Introduction

Singapore Airlines is the national airline of Singapore, the main activities of Singapore Airlines
take place at Changi International Airport - Singapore. Singapore Airlines is the only 5 * (5
star) airline in Southeast Asia. Originating from incorporation with Malaysia Airways Limited
in 1947, until 1972, Singapore Airlines split up independently and became one of Singapore's
largest and most developed GLC (Government – Linked Companies). Singapore Airlines
headquarters are located at Airline houses, Changi are of Singapore. Singapore Airline has a
strong presence in almost of Southeast Asia, South Asia, East Asia and Africa. The airline
offers high quality flights and trans-Pacific flights. In 2019, Singapore Airlines were honored
at the Singapore Corporate Awards 2019 for the quality of their corporate governance in their
board practices (Times, 2019).
This corporate governance essay will analyze and evaluate the quality of all corporate
governance mechanisms of Singapore Airlines. Therefore, this essay would give the reasons
about its strengths and weaknesses. Besides, give the recommendations to improve the
strengths in corporate governance of Singapore Airlines with reasonable analysis in
mechanisms and the knowledge learned about corporate governance.

I. Singapore Airline’s corporate governance mechanisms

1.1. Review
Board Composition
The Board composition of Singapore Airline has nine Directors who are dedicated to
continuously improving value for shareholders by keeping high standards of corporate
governance, commitment, integrity and professionalism at all levels, underpinned by powerful
internal controls and risk management mechanisms (SingaporeAirlines, 2018/2019)
Name Position Nature of Appointment
Peter Seah Lim Huat Chairman Non-executive/Independent
Goh Choon Phong Director Executive/Non-Independent
Gautam Banerjee Director Non-executive/Independent
Simon Cheong Sae Peng Director Non-executive/Independent
Dominic Ho Chiu Fai Director Non-executive/Independent
Hsieh Tsun-yan Director Non-executive/Independent
Lee Kim Shin Director Non-executive/Independent
David John Gledhill Director Non-executive/Independent
Goh Swee Chen Director Non-executive/Independent

(SingaporeAirlines, 2018/2019)
Board Composition is responsibility for oversights not only business performance but also
affairs of the Company and offers Management with overall guidance. Its main responsibilities
involve charting the strategic direction of the Group, guiding the management of digitalization,
technology and innovation, financial decisions and plan, reviewing and approving annual
budgets and monitoring the performance of the Group, approving significant acquisitions and
fundraising exercises, and ensuring that the Group complies with all laws and regulations as
relevant to the business as possible .
In a fiscal year, there are at least four Board Meetings are held by The Board and more if
necessary. The purpose of the meeting is to make strategic plans for the Managers in the
financial year as well as to meet important partners to develop sustainable economic relations.
The non-executive directors also hold meeting, once per year or more, that without
management's presence to review the efficiency of the latter in achieving goals or to discuss
any other relevant issues.
Board sub-committees
There are six board committees that were established to support the Board in carrying out
its duties are:
 The Board Executive Committee;
 The Board Audit Committee;
 The Board Compensation and Industrial Relations Committee;
 The Board Nominating Committee;
 The Board Safety and Risk Committee; and
 The Customer Experience and Technology Committee
1.2. Analysis
Agency theory
Singapore Airlines’ Board of Manager state that their main responsibility is “enhancing
shareholder value”. Besides, in the Board, the amount of independent director account 90%
members of Board. The relationship between BOD and BOM so independent and separate, and
the power of Shareholder is very strong, they have the ability to appoint Manager, plan
strategies, organize meetings and monitor BOM activities and performance. This role is in
agreement with the Agency theory that “the firm’s owners (principals) hire managers (agents)
and then delegate the firm’s day-to-day operating decisions to these managers”. “The theory
assumes that both parties – owners and managers - seek to maximize their own personal
interests”. The theory of the Agency identifies corporate governance mechanisms, particularly
the board of directors, as an important means of monitoring to guarantee that senior executives
behave in shareholders' best interests (Panda & Leepsa, 2017). Moreover, the structure of
Board composition in Singapore Airlines have enough condition of Agency Theory such as:
Strong, independent boards of directors; CEO and board chairman to be different persons;
Outside/Non-executive directors advocated; Important role for Audit and Remuneration
Committees.
Type of Board Structure: Unitary/one-tier board
The structure of Singapore Airlines’ Board could be demonstrated by following map
 In the Board Composition have 8 Non-executive/Independent members and 1 Executive
/Non-Independent member named Goh Choon Phong who is the Chief Executive Officer
(“CEO”) of the Company. So, it has both executive directors, and non-executive directors as
the description of Unitary structure, that is similar with Unitary definition (Tan, September 1,
2011). Moreover, this Board is elected by Shareholder and responsible for protect the interest
of Shareholder.
The independent
Singapore Airlines guarantee their independent of Board composition by separate the
duties of Chairman and CEO. There are eighttoutoof nine Directors that are independent from
Management and the Company’s substantial shareholder. There is a strong separation of
powers between Chairman and CEO to ensure a balance of rights and responsibilities as well
as the interests of the parties in the company. Mr. Peter Seah as Chairman of Singapore Airlines
plays a role in promoting, communicating and conveying ideas to represent shareholders, as
well as managing BOD annual meetings . The drive of the Company was led by Peter to attain
and sustain a high corporate governance standard with complete assistance from the Secretary
of Directors, Management and Company. Concerning about CEO - Mr Goh Choon Phong, with
the assistant of the Management Committee, he makes strategic proposals to the Board and
supervises the implementation of choices of the Board (SingaporeAirlines, 2018/2019). He also
responsible for overseeing the application and actions of the company's corporate and company
strategies and policies.

