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A standard Airline:

More than years the Singapore International Airlines has built up a well-built brand name as a pacesetter in the aviation industry, mainly in terms of safely, innovation and service quality. Its heart on the separation of its services from other airlines has made it one of the most thriving and identifiable airline brands in the recent earlier period. It is also an industry bellwether for air-craft purchases. Its major shareholder being the Government of Singapore, SIA has always received remarkable support from them. It is the parent airline of the Singapore Airline Group of Companies. It has expanded into airline-related businesses such as aircraft handling, engineering and catering. The Singapore girl as we know is what the hostesses are called- is recognized as a symbol of excellence in service quality. The idea of choice of meals in the “economy class” was first pioneered by the SIA. Other substantial and elusive discriminations were first initiated by SIA which is now imitated almost by all major airlines.

The beginning of dilemmas in the SIA:

The trouble commenced during and after the complex economic circumstances such as the SARS outburst in 2003 and the Middle East disaster. The relation among the group management and the labor unions began to get unpleasant, predominantly after the wage-cuts and lay-offs of over 400 employees. It was considered as the uppermost number of lay-offs in the record of SIA. It went on for a further wage-cut and lay-offs in order to curve down its operating costs. The entire episode was being observed as expedient by the Unions. The full support from the SIA’s major shareholder, the Government of the Singapore was also considered by the unions as apprehensive and they did not like it a bit. They thought these justifications were used just to cut back the number of employees

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BACKGROUND

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Then came the other airlines who did not waste any time in replicating many of the outstanding advances prepared by SIA. SIA’s enlargement as a carrier came through their policy of differentiation. But soon it became a custom, as a result of the other airlines’ acclimatizing the ways. The breathtaking additions of luxury such as choice of meals in economy class, pioneering entertainment options etc that were introduced by the SIA which became their specific field, no longer remained so. Core concern was the mounting competition from International carriers headquartered in the neighboring countries, such as Thai Airways, Cathay Pacific, Malaysian and Qantas. They replicated some of the key features of SIA’s competitive policy, which incorporated recruitment, in-flight service, fleet management and so on.

Investments made by SIA in present times:

To make its existence effectively about in the world, SIA in order to swell its business, acquired 25% of Air New Zealand, but as the Air New Zealand became insolvent, the deal turned unpleasant and SIA lost about $157 million. Around the year 1999, SIA bought a 49% stake in Virgin Atlantic Airways worth $1.6 billion. By 2007, it lost 60% of its worth. Many said that the affiliation was not functioning because of the different cultures of the individual airlines. Mr. Chew Choon Seng the CEO of the SIA was faced with a exigent task of determining the competitive strategy of SIA in unstable times.

The Conventional Airline Industry:

Traditionally, due to the national and international rules, the airline industry based on the limiting effects was disjointed. Each country has its own landing rights and local ownership necessities. The large airline companies enlarged dominance only on their own regional markets. That’s the best they could do even being industry’s biggest airlines. The competition was divided into each region and it was not universal. The solitary reason being different countries

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not permitting other airlines to have their business in their countries and only the government owned national carriers were given the sovereignty to run their business in their individual countries. Exemption was the United States, where they did not allow the national carriers to control rather they encouraged a fair competition among the airlines inside their country. Nonetheless the situation in due course changed in the 1990s when the industry began to change as a result of the deregulation, privatization and the introduction of the new technologies.

United States deregulated its airlines in the late 1970s and as a result it has observed the severe competition among the airlines in its country. Europe, soon after the formation of the European Union, terminated the country-specific barriers and allowed free-market competition among the carriers. As a result they also entered the world of competition of the airline industry. In Asia, some major regions started allowing greater access to foreign carriers. Japan took an colossal step in the process of deregulation by selling off its shares in the then state-owned Japan Airlines and authorized All Nippon Airways to serve international markets. On the other side of the orb, in South America, many small national flag carriers were privatized. Countries such as Argentina, Mexico detached the anti-competing barriers and infused substantial levels of market competition in their airline industry. They also privatized their national carriers.

This tendency gained a lot of significance and approval. Countries such as the European nations were by then having negotiations with the United States to operate an open transatlantic market area where landing rights would be determined by free market forces rather than regulatory process. Thus, the traditional airline industry coming to an end. The age of globalization started. Nations started having open-skies agreements between each other. There agreements were mutual agreements between countries that agree to provide landing and take-off facilities for air-carriers coming from any of the partner countries.

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The restoration through deregulation and privatization helped the airline industry to become global. It altered the uneven competitive market into a global competition. It was seen that most of the large carriers preserved their regional powers, but many airlines tried to make coalitions with the other leading carriers, in order to provide perfect services across the wider geographic regions. These alliances made most of the larger airline companies into de facto global organizations. That is they became a group and cooperated with each other in order to provide services to customers. Due to globalization many regions were witnessing the significant and intense competition among the airline companies. It was clearly exposed in case of the fares offered by the airline companies. There were high fare wars among them. Since the customers had more options to choose from, they became concerned and more price-sensitive then ever before.

The competition became so intense and acute that many carriers started to focus only on their service offerings. They concentrated on upgrading their service offerings. To sustain the competition, many carriers in the process of improving their service offering, contributed in the declining yields in a price-conscious market. The presence of so many airlines competing with each other worsened the situation. The passenger-revenue yield declined in all geographic regions. The carriers around the world were passing a very tough and challenging stage in order to extract higher levels of efficiencies from their operating structures.

The development of Alliances:

During the late 1990s had become a tradition for the carriers around the world to be a part of the coalitions. By 2004 most of the key airlines were part of mammoth alliances. These coalitions have developed in order to include quite a lot of carriers under a single coalition brand. One such coalition was called the star coalitions and it incorporated ten-carriers on behalf of Asia-Pacific, North America, Latin America and the Europe. Another similar network of partnership included eight carriers across a similar geographical territory to Star.

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The reason of the existence of these alliances was to redirect traffic, increase profitability, and help leverage scale economies in operations. In addition differentiate services and convince potential customers to buy their services and make them their regular carriers.

Besides the advantages, came the inadequacies of being a part of the coalitions. It had its own intricate issues. The issue that rose first was if all the carriers in the alliances would be able to perform consistently or not. That is the partner carriers were concerned if the level of service across carriers, safety records of the partners, and willingness to let go control to an alliance. Becoming a partner meant losing the control to some extent. As the partnership suggests, they also had to listen to other members of the alliances and act in accordance with them. They have to work as a unity. The crucial factor seemed to be the difficulty in developing a harmony among the partners regarding how they would establish common safety, service, and performance standards. The other major issue was the cross-shareholdings between carriers especially in the Europe markets as the privatization accelerated. It was seen that many carriers were purchasing shares of other airlines but it was not like everyone was purchasing everyone’s shares. Rather it occurred between two-three carriers and that endangered the scenario for the alliance. Inside one big alliance, small alliances were emerging and it was giving rise to rivalry among them. This also happened as the partners were allowed to negotiate side deals with other carriers irrespective of their alliance membership.

