A case study on

Strategic Issues in the Airline Industry and the Role of SIA

Implication of this study on NAC

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Team Members

Damodar Niraula Kishore Dhungana Laxman Raj Kandel Nischal Thapa Sunil Devkota Yogendra Adhikari

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Case of Singapore Airlines - An Analysis

Mission Statement
Singapore Airlines is a global company dedicated to providing air transportation services of the highest quality and to maximizing returns for the benefit of its shareholders and employees

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Case of Singapore Airlines - An Analysis

The Economic and Strategic Issues of Airlines in a Regulated World

Airline is a highly regulated industry in every country Domestic air-routes are preserved for the domestic airlines only

Regulatory constraint effects success of an airline

Technological advancement cannot provide desired benefits any because it can not compete effectively with other The reason is that there is no feeder traffic from other country
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Past Two Decades of Airline Industry

The Asia Pacific Region and Singapore Airlines This region is important for commercial air travel The industry of the region has steady growth and economy is growing rapidly SIA is born on 1 May 1947 with an air craft having capacity of five passengers and tri-weekly flights. It had expanded its operation with comet jets in 1962. It celebrated its golden jubilee anniversary on 1 May 1997.
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The Influence of External Factors and Past Events

Governments Technologies Labor Markets Unbalanced Distribution of Traffic Airport Capacity Carrier Competitiveness Consumer Behavior Increasing Use of Strategic Alliances
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Industry Evolution and Source of Uncertainty:

An industry having highest growth rate. 1945 = 12% 1965 = 11% After market maturity it started declining. 1985-95 = 5%, 1991-93 = 2.3% (due to gulf war) In an average 5% in recent years.
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Industry Evolution and Source of Uncertainty Contd.

Rapid growth in Asia pacific in 80s and 90s till 1997, 26.2% of the total intl passenger in 1985, 36.5% of the total intl passenger in 1998. Due to recession traffic fell by 20% and 7.6% reduction in world travel. Other Problems: Fuel price increase. Foreign exchange rate fluctuation. North American: 2 trips per year (1990). India and china: out of 100, one manages a trip a year. Leisure travel is price sensitive and business travel is inelastic. (In 1999 the ratio is 80:20) The frequent flyer Program, a purchase incentive plan 7/22/2013 Case of Singapore Airlines - An Analysis reward passengers for their loyalty.

The Present: Singapore Airlines Market Position

Industry Structure The Rise of Budget Airlines: September 11, 2001: The Impact of a Major External Event The Major Airline International Market

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Case of Singapore Airlines - An Analysis

Singapore Airlines Competitive Advantages and Strategies

A favorable Location Strategy Restricted by International Air regulation Singapore Airlines Vs Singapore the Country: A Joint Strategy: Emphasis on Quality Partnership in a Strong Alliance

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Porters Five Forces Model- (past)

Threat from New Entrants Low Constrained by regulations

Bargaining Power of Supplier High Less alternative supply Low volume of business to airlines

Rivalry among Existing Firm Avoided Competition High degree of Protectionism

Bargaining Power of Customer Low Business and leisure customer (80:20) Limited no of airlines

Threat of Substitute Products: Low Remote Substitutes are other modes of communication
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Porter Five Forces Model- (present)

Threat from New Entrants Low to medium Open Skies Agreement Bargaining Power of Supplier High to moderate Less alternative supply volume of business from airlines Bargaining Power of Customer Medium Business and leisure customer (20:80)) Large no. of airlines Price Sensitive

Rivalry among Existing Firm Medium Innovations Concern for safety Strong marketing

Threat of Substitute Products: Low to medium Video Conferencing and other modes of communication

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Summary of STEEP Analysis

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Possible Future
Environmental Analysis (STEEP Analysis)
Social (reduction in leisure travel, alternate source of transport, fear of flying) Technological (alternate source of energy, high speed aircraft) Environmental (stringent laws, noise pollution) Economic (recession, rising fuel price, devaluation of Currencies) Political/Governmental (repetition of 9/11, deregulation)

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Comparing NAC

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Brief history- NAC

Aviation started in 1950s Established in July 1958 with one DC-3(51% Govt., 49% Indian Businessman) International Service started in 1960 Management by Air France 1969-73 Douglas Dc-3s (Dakota).. Total 19 aircrafts with 4 Boeing 757 in 1980s Currently, 1 Boeing, 4 twin-otter At present 4 International and 37 domestic destinations
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SWOT of NAC
Strength
Differential Pricing Competent Pilots National Flag Carrier Route permits Ground Handling Rights

Weakness
Policy Interference Frequent cancellation High employees turnover Improper resource mgmt Insufficient Infrastructure Poor Customer Services

Opportunities
Increasing flow of tourists Foreign employment and study High Traffic routes Hub for Tibet
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Threats
High Competition Unstable policy

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Thank You

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