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Executive Summary The report provides an overview of the company and its environment.

The paper identifies various resources and capabilities available to the company. The various strategies that Singapore Airlines utilise and how they affect the airlines performance. Key issues have been identified that threaten Singapore Airlines current market. The often complicated Government regulations and global laws that affect the airline industry have been defined and explained. Current industry issues and trends that affect Singapore Airlines have been researched, a number of recommendations have been provided, as a possible solution.

Overview of Singapore Airlines Singapore Airlines (SIA) first flights began in 1947 partnered with Malaysian Airlines, each funded by there governments. The two airlines mainly serviced South East Asia. Singapore separated from Malaysia in 1965 to become the republic of Singapore. The two governments therefore decided to go there own ways and set up there own airlines. In 1972 Singapore Airlines was launched. The domestic market was basically non existent due to Singapore being a small country geographically. Singapore Airlines had to immediately pursue an international presence and started planning flight routes, airport resources, and government acceptance into foreign destinations etc. SIA also had to establish themselves as a genuine competitor and market the airline internationally to potential customers and future stakeholders. Today, SIA has more than 10,000 employees and 95 aircrafts. The airline now serves 89 destinations around the world including Asia, Europe, North America, Middle East, Australasia, and Africa. ( www.airlines.priceline.com) SIA is situated at Changi Airport along with subsidiaries Silkair and Tiger Airlines. ‘In 2004, Changi Airport received a record 30,400,000 passengers, a year-on-year growth of 23.1% in passenger traffic. Similarly, a record 1,780,000 tonnes of cargo was moved, representing a year-on-year increase of 10.2% in airfreight volume’. (http://en.wikipedia.org). Changi Airport is classed as “the hub of Asia”, Changi provides stopovers, refuelling, and passenger exchange for all the international airlines travelling from one side of the world to the other. Changi Airport is also expanding to accommodate for there cut price airline and new Airbuses arriving in 2006.

Analysis of Singapore Airlines Environment

Terrorism has caused massive economic losses for airline industry and also bankruptcy. The governments also implement policies and regulations to control foreign airline access to there airports. SIA has established its own low price airline Tiger Airlines to satisfy demand. Australia. the important external influences that effect performance and decisions of Singapore airlines have been detailed in this section. SIA have just passed a decision to put a US$10 surcharge on ticket prices to accommodate the fuel rise. European Union and Japan. Some countries now have deregulated there national airline industry to reduce the amount of government control. The open skies phenomenon is gathering momentum and more and more countries are signing up. The deregulation of the Airline industry opens doors for more entrants to the market and increased competition. Terrorism strikes happen at any time without warning and destinations around the world that are directly affected by terrorism attacks see a dramatic stop in airline flights.In analysing the environment.oag. The airline industry is highly competitive industry and the rival airlines are always taking advantage of any opportunity to gain more destinations. The Singapore government has signed an agreement with the United States called “Open Skies” that gives both countries unrestricted flight access to each others countries. Singapore Airlines is currently in negotiations with Australia. This interest in the area has seen new cut price airlines emerge to cater for the demand. Review of the Industry Structure . and make access to airports/services more open for negotiation. therefore a rise in ticket prices. Statistics show Asia’s population is steadily increasing every year and this contributes to the increase in flights.com). Airlines couldn’t just fly to any destination or country without appropriate authorisation. to reach an agreement regarding open skies access down under. Basically the countries that gain open skies agreements are able to expand on existing business. The airlines cannot predict these attacks from happening and have to build such occurrences into there risk management policies. The airline industry has been strongly controlled by agreements and policies. Singapore Airlines is still owned by the Singapore government and is still affected by such controls. Asia is recognised as the hotspot for air travel at present and into the future. Asia-Pacific intercontinental flights are up 7% and there has been growth of 8% intra-regional services (www. Countries that have employed this action are the United States. Other environmental factors influencing SIA and the airline industry are rising fuel prices. Most countries have there own national airline that are generally government backed and hold a big influence on there operation. The price rise in fuel causes a cost increase in the running of flights.