The Background and Ethnicity of Singapore:

By the 1990s Singapore became a prosperous nation and was resented by the neighboring countries for its glorious accomplishments. It’s per capita GNP increased by 32% by the 1990s. Mr. Lee Kuan Yew, the most powerful Prime Minister in the country’s history was the very reason for such change in the country. He was able to inspire his fellow countrymen. He proclaimed his intention to inflate Singapore so that they could compete head to head with rival Switzerland in terms of standard of living. He was not late to unitize the

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partisan spirit of the people. He gave prominence on higher education standards, a proscribed labor environment, momentous outlays for training and development of the people of the country. He believed that these all helped to augment the quality of human capital. By 2004, Singapore had the highest rate of literacy rate in the region. Mr Lee Kuan’s vision did pretty well fit as one with the Singapore’s Confucian work ethic. It strained on responsibilities over rights and placed huge value on features such as hospitality, caring and service- the biggest asset of Singapore. Thus, as a result of all these, Singapore ranked among the best countries in terms of human capital in 2004 and was often looked upon as the sociable place to do business with. But with the rising of standard of living meant a higher wage. In addition to that the small size of the local population and a very low unemployment rate, the availability of labor was seen as a potential obstacle in the drive toward further growth. Many large companies were already depending on a considerable number of expatriates, that is they were highing labors from other countries, particularly the from the neighboring countries and west in the workforce.

Mr. Lee supported free-trade and internal driven growth. He believed that the business organizations must be self-sufficient, like in the air-sector he declared that SIA although a national carrier of the country would not receive any subsidies or protection from the government. The company has to be completely on its own and has to use only the resources and skill it owns.

Singapore adopted the free-skies agreement policy at that time and allowed foreign flag carriers from other countries to serve the city-state without any restrictions. This increased the competition among the carriers, especially SIA. But the free-market policy on the other hand resulted in sharper rates of market growth. As during that time, almost 35% of the equity base shares of Singapore were foreign in origin. In addition, 17% of shares of all companies in the country were owned by foreign investors. Both of these demonstrated the successful programs that attracted foreign capital and commerce to the country. In the all over development of the country, Tourism played a very significant role. Since the country was small in size, and lacked natural resources, Singapore heavily had to rely on service industry such as tourism and finance to generate growth. On of the advantages the country has is that, it has always enjoyed a status as an important geographic hub since the

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British colonization era. It has become an important Asian tourist hub since during the time when Singapore was a British colony, it acted as an important stop-point for the travelers from Europe to the outlaying colonies of Australia and New Zealand.

The legend of the Singapore Airlines: The Company:

Singapore Airlines began with the amalgamation of Malayan Airlines (MAL) in the year 1947.That is it started its first commercial passenger service. In the year 1972, due to political differences between Singapore and Malaysia resulted in the formation of two entities: Singapore International Airlines (SIA) and Malaysian Airlines System. Thus we can say the birth year of the SIA was in 1972. The long association with the Malaysian equivalent proved very useful for SIA. The crew working there gained significant flight experience by working jointly through out the South-East Asia. Their safety records were unblemished. The over all association worked out pretty good for SIA. The SIA personnel were able to experience and learn more about their works. In addition, they also gained vital operating experience which varied from flight operations to administrative importance. Following the separation, SIA received half the combined assets. These included most of the overseas offices, the headquarters building in Singapore and also one almost new computer reservation system. By 2003 SIA became one of the most established and popular airlines in the world. It reached over 90 destinations in over 40 countries in Asia, Europe, North America, the Middle East, the South-West Pacific and Africa.

Both in terms of operational performance and its profitability history SIA was doing really great. The record it had created was envied by the other airlines. SIA was one of the few Asian airlines which continuously posted profit even at times of economic downturns in the 1990s in Asia. However, its short-term performance record began to decline as a result of SARS attack in the south east region and the Middle East crisis and the global economic conditions that had taken hold of most of its key markets. In view of all these major issues,

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the company was looking for alternative courses of actions to survive in the industry.

SIA’s subsidiary is called the ‘Silk-Air’. It covers 24 destinations in the South/Southeast region. This was mainly publicized and promoted as an option for vacation travelers who wanted to travel short distances between various tourist spots in the region such as Penang, Yangon etc.

SIA’s ground services:

SIA has been all along known for its ground services. They were known for giving better services and they did it by building a strong arrangement of completely owned subsidiaries and joint ventures to offer operational support in the areas such as catering, terminal management, and aircraft maintenance. The subsidiaries were largely managed as an autonomous entities and it had to bid for orders from the parent company. In many of the core areas they were rated as number one. One of the largest of the groups was The Singapore Airlines Terminal Services (SATS). This group specialized in terminal management which includes management services such as catering, passenger and baggage handling, and ramp operations. SATS are one of the largest flight kitchens in the world at Changi International Airport. On average they produce about 45000 meals a day. Some of it’s clients were the British Airways, Quantas, Lufthansa and Japan Airlines. In addition to that SATS serves 70% of all airlines that fly in to Singapore. SATS also went global by going in to joint ventures in Beijing, Hong Kong, Chennai, Manila etc.

The Changi International Airport was indeed very significant for the SIA. The SIA being the national flag carrier was also very important for the Changi airport. The SIA managed the airport. It was considered as one of the best airports of the world and often got top honors for people handling efficiency

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and cleanliness. One such example would be the delivery of passengers’ baggage within 10 minutes after arrival. It was really hard to sustain such high standards but thanks to the efficient subsidiaries, especially for the SATS, the SIA could continue offering such services. Changi was also the home for the SIA Engineering Company, another subsidiary of the SIA. They provided aircraft maintenance and engine overhaul services. The SIA Engineering Company was made of expertise and skilled employees and for that many global carriers chose to engage SIA Engineering Company to service their fleets This Engineering Company also went global by going in to joint-ventures with very reputed companies such as the Rolls-Royce and Pratt & Whitney.

The Services Offered By the SIA at the Changi International Airport and Other Airports:

The SIA was one of the first airlines to bring in the electronic ticketing through its website. Online ticket booking was allowed all over the world where the SIA had their hubs. For its customer’s convenience, it introduced the automated check-in systems on certain flights and it attracted a lot of travelers. The company adopted technologies in variety of forms, allowing check-in via e-mail, telephone and fax. For the first-class and business-class, the SIA offered the Silver Kris Lounge, which was an illustration of sophistication and a demonstration of exoticness that reflected the culture of Singapore. The lounge consisted of plush armchairs, deep-pile carpeting, aquariums, tropical gardens and paintings by the original Singapore artists. It also comprised the top of the line business equipment such as computers, fax services etc. It was undoubtedly one of the world’s largest and most luxurious airport lounges.

