2000-2001 was $1340 million. Seeing this, the
investment of $100 million required to install new seats to maintain
SIAs supremacy of offerings, is rather a small percentage of its
earnings.
Taking the emotional sentiments into considerations, providing
additional comfort should be a good idea to attract customers and give
them a greater sense of satisfaction. As providing top notch service
even in the toughest of situations is the core driver of Singapore
Airlines.
These points show that SIA should go ahead with the installation of
new seats.
The Singapore Girl has become a strong brand campaign for SIA and
has evolved over the years to promote different messages. At a time
like this, SIA can create new Singapore Girl campaigns to promote
empathy and, convey security and care that the airline dedicates
towards its customers. This will give the people a greater sense of
security in flying with them.
An alternative which the airline company could look at is; as SIA follows
a policy to turnover its planes every 5 years or so. If there are only one
or two years left for the turnover to happen for the planes on which its
planning to install these seats, SIA can plan to pause the investment
for now and apply it to the new planes it acquires.

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Group Members
Jitendra Bherulal Jain - DM 16219
Ankil Kumar Sanghavi DM 16106
Nitish Nijhawan DM 16232
Shruti Balabhadra DM 16144
Shubham Agarwal - DM 16245

Group - 6

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