Power of Suppliers: The aircraft suppliers of the airline industry are dominated by two suppliers Boeing and Airbus. and was establish to fill a demand that the other forms of travel couldn’t accommodate as effectively. The aircrafts engines are standardised so both aircraft manufacturers have similar engines. Availability of Substitutes: The substitutes that could threaten the airline are cars. (www. Boeing and Airbus both outsource there parts for there planes and generally use the same suppliers. it’s more the service that sets them apart. on the other hand new entrants my cause price competition and therefore a buyers market. Due to the standardisation of engines the switching costs of suppliers is reduced and airlines. These substitutes are not that much of a threat to aeroplane travel. 2000) Power of Buyers: The power of buyers is low in the airline industry as switching costs are high. As mentioned previously. firstly there are quite high costs involved in setting up an industry. The body frames and interiors is where the two manufacturers can differentiate there product. and performance to discourage any new entrants and to try force out existing poor operators. Threat of New Entrants: The international airline industry has high barriers to entry for a number of reasons.fool. (www. Power of Suppliers. The five forces look at the Threat of New Entrants. What Key resources available to Singapore Airlines? . Power of Buyers. Alternate measures of transport are more of a personal choice not a direct parallel substitute. There is constant fighting for territory and expansion. Major players in the industry concentrate on lowering there costs and improving service to deter new entrants.In analysing the industry structure this report uses Porters 5 Forces. Most airlines follow each other on prices and cause buyers to pay there price. gaining flight access to foreign countries and obtaining airport space is another hurdle that stands in the way of new entrants. boats and trains. Competitive Rivalry: The airline industry is highly competitive and price wars are a common occurrence. The Domestic industry is more attractive to new entrants as it doesn’t have as much complications as the international side and lower barriers to entry. Availability of Substitutes.com).com).fool. and Competitive Rivalry. The current airlines dominating the industry are constantly working on maximising cost efficiency. Most airlines are similar inside. Airlines are generally is used to cover large distances in a short period of time. (De Melo.

S breakout in 2004 they still posted a profit. • State of the art freight facilities that link with the port shipping authority What it takes to be successful in the Airline Industry and What strategies are used by Singapore Airlines? Singapore Airlines is basically the trend setter of the airline industry. Singapore Airlines has many other resources listed below: • Changi airport the home of Singapore Airlines is one of the largest freight handling facilities in the world. • Expansive destination coverage due to Star Alliance. Aside from just financial capital.Singapore Airlines is a well establish international airline with strong profitable track record. • Singapore has a resource of about 95 aircrafts that now are brought internally and not leased. these are: • Latest technological and communication products linking there global network. • Changi Airport hosts SIA state of art engineering company that services there planes and other international airlines. • Singapore Airlines has built a mass of 89 international flight destinations. • Finally the brand attribute.A. Star alliance covers 790 airports in 138 countries. and have . the aircrafts are generally replaced every 4-5 years. • The airline has built a human resource training facility. The airline has always been profitable and the funds reinvested back into the company. • Huge investment in human resources. is probably there most powerful resource. Singapore Airline has many capabilities that support there resources. SIA also has one of the largest flight kitchens in the world situated at Changi. and is the most popular hub in Asia. “Singapore Girl you’re a great way to fly” Has been strongly nurtured over the last 32 years to be the most recognised brand and icon in the airline industry. The company has a government ownership and also private stakeholders. The table below shows that last 3 years financials and even in the case of the S. • SIA belongs to the Star Alliance where other airlines join resources together to increase coverage around the world. These strategies have been supported and strengthen over the years. to build on capital.R. SIA has employed many innovative strategies since it began. this provides highly skilled workers and management.