The Fleet possession form and the importance of fleet assortment of SIA:

The SIA started very small and when it started it just had a fleet of just 10 aircrafts and covered 22 destinations. But gradually, over the years SIA’s position became stronger and stronger. By 2003, it was operating a fleet of 97 aircrafts and most of them were capable of long-haul, large-capacity flights.

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The SIA was also in the process of ordering more aircrafts and was one of the first airline companies in the line to purchase the 500-plus passenger, double-decker mega liner that Airbus would unveil shortly. The SIA followed a very careful and expensive fleet acquisition policy. The policy was such that its fleet average was a little over five years old. It was the world’s largest operator of Boeing 747-400 Mega tops, a specious aircraft capable of long distance flights. The major difference between SIA and other airline was the fleet age was that most of the airlines’ average fleet age was 14 years plus whereas SIA’s one was a little over five years. SIA was able to maintain such short average fleet age and it was a big accomplishment and the company took this issue very seriously. Just for the aircrafts, SIA maintained an office in Seattle, Washington in order to be near to the Boeing designers and oversee the developments of the new additions to the SIA fleet

The advantages with newer aircrafts were that, the aircrafts were more fuel efficient. Besides less maintenance were required than the ones that were old. The SIA Acquired fleet of aircrafts through two ways: By leasing and by purchasing it outright. This was done primarily during economic lulls to acquire more new fleets, thus taking out the maximum value for its investment.

SIA’s Fleet selection reflected their outstanding ability to satisfy their potential customers. They emphasized on fleet selection because the company believed that this indicated the fact that they as an airline would provide top of the line technology, comfortable seating and a safe trip. All of these were considered as an important feature as far as differentiation strategy was considered. It has probably concentrated the most on the customer satisfaction as far as the airlines were considered. The SIA always designed the interior of their aircrafts that for all the times included the latest amenities. As we know the SIA has been one of the very first airlines to offer personal video screen in every seat, including the economy class. The in-flight entertainment ‘The Kris World’ that it offered, delivered 22 video channels, 12 audio stereo channels and nine Nintendo game channels at every seat, with a Dolby surround-sound system and it was specially designed by the SIA. The First Class Cabin became a benchmark for the industry. They had four variations in the First class and they were truly something to look at. The first-class consisted of arm-chair seats types that converted into comfortable beds with switches. It used the most sophisticated and expensive type of seat

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covers. It used Connolly leathers for the seat covers. The seats had built-in communication devices and inflatable air mattress. On long trips the bed linens in the first-class were changed by the cabin-crew. It truly showed how much the SIA gave importance to customer satisfaction. All the service wares were designed by the famous French Fashion house “Givenchy”. The SIA wanted to make all its passengers feel special, regardless of which class they were traveling to.

The force to be Number One in Providing Service:

The SIA made sure that the economy class passengers feel the differences and superiority offered by the company. The seats they provided were wider than average with spacious leg room, leg rests, video screens, and its ergonomic headrests.

SIA always was ahead in the race as far as providing services were concerned.19 years ago, SIA introduced in-flight telephone using the advanced communications technology. SIA was the first to introduce Dolby surround sound and personal video screens in coach. The SIA was also started the fax services in the air. Discussions were on the way to upgrade the communications package to allow Internet access on flight. The SIA also introduced an entertainment system called the ‘‘WISEMEN’’. It was available for the first class and the business class. The specialty of this entertainment system was that it functioned like a personal home theatre and featured a range of movies and other entertainment options that passengers individually could choose and control.

The work force of SIA:

The SIA always appreciated its employees and considered them to be the most important advantage for the company. As without them there nothing would have been possible. It was for the services provided by the employees that the company was in such a desirable position in the industry. The SIA offered top-of-the-line services and the company was known for the marvelous services they provided. SIA turned its human assets into a significant source of competitive advantage through a brilliant combination of

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organizational culture, training and rituals. The main source of employees was Singapore and Malaysia. In 2003, the SIA employed around 14000 employees worldwide. It was the highest number of recruitment by any private organizations in Singapore. The SIA also started a Training Centre in Singapore. Its main objective was to train the cabin crew, commercial staff, and flight crew and flight operations personnel of SIA. SIA followed a harmonized recruitment and training policy which enabled them to have a group of exceptional talents. The employees who were employed usually had to complete a cadetship (similar to internship) program which was like an internship program and functional experts in areas such as computer services and finance had to go through specialist programs. The cadetship that was offered by SIA was an on the job extensive training program. The employees had to go through various functions in the program and this way they moved up the hierarchy. SIA was very particular about the training and development of the employees. They would spend almost 14 times more per employee on a Singapore average scale. The employees went through extensive training. The company had proven controls and mentoring guidelines which were suppose to help the employees develop their potentials in order to add more value to the organization and help the company have more success. The employees as a result developed a greater sense of commitment for the company. In due course, they also nurtured a strong sense of identity and belonging and were very proud to be a part of the organization.

The base of the dedicated employees and the reason for their unhappiness at the end:

The employees were hired from worldwide. The pilots employed, came from over fifty countries. They were drawn to the SIA mainly because of their desirability of flying the latest equipment under professional working

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conditions. For this very reason they did not mind working at a very generous level of compensation. It was very apparent as SIA gave a lot of importance to the latest equipments and having a superb quality working conditions. The SIA had its own flying college with facilities in Australia which focused on improving the training efficiency and producing qualified pilots. The SIA also made this college a base for the learning Singaporean pilots in order to meet the demands. The SIA also had a high-tech flying facility in Singapore which had eight flight simulators to taint he pilots. All the employees were required to go through the mandatory biennial proficiency checks. The company believed the reason they were able to achieve the high levels of safety was because the training centers were quite well-administered. The company’s long-term target was to get as many Singaporean pilots as possible because the Singaporean pilots represented a very little of the total number of pilots the company had. The Singapore Armed Forces graduates were given responsibilities to train the pilots for defense purposes. After the training some of the pilots joined SIA. The company’s half of the pilots were expatriates. The expatriates were generally paid more then the Singaporean pilots. As the compensation for the expatriates included variety of expenses such as housing, travel etc.