II. Strengths of corporate governance

By the application of Unitary Board structure, Singapore Airlines has significant strengths
of corporate governance. Firstly, there are more relationship and contact between Non-
executive directors and the Company. So, the Board, also NED would have more knowledge
about financial situation of company, hence give the financial decision quickly, saving time of
decision-making process. The body that have main right to give decision in company is only
the Board, so it is quicker and simpler to exchange information between a single body. The
ultimate strengths of the Unitary Structure are less administrative burden and only one body
needs to hold meetings and only one set of minutes needs to be drawn up.
Moreover, about Agency theory, the Company could have highly independent between
BOD and BOM, thus, there will be a separation of rights and interests, ensuring the highest
benefits for shareholders. There are Audit Committee in Singapore Airlines, that not only
strengthen the comprehensive and detailed review of the audit matters but also avoid the
dominance of senior managers over auditors (e.g. CEO and CFO). NEDs are be able to
contribute independent judgments in a region in which they are especially suitable, and it
provides auditors with a direct connection to non-executive directors.

III. Weaknesses of corporate governance

The main weakness of Unitary Board structure is that Non-executive directors are less
independent from the management, therefor its encourage the collusion due to personal benefit.
Moreover, regarding to Agency theory, there are less attention for benefits of stakeholder by
overall. The relationship between company is simple, following “the theory’s view of
individuals as opportunistic and self-seeking may be too simplified” (Lewis, 2018). Moreover,
concerning about age of Managers and Directors in Singapore Airlines, they are almost over
50 years old and about 50 to over 70 years old. This is an old mechanism with too much uptime
and reactivation, so the company may face potential risks of a dynamic, too conservative, and
non-breakthrough working environment. Moreover, long working hours will lead to the risk of
independent managers and directors.
Moreover, using Agency theory makes Singapore Airlines consume costs related to
Bonding costs, Monitoring costs and Residual losses. Firstly, bonding cost, the company has
to pay managerial support expenses to encourage their working performance for the best
purpose of serving the owner. These include high wages, stock options, or limited stock
allowances. Next is about monitoring cost, company has to pay cost to assess the performance
of managers such as audit fee. Finally, in the event of losses that separate the interests of the
managers and shareholders, they can make decisions for personal interests, not for the company
or shareholders.

IV. Recommendations of improvement

Firstly, although Singapore Airlines holds four Board Meetings annually, it is still
necessary to organize separate meetings between separate Non-Executive Directors, NEDs and
Managers as well as meetings in each department. The purpose of the meetings is to check
corporate governance performance as well as consolidate and provide timely direction.
In addition, there should be a specific milestone to review the personnel structure of BOM
as well as senior positions, in order to promptly detect errors if any of the familiarity leading
to collusion. The personnel apparatus should be rejuvenated to promptly catch up with the
trends of the times, introduce new and more effective management models, and contribute
breakthrough developments in management and operations. Moreover, the personnel change
also helps to control the independence within the board of management, the management team,
ensuring the rights and benefits for shareholders.
Finally, the application of advanced technologies to the control system, in order to shorten
the control process, reduce opportunity costs. Moreover, technology devices also help the
company reduce fraud risks and bring high economic benefits.

Conclusion
This corporate governance essay carefully analyzed the corporate governance system of
Singapore Airlines and examined the strengths and weaknesses based on that structure. The
article then came up with some preliminary conclusions about the theory and structure that
Singapore Airlines is using, which is Agency theory and Unitary structure. From certain
insights, the article recommends solutions and ways to help improve corporate governance of
Singapore Airline. However, overall, this airline has a complete and efficient operation.
(1573 words)

References
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Chen, C., 2016. Solving the puzzle of corporate governance of state-owned enterprises: The
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[online] Smallbusiness.chron.com, viewed 4 September 2019,
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Panda, B., & Leepsa, N. M. (2017). Agency theory: Review of Theory and Evidence on
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Tan, Corinne, The One-Tier and Two-Tier Board Structures and Hybrids in Asia - Convergence
and What Really Matters for Corporate Governance (September 1, 2011). <Available at
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