work experience and simulation strategies.venturerepublic. where SIA can offer services on another airline under its own flight codes and offer more destinations.allaboutbranding. (www.com) SIA is committed to providing a world class quality and service. Hot towels. maintenance. The company has 4 training facilities with various programs that exercise classroom.trainersdirect.com) SIA has more concentration on staff training than any other airline. To be successful in the airline industry you have to employ superior efficiency. (www.com). On average in 1997 Singapore Airlines spent $5600 per staff per year on training. as mentioned above they replace there airlines every 4-5 years taking advantage of new technology. more so than competitors. SIA has exercised a quality/service differentiation strategy to become one of the leaders in the passenger airline industry. SIA have the strongest brand name in the airline industry. which helps the company maintain economies of scale by code sharing. and video on demand. quality. (www. free alcoholic and non-alcoholic drinks. (www. By building solid capital the airline now enables them to purchase aircrafts and equipment internally without the need for leases and interest. SIA has the freedom of not being locked into long leases and aircrafts can be disposed of. the company enjoys today. Singapore Airlines employees have to complete a 4 month training course before they are even allowed to serve a customer.com) The branding of SIA is based on quality.(www.com). the airline allocates a substantial amount of time and money into there staff training and education. innovation and customer responsiveness.com) More recently Singapore Airlines became a member with the star alliance. The emphasis on staff training is so they can provide the best quality service. By having a new fleet the company is able to be more efficient with regards to fuel economy.trainersdirect. ‘The icon has become so strong that Madame Tussaud’s Museum in London started to display the Singapore Girl in 1994 as the first commercial figure ever’. (www. This has enable SIA to have the latest aircrafts and renew them every 5 years. Another benefit of owning aircrafts outright gives flexibility if there is a dramatic decline in the economy.com). ‘Singapore Airlines has carefully built a financial and fixed cost infrastructure which allows them to continue investing to support the brand while challenging the competition on costs’. Therefore they can handle the ups and downs of the economy. personal entertainment systems.venturerepublic.led to the success.venturerepublic. if need be. The airline provides the best . Singapore Airlines have always concentrated on being innovative. The company has always the first to introduce new innovative ideas for example hot meals. (www. SIA will also be the first to own the new Airbus Super jumbo A-380 in 2006. and have less downtime. “Singapore girl you’re a great way to fly” has been there brand of quality for the last 32 years.venturerepublic.

E. advanced facilities and a proven track record as being one of the top airlines for the last 20 years. Airlines that adopt the new airbuses will be able to bypass previous stopovers and enjoy cost savings. On the flip side the introduction of the new airbuses into the industry will cause less demand on Singapore as a stop-over. SIA have maintained a policy that once a passenger pays for there ticket there is no more to pay. Recommendations and Justifications Singapore Airlines conduct a very professional business they have a strong brand. The Australian government holds the key to Singapore gaining open skies agreements.g.com). • Keep strong emphasis on the brand name and quality of service. I recommend: • The airline pursue “open skies” agreements to expand there destinations. (www. This commitment to quality has won the airline numerous international awards and differentiated themselves from other airlines. Some airlines in tough economic times have started to charge for in-flight drinks and entertainment where SIA haven’t. • Stay with the competitive advantage outlined above. As explained earlier there has been a dramatic increase in demand for inter-Asia flights. Australia’s Jet Star. using the differentiation strategy. . and cocktails. Complimentary gifts are received on each level of passenger class. strong human resources and management. • Utilise some of the success factor from SIA on the new low-cost airline to compete with new rival competitors establishing themselves in the Asian market. • Establish the long haul routes with the new Airbus technology before rival airlines purchase the aircrafts. Some issues facing Singapore Airlines The Airline has purchased a number of the new Airbus Super jumbo A-380. refuelling hub. Rival players have noticed the increase in demand and have implemented there own low cost airlines.on flight cuisine including fine wines. • Promote Changi Airports engineering and freight facilities to the new inter-Asian airlines as long haul flights maybe bypassing Singapore’s Changi Airport in the future. which could be a bit premature due to the fact they are still in negotiations with the Australian government over open skies. if an agreement is reached Singapore will be able expand and benefit from long haul flights between Australia and United States.venturerepublic.

This report has been constructed from a wide array of research that has complemented Singapore Airlines various approaches to conducting business. • Help support the Star Alliance to improve customer satisfaction. It is very hard to recommend a lot of strategies for Singapore airlines to undertake.• Maintain the innovation and complimentary products. as they have been leaders in the industry for so long and have developed award winning strategies that have made them very successful. .