In the start when the company proclaimed and conversed bout the financial conditions of the company and about taking projects like cutting down the operating cost, the employees were very cooperative with the authority; they agreed upon the wage-cut decision in a friendly manner and were very understanding. They believed that they were a part of the organization and in such economic downtimes; it was a way of showing their commitment to the organization. The incident of cut-offs during the 2002-2003 session brought a change in the employees judgment. They started to recognize the whole situation and felt vulnerable. Many employees who, previously have cooperated and understood the situation were publicly expressing their concern regarding the wage-cuts and lay-offs. They viewed the whole event as self serving, since although they gave reasons of financial crisis due to SARS attack and middle crisis, even when the situation was under control, the organization did not take any steps. It was difficult for the employees to trust the company. They were always worried about their jobs, since it was the very first time that SIA has had a large number of lay-offs and the employees suspected that their job is at risk too.

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The hiring of the cabin crews ,along with the image of the “Singaporean Girl”:

SIA alleged that the cabin crew acted as the brand representatives for the company. So they had to reflect the high standards of service excellence that its passengers expected. For this reason the complement of the cabin crew was chosen through a very rigorous selection process. The cabin crews were hired from the south, south-east Asia region but most of them were from Singapore. The SIA’s main pool for recruitment was Singapore but this was constrained by the shortage of labor available in Singapore market. Hiring employees from Singapore had a lot of advantages including the fact that the fellow people were paid less than the foreign employees. Since SIA had been one of the airlines with lower labor costs among leading carriers, they had to have more recruitment from its own country. Failing to do so would directly affect its operating costs as then they had to go for hiring expatriates.

This fact would also contradict with their historic branding approach, “The Singaporean Girl” if they had to fit in cabin crew from other countries. Also, this factor was crucial as when SIA started off; it had to compete with other established carriers. In order to differentiate itself from the rest, the company launched the Singaporean girl as the embodiment of caring, comfortable, hospitable service. This paid off immensely as all this Oriental mystique was then a big attraction for the western world.

Since the Singaporean girl image was a part of their business strategy, they nurtured it very carefully. They wanted their cabin crew to be perfect. That is why; it started off with a rigorous selection process and ended with an extensive training. They trained them on areas such as passenger handling, social etiquette and grooming. The SIA programs were long and more extensive then the other carriers programs. The programs also included some nontraditional aspects, for instance, the company went as far as making the

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trainees stay at homes of the aged to gain a better knowledge on the special needs of this fast growing passenger segment. The cabin crew adopted service-oriented behavior and followed the rules strictly. These training programs were repeated periodically so that the crew could get acquainted with new cabin management technologies and service standards every time they were altered. Once they were in the fold of the organization, they learned to help each other in order to provide the best services for the organization. For the betterment of the employees and to become accustomed to their job, toward the end various practices such as detailed performance reviews and feedback at all levels, career counseling and performance based reward system were designed.

The SIA took advantage of the local labor laws and practices while recruiting cabin crew. The male staff was hired as regular employees. However, the female employees worked on a five year contract basis, which was renewed at best for five years. The female employees were 60% of the total number of employees.

SIA’s in-cabin service became the gold standard in the industry. It was the benchmark for the other airlines. It was ranked overall as the “Best International Airline” by a recent survey done by a well-known and respected travel magazine’s for the tenth time was chosen for this prestigious honor. To add, the award has been given for eleven years. This award, though were nothing new for SIA. The company has been receiving awards such as Zagat, Conde Nast, OAG Worldwide, ASEAN Tourism Association and magazines included Asia Money, Business Traveler etc.

Strategic alliance of SIA:

To gain the control over alliance SIA took some important decisions which later came out to be a bit costly for them. Such as, SIA acquired an 8.3% equity stake in Air New Zealand to strengthen the partnership with the New Zealand carrier. Since Air New Zealand already owned 50% of Ansett Airways, SIA would have the benefit of the additional alliance with Ansett as well. These things expected SIA to make position in the Australasian market which was growing rapidly but it destroyed when Sir New Zealand’s fortunes turning into worst position. The Government raises capital to hold up the company but it weakened SIA’s ownership in this company. SIA left the

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company with a large amount of loss and hasty retreat from the initial foray to establish control of the key Australia- Asia routes.

The second move of SIA was to acquire the 49% of the equity with UK based Virgin Atlantic Airways for $1.6 billion. This was the fairly steep price to pay for a deal that offered little operating control in the near term for SIA, but the Virgins thought that this partnership would give SIA the ability to control their transatlantic routes, among the most lucrative worldwide. Virgin was popular for their exacting service standards. They were constantly going up to the 2nd position behind SIA in most surveys of customer satisfaction. The partnership ultimately goes wrong. Virgin’s decision not to join the Star Alliance placed SIA in delicate position and the threat of invoking the ire of other alliance partners should it favor Virgin over United and other for channeling some of its transatlantic passengers. On the other hand rejecting the opportunity to participate in the venture of Virgin Blue, which later posted very good returns in the Australasia market was another wide of the mark decision of SIA.

New Asian competitors are booming:

Asia had slow in responding to the phenomenon of low cost carriers. But to saw the success of such companies like easy Jet and Ryan air in Europe and Southwest and Jet Blue in the U.S., many new competitors engaging on the Asian market. On the earlier years, the Asian market were only fly the longer flight distances, they had only few alternative airport options for take off, and lower passenger destinies, but now a days these barriers had broken, and low cost carriers were alternate to these positions. Early 2003 they were six main competitors in the market and another one wants to enter this market using Singapore as a base. After the arrival of easy Jet and Ryan air in Europe using their experience of the large network, the large players in Asia, such as SIA, were facing unbelievable pricing pressures. Many of the new players were focusing on South Pacific and East Asian routes, prime SIA territory.

Air Asia and Virgin Blue faced threats. Air Asia was based in Malaysia and offered services at highly discounted rates to domestic destinations within the country. Its operations model used Kuala Lumpur as its central hub, but plans were on the anvil for expanding into Johor, a location that was within driving

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distance from Singapore. It plans to fly with approximately two million passengers by 2004 even though it had a small fleet of seven Boeings 737. Its attractive price drove passengers to this way. It offered a round trip from Kuala Lumpur to the resort island of Penang for only US$10, while Malaysia Air, charged US$101 for the same trip. Air Asia also boasted that it had the lowest cost for any passenger airline in the world at US2.5¢ per available seat kilometer compared to US5.1¢ for SIA. Air Asia set challenges to SIA in the near future. It had recently scouted Changi international and Seletar Airport in Singapore to explore to setting up its operations there. The company suggested that it offers a one-way fare of US$28 from Changi to Kuala Lumpur, a sector where SIA was currently charging US$109.

The beginning of New Millennium with new competition:

Although few carriers could legitimately claim to be global carriers, by the late 1990s the competition in the airline business had become distinctly global. Carriers of Asia-Pacific region had offering the low fares which was the premium services of SIA and had strengthened their positions in Europe and North America through the alliances. The strategy SIA fixed to compete in the airline business was to take some important steps to fortify its position globally. SIA joined one of the powerful networks of carriers in Lufthansa, United, Annett, Air New Zealand, All Nippon Airways, South Africa Airways, Air Canada, Thai, Varying, and SAS named the Star Alliance. SIA expected that this would let the members to increase revenues and their efficiency by core sharing services, fine-tune traffic flows. They combined their buying power to secure the inputs like; food and allied services. By joining the Star Alliance, SIA had entered into several destinations that they did not serve yet. By using the code sharing, SIA took off with a large number of passengers to their destinations within Europe and the United States. Before joining to the Star Alliance, SIA served only four major cities in the U.S., Los Angeles, San Francisco, Las Vegas and New York. But for joining them the limited set of destinations changed to the large number of primary and secondary cities of United and the relationship extend between SIA and United. The new relationship with Varying also influenced to fly to more destinations in South America which was not well represented region in SIA’s route structure. Despite this advantages, the alliance network brought with it some concerns. It remained to be seen whether the other network carriers would be able to rise to the levels of SIA’s hallmark service standards. However, despite the

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obvious advantages, the alliance network brought some concerns like restoring the brand image of SIA which it so carefully nourished over the years, specifically with its loyal first-class and business-class passengers. The collective group of companies joined the network which delegate some aspects of brand management such that the identity of the network would go beyond to the individual identities of the members. Some loss of controls also creates future challenges for SIA like; scheduling and flight frequency. It also raised critical questions about the immutability of core competences. Would the partner firms be able to learn more about the critical aspects of SIA’s recipe for sustainable competitive advantage?

SIA in the Future:

Mr. Chew Choong Seng had faced challenges in competitive issues in front of him. How should SIA be distinctive from the copycats who copy and made a great job in terms of cabin service and amenities? What tactics could SIA do from which it separate itself from the copycats? The amount of people who gave their best to built up SIA at the top most level, they were now disgruntled after the salary cut offs and stuff cuts, SIA started to motivate those people to help again to reach SIA up again like its past days. It was the time to face and conclude the threat of low cost competition before it became a larger phenomenon. How should the emergence of low-cost carriers be addressed? SIA is at the cross roads in its history and the next few strategic moves would determine the rise of the best Asian Airline to become a global player commanding the respect of the world’s largest carriers. SIA needed to compete with the low cost competitors and it’s the time to pass away from their distinctive premium approaches to rise again in this newly competitive airline business.

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Singapore International Airlines has been one of the dominant organizations in the airlines business because of its exclusive services and customer offerings. However, SIA is currently faced with a lot of setbacks including the significant increase in operating costs and the reduction in profits that has led to SIA laying off hundreds of works in order to bring the costs down, which in turn has bruised employee morale badly. In addition to that, competitors have been efficient enough to copy their differentiation strategies which have become a cause of huge concern. Moreover, the government has announced that it will sell the 57% stake that it has in the business which can prove to be a big blow for SIA. Finally, the emerging competition from the other Asian airlines.

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Theme

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What strategies should SIA adopt to continue to differentiate itself, to motivate its employees once again and to face the challenges from the low cost competitors?

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MAIN ISSUE

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SWOT analysis is a formal scrutiny of a firm considering its vital advantages and disadvantages arising from both internal and external factors. SWOT can be broken down in to its sub-components which are; internal factors include Strengths and Weaknesses, external factors include Threats and Opportunities. The reason for differentiating internal and external is that internal factors can be changed in favor of the company whereas; the company has no control over the external factors. It is also considered of an indispensable value to the business for various reasons. Most important of all is it provides the company a chance to understand its various capabilities and incapacities at a glance.

To survive in a changing world like today, a company should be equipped with the proper knowledge of changing external environments. Such information will provide the business a scope to prepare itself for proper opportunities and

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SWOT ANALYSIS

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threats

Strengths:

Superior Strategy of Differentiation

Singapore Airlines is one of the most successful airlines of the world. The strategy or the most effective plan working beneath its success is the excellent differentiation strategy of the flight service. The differentiation strategy is crucial for any kind of business. It can give any company the competitive advantage over the competitors. There are no other airlines that concentrated that much hard to differentiate their service among all the competing companies. For the superior service quality all the potential passengers are always willing to travel in this Singapore Airlines. They offer higher passenger service, superior food cuisine, sincere passenger query service, excellent lounge and services during the flight. Besides, at the airport the pre-flight services are also up to the mark. There are so many strategies the follow in the ground and also in the air to retain their position as the

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ENVIRONMENTENVIRONMENT

InternalInternalExternalExternal

StrengthsStrengths WeaknessesWeaknesses OpportunitiesOpportunities

ThreatsThreats

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leader. For this excellent differentiating strategy they have come to the present situation and also will survive and maintain their current growth.

Comparatively Lower Operating Cost

SIA as an Asian carrier has lower operating cost compared to their American and European counterparts. It has higher labor productivity level and lower unit labor cost. Lower operating cost is something mandatory if any company wants to gain a higher profit and want to make their service more customers centered. The operating cost of the company is low that’s why they got the opportunity to put all their effort to up hold their service in the flight and also in maintaining the management of the company. Without substantial amount of low cost the higher profit is not possible at all. So, SIA would not be bale to extend its business in different horizons with commitment of better service. With the opportunity of lower operating cost SIA has used their resource in different sectors of their company to get more flexibility, efficiency and thus has become the hallmark in this industry.

Training and Development Program for the Pilots

SIA usually follow extensive recruitment strategy and selection process. They provide extensive training, which is mainly on-the-job training, and also provide development program for the higher performance of the pilots. Moreover, the Singapore Armed Force trained the pilots regarding the safety issues during the flight time. The pilots have high safety records. This training and development program is great strength of SIA as the pilots is the driving force of the company.

Largest Group of Subsidiaries of Terminal Services

The Singaporean Airlines Terminal Services (SATS) subsidiary is one of the largest in the group of subsidiaries that are owned by SIA. These supplementary working units are giving the extra benefit of providing additional services in various sectors, such as – catering, fleet management, airport services, operational areas etc. It offers a variety of terminal services

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including catering, passengers and baggage handling, and ramp operation. SATS operated operates one of the largest flight kitchens in the world at Changi International Airport, producing an average of 45000 meals everyday. It has an impressive client list that includes British Airways, Quantas, Lufthansa, and Japan Airlines. Due these subsidiaries SIA is I better position in terms of providing services to their huge customers all around the world with coping with the increasing satisfaction and lower-cost business strategy.

Pioneer of Several Unique Services

Unique services give the avenue to attract a large pool of customers to gain their trust and expand the business. SIA is not different from that. They can be considered as the pioneer of some flight services that are still considered as the pioneer service of the company. These services have differentiated the company from other competitors. These sorts of services are sole domain of the company. SIA was among the first to introduce electronic ticketing through website. It has embraced in a variety of forms, such as check-in via e-mail, telephone and fax. By these facilities the flight experience of the passengers remains smooth and the brand image of SIA gets the foundation among the people. Due to these unique services the airlines has been able to survive in this dynamic industry. That’s why it’s one of the strengths of SIA.

Largest and Luxurious Lounge

Another beneficial important strength of SIA is their large luxurious world class lounge. During the flight all the passengers want to relax and to enjoy the flight time in a luxurious lounge. It can give the ultimate satisfaction to the passengers. The Singapore Airlines understand this need of the passengers very well. SIA offers the Silver Kris Lounge to the First class and Raffle Class (Business class) passengers. That lounge is one of the largest and most luxurious airport lounges in the world. They provide various kinds of entertainment facilities to the passengers to make them relax during the flight time. Due to these lounge SIA is attracting new passengers every day and that’s how the business and the profit of SIA is also increasing.

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Extraordinary Fleet and Exceptional Fleet Age

SIA is considered as one of the largest air carriers in the world. It is the largest operator of Boeing 747-400 Mega tops, a roomy aircraft capable of long distance flight. SIA has the highest fleet age with an average of roughly eight years. No other airlines have such a huge fleet like SIA. It’s giving the advantage of flight flexibility and more chance of increasing the in-flight services. Because of the large fleet the company is getting the competitive advantage over the competitors as they have the opportunity to start venturing at different direction at the same time worldwide. So, the profitability is highly affected by the number of fleet that SIA posses at the current situation. More the fleet age is also beneficial because it indicates the reliability of the fleet. The high fleet age means the accident rate is very low. So the passengers are more likely to be attracted towards SIA due to the high fleet as. That’s why it is strength for the company.

Lucrative Entertainment Offering During the Flight

Entertainment is the primary and supreme need of any air passenger. Singapore Airlines is a dynamic airline of commitment towards the passengers with superior service that will differentiate SIA from others. SIA put great emphasis on fleet selection because fleet is the main base upon which the differentiation can be built. SIA is the pioneer in case of entertaining the passengers during the flight. It was the first to offer a personal video screen in every seat. Its in flight entertainment system KrisWorld provides 22 video channel, 12 stereo channel, 10 Nintendo game channel at every seat with Dolby surround system. SIA’s First class cabin is the golden standard in the air industry. Due to these lucrative entertaining offering more and more people are traveling by Singapore Airlines and that how they are meeting up their satisfaction during the air flight. By these services the profitability of SIA has gone high and it has grown to the present situation.

Excellent image and service of Singapore Girls:

Another major strength of SIA is their in flight airhostess service known as Singapore Girls. This has become the brand of the company. It reflects the better business strategy of the management. To distinguish the superior

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service from its competitors’ SIA has started a program named Singapore Girls, which is mainly Singaporean Airhostesses providing high quality in flight service to the passengers. Now a day it has become the embodiment of caring, comfortable, hospitable service.

High experience of the flight personnel

SIA had a long association with the Malaysian Airlines. Most of their current flight operating personnel was working with the company from the very beginning and some of the crews and pilots were also from the Malaysian airlines. The crews have garnered significant flight experience through this association. They used their experience completely in flight management sector to give SIA the cutting age in operation sector. This has enabled the company to experience the smooth operational management and also the satisfaction of the passengers which integrated the beneficial reputation of SIA. The pilots which are the driving force of the company have an impeccable safety records. SIA personnel have crucial operating experience in flight operation which one of the great strengths.

Excellence in Operational Performance

SIA has established an enviable record in terms of its operational performance and its profitability history. It is one of the few Asian airlines that had continuously posted profits even during lean years such as the 1990s economic downturn in Asia. Its return on equity (ROE) averaged roughly 10% over the five year period prior to 1999, while its return on sales was around 14% during the same period. These profitability matrices are far more superior to their competitors and some cases as high as twice or thrice what the rivals are earning. This financial strength of SIA has enabled the company to capitalize more on entertainment and providing superior services for the passengers. No other company has this type of remarkable financial growth in the sector. This financial success of SIA is considered as on of the major strengths as it gave the necessary nutrition during the turbulence period of the industry.

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Strong Commitment of Superior Service

For any kind of success, a strong commitment is must. SIA has their corporate culture of providing the superior services to the passengers. This is their one of the most important strength. It’s kind of internal strength that drives the SIA towards their goal of success in operation. Due to this strong commitment SIA has reached this present situation gaining the trust of the passengers around the world. On the ground SIA had a legendary commitment to superior service. It has built a network of wholly owned subsidiaries and joint ventures to provide operational support in areas such as catering, terminal management and aircraft maintenance. Holding the commitment has their only capital SIA has ventured all the skies around the world to become the superior in the industry of airlines. Other competitors had a hard to compete with SIA because their lack of commitment in providing service.

Weaknesses:

Duplication of Services by the Competitors

Business strategy is the uniqueness of any company that gives the success to that company. At the early stage of operation the services of the airline was pioneer and unique but with time it has lost it’s potentiality to attract the customers. The main problem with the strategy is that SIA’s competitors can easily copy them. For that reason now the company has a very narrow path of strategy to differentiating their service from their rivals. The competitors are narrowing down the market of the Singapore Airlines as they are attracting the passengers by similar sorts of services. The company is at the moment to loss its credibility in the industry. The rivals companies are easily adopting

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their strategies and give a hard time SIA to change its business strategy as soon as possible. This frequent strategy change is coming up with lots of expenses so the profitability of the company is being hampered. SIA was pioneer in most if the areas regarding service but now they have lost that pride.

Comparatively High Fare in Certain Flight Service

High fare is one of the great weaknesses of the company. The industry is heavily depended on the tradition of low cost flight. All the companies are trying to minimize their operating cost so that then can charge lower fare and attract more customers. But Singapore Airline is totally different. Their fare of the first class cabin is comparatively higher than other similar kind of flights. That’s why they are losing some European passengers while the rival airlines are capitalizing on their low fare strategy. SIA First Class cabin is the golden standard in the industry but the main fact is that they charge more compare to their competitors like Thai Airways, Qantas, Lufthansa, and Air New Zealand etc. who offer similar kind of services in flight and also in the airport. That’s why higher fare of first class cabin is a major weakness of SIA. It’s pulling out the business of the company.

Problems in Regard to Alliances

Joining a network amounted to delegating some aspects of brand management to the collective groups of companies as that the identity of the network would transcend the individual identities of the members. The loss of control over some key decisions, such as scheduling and flight frequency, could also be a challenge in the future. It also raises questions about the limitability of the core competences. It will be very difficult for other network carriers to rise to the levels of SIA‘s hallmark service standards. It is quite likely that the brand image that SIA had so carefully nourished could be tarnished, especially among its loyal first class and business class passengers.

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Lack of Domestic Flights

The Singapore Airlines has spread its wings in different skies of the world. It has its flights operating in different regions with different association and also with other airlines. But the company has its weakness in providing domestic flights. SIA does not offer any domestic flights, which have narrowed their market. It had a long association with Malaysian Airlines. When they came apart, Malaysian Airlines focused on domestic market while SIA focused on International market. But now Malaysian Airlines is also competing with SIA. They are targeting all the potential market of the world but they are ignoring their own domestic market. From this domestic/local market other airlines companies are earning a significant portion of their total earning. SIA is ignoring the local possibility if earning money while venturing in different regions at loss. This ignorance shows the strategic inefficiency and that’s why it’s a weakness of the SIA.

Limited Route in United States and Europe

Singapore Airlines is considered as world’s one of the famous airlines. SIA has limited routes compared to the other competing airlines. More they do not have an extensive network in the United States and also in the European region. They are mainly concentrating in some of the certain regions of Europe and also in some of the African regions and also in some Australian regions. But the passengers from United States and Europe are comparatively higher than other parts of the world. So, SIA is losing money as they have established their routes in those regions. SIA is big company with lots of potentiality but their limited route in different regions is pulling its leg

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from going to the top position in the airlines industry. SIA is not in the position to venture in all parts due to limited routes and that’s why it’s weakness of the company.

Limited Automatic Check-in Service

Touch technology is a great way of gaining the competitive advantage and to facilitate the business. But when the technology used in a limited way it becomes a shortfall. SIA introduced automated check-in system in some certain flights, not in all flights. So there is still difficulties regarding check-in process in others flights. Due to this problem the fruitfulness of the automated check-in system is not fully realized. The system is used in certain flights so in flights the passengers are still facing with great problems regarding the check-in system. It’s losing the passengers so losing the market control as well. Though SIA was the first to introduce this system but now a day where all the airlines are introducing it, than SIA the inventor is of that system is not using that in every flight.

Equity Partnership with Air New Zealand

In balancing growth potential against the ability to control the alliance, SIA acquired an 8.3% equity stake in air new Zealand to cement a long partnership with the New Zealand carrier. Since Air New Zealand already owned 50% of Ansett Airways, SIA would have the benefit of the additional alliances. It was expected that these moves would strengthen SIA’s position in the Australasian market that is growing rapidly. This grand design crumbled when air new Zealand’s fortunes started turning sour. The government of New Zealand injected capital to shore up the company, but this had the negative effect of diluting SIA’s ownership position. SIA was left with a sizeable loss

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and had to beat a hasty retreat from this initial foray to establish control of the key Australasian routes.

Inferior Flight Service in Economic Class

One of the major weaknesses of SIA is their inferior service in some flight classes. The airline has the commitment to provide superior service in all the flight classes but it’s only concentrating on the high fared class where the passengers are paying more. For this the company is losing its costly earned reputation. SIA has established their first class cabin service as the world’s best but their services in Raffle class (Business) and Economic class is not up the satisfactory level. People want to travel with SIA because of their First class service but the other class has failed to attract passengers. Comparing the number of passengers in those classes, the people are more willing to travel in economic or business class. So, poor service in those classes is obviously not beneficial for SIA. That’s why it’s a major weakness of the company.

High Salary of the Official Personnel

The information that is provided in the appendix part of the case is very much crucial. If we compare the administrative salary of SIA with other competing airlines, we would see that the salary expense of Singapore Airlines is quite high comparatively. SIA shows a signal of inefficiency in its operational areas. Because after analyzing the Annual Staff Cost Pert Employee, it reveals that SIA has a pretty high annual staff cost compared to their other competitors such as – Malaysian Airlines, Thai Airlines, Air New Zealand, and Korean

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Airlines. This is considered as a weakness because to this high administrative salary cost the profit margin of the company is being minimized where the competitors are earning more giving les effort.

High Expense of the Expatriate Pilots and Flight Staffs

All the pilots and flighty management staffs are very much professional. The company provides them with on job training facility. Most of the pilots expatriate who are coming from some other foreign companies. These expatriates are costly for the Singapore Airlines as they have to provide some extra facility to them, such as – housing, school of children, travel etc. these extra expenses are cutting the profit margin of the company. For these reason this is a weakness for SIA.

Opportunities:

The Open Skies Agreement is an opportunity:

This is a new occurrence where two or more countries make a deal to do business together. In this deal they come to a compromise where the skies of the each country will remain open for each other. This is known as “Open sky”. Under this treaty countries who will sign will be able to land and take off their aircrafts from any of the airport of the corresponding countries.

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Open sky agreement between USA and Singapore is a massive opportunity for SIA. USA is a vast country where millions of opportunity exists. Moreover, aviation industry is not very lively there though there are still some competitors are playing vital role like Virgin, Delta airlines and of course Southwest airlines. But SIA is getting the biggest opportunity thought the bilateral agreement between USA and Singapore government. Now they are going to land and take-off their aircraft in USA. They can go to any city or state in USA. There are a huge number of people living in different states who were not served before by SIA. Now this enormous market is going to be opened in front of SIA. The people from USA had to depend on other airlines or some low cost airlines like Southwest previously. The outstanding service of SIA will certainly attract the luxurious people of USA. Furthermore, SIA has lot of extra facilities, which other existing airlines in USA don’t offer generally. So, SIA has a very good prospect in USA market.

The Alliance Network Which Is Yet To Serve by the singapore airlines:

This is another good option for SIA to leverage their business in aviation industry. Forming alliance is a new phenomenon in this sector that allows any airlines to tie up with other airlines and share their common values and work under a single alliance brand. For an example, Star alliance, this covers a lot of cities of the world, even the continents. For a single airline it’s really difficult to cover a large area consisting different routes simultaneously.

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Building alliance is a massive task but it opens more opportunity for any individual airliner. An individual airliner sometimes faces some difficulties with various types of problems. It might be technical, operational, and strategic and so on. It’s very tough to solve those problems lacks lonely. Sometimes it’s not possible to operate flights on some routes due to operational cost though it might have prospects as well. Financial constraints most of the time create headache as well. Forming alliance is a good solution for it where everyone works under same umbrella. Working under an alliance will give SIA a unique opportunity to work with other friendly airlines and would able them to reach to other different destinations in Europe and USA, the zones that are yet to be served by SIA. This will definitely increase the profitability margin. SIA will be able to reach to cover up their loses on different zones by forming alliances with its friendly companies. It will help them to share profit as well because some people might not travel by SIA but they may travel through one of the airlines of the alliance.

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Threats:

The SARS, causing the Singapore International Airlines (SIA) to downsize the operating costs:

All of a sudden the SARS (Severe Acute Respiratory Syndrome) has fall over the countries like Singapore, Hong Kong, China and the neighboring countries. This syndrome has caused destruction on the passenger travel. Due to this issue, the cost of Singapore International Airlines was hampered.

The reasons of SARS obstructing the cost of SIA are that for the SARS the passenger traffic got hanged and due to this action the profit earning capacity of SIA slowed down. As a result, to earn profit the company has to cut its operating cost by outsourcing its employees. Thus the SARS became a major threat to the company.

The Iraq war is another gadget to cut back Singapore International Airlines’ profit:

After the sudden attack of SARS, another danger that was waiting for SIA is the Iraq war. The Iraq war has caused the important Middle Eastern customers to reduce in a very drastic number. This has made the SIA to face losses in their business operation.

The Iraq war has sourced the SIA to slow down its operation, which has directly affected its profit sector. Due to this reason SIA had to decrease its operation cost by lying off its employees. The war of Iraq became very important issues under threat for SIA.

The termination of the employees and the decreasing salaries are threats for the Singapore International Airlines:

The SARS and the Iraq war have caused the SIA to generate less profit. To balance this situation, the SIA has terminated more than 400 employees, and additionally 156 cabin crews were laid off. 22 % cuts were announced on the average salary of the senior managements and a negotiation was taking place between the SIA and the cabin and ground staff about the wage cut.

The lay off decision and the wage cut off decision had lead to de-motivation of the employees. Due to this the existing workers has lost the interest to work with full attention, thus the quality and the good remark of SIA will be ruined, and their overall image will be destroyed. So, the termination of employees

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and their salary cut off will be a treat in terms of quality maintenance of the organization.

The risk of competitors copies their innovated products:

SIA was pioneer in innovating some of the remarkable services like offering food for the economy class, some innovative entertainment for individual cabins and ensnaring of lavishness. All these facilities were copied by the competitors of SIA like the Thai Airways, Qatar Airways, and Cathay Airways. Not only the innovative ideas, the competitors of SIA also duplicated the issues like the recruiting system, the flight- in service and the fleet management.

The problems that have arrived from these issues are that the SIA has invested lots of resources, technology and capital to imply all these innovative ideas. As a result their cost of production is pretty much higher. On the other hand, SIA’s competitors have just copied those, so they did not require any extra developing costs, thus their profit margin is lower than the SIA. So it will be easier for them to incur profit, hence easier to survive in the market compare to SIA.

The pressure of low cost carriers was emerging:

The less expensive flights were starting to make their mark left in Asia for the first time. Some local firms like Air Asia and Virgin Blue were inclining up to offer regional low-cost services along sectors that SIA had dictated for a long time. The Government of Singapore had recently authorized a new low-cost start up to be based in Changi, the heart of SIA’s empire. The government had also suggested that it might sell its 57% stake in SIA.

The proposed suggestion of government had made the SIA to compete with the low cost airways. Now SIA needs to consider the giants of the industry but also the up coming low budgeted airlines.

Free-skies approach created more threats for the Singapore International Airways:

Although SIA was the only national airlines of Singapore, the government was reluctant to pay any subsidy or provide any protection to the organization. Not only this, they were ask to run with their own resources ingenuity. Moreover the sky over Singapore was made free for all foreign flag carriers.

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This issue put SIA under lots of travel, as they now need to compete with international market along with the fact that they do not have the support of their government. This meant keen competition for SIA right from the start.

The competitors are making alliances:

There are some potential risks on getting attached with any airline alliance though it is beneficial for some cases. First of all, any individual airline may have poor standard on safety record, sometimes they might have poor level on service delivery or employees’ performances standard are not up to the mark. So the poor performance of one member of the alliance may effect on the reputation on overall alliance. Secondly, some of the alliance member may run their business in parallel with other airliners that might be rival group. It would be very vulnerable for the alliance, as it would directly impact on the business.

SIA has a very fresh and prolonged reputation on airline industry where very few airlines of the world can dare to reach. But due to turbulent nature of the airline industry SIA is getting forced to tie up with other airlines. If they do this and get a partner with poor performance then certainly who are the regular passengers of SIA will not show interest to board any of the aircraft of the alliance. These will seriously damage the reputation of SIA. Due to the fault of one airline the whole alliance including the SIA will suffer. Side business of its partner with rivalry group also may jeopardize the business position of SIA as well. A large chunk of passengers may migrate to different alliance or other member of the SIA’s alliance who are getting benefited in a different way by depriving SIA. So, both ways there are threats for Singapore airlines if they go under alliance.

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The effectiveness of HR Department is critical for any organization’s objective to accomplish market competence through competitive advantage over the other organizations. HR issues refer to policies, practices and employees attitudes toward their jobs. Analyzing and designing work, determining human resource needs, hiring effective employees, recruiting employees for specific position, train the hired employees for efficient working, rewarding employees, evaluating employees performance and giving them feedback, and also creating positive work environment all of these things are HR issues. The most important resources of any organization are its HR resources.

HR is also important for to maintain good quality for long period and it also explain how a company can retain good employee by giving incentives, bonuses, reward, and great compensation to sustain its quality service. This can be better explained by the fact when, HR handles the execution of most firms downsizing and restructuring strategies. HR manager can also help in the formulating of strategy, which requires the identification of the strengths, weaknesses, external opportunities and many more.

There are some of the human resources issues of Singapore International Airlines (SIA) are given as bellows:

Too many expatriate employees in the organization:

The cabin crew employed in Singapore International Airlines hails from many ethnicities within the South/Southeast Asian region. Besides Singapore itself, the other countries are mainly Malaysia, Japan, Korea, India, Taiwan and Indonesia. However, the pool of available talents within Singapore is insufficient to draw from for long. Given the fact that SIA had some of the lowest labor costs among leading carriers, this home-based cost advantage had proven to be a critical ingredient in the success of the company. Any fall-off in the availability of local talent could adversely affect the operating costs, especially if it necessitated the recruitment of expatriate personnel. Expatriate employees are generally paid much higher compensation compared to local people. Not only is their base pay higher than those of local employees, they have to be paid many additional benefits like housing allowance, schooling expenses for their children, travel expenses, etc. Compensating expatriate

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personnel can only add to the rising costs experienced by Singapore International Airlines.

SIA should have friendly relationship with union:

When SARS broke out SIA discharged over 400 employees. In the meantime, Iraq war broke out which made the situation worse. To cut operating cost they cut the salary of senior managers, cabin and ground stuff. According to the union of SIA, this decision of SIA’s management was unfair. The union felt SIA has acted as skeptical. SIA should be more careful dealing with this problem and should create a friendly relationship with union. SIA should try to be fair to its union as they have to remember employees are a great resource of a company.

Limited Number of routes of SIA:

Singapore Airlines is not offering the necessary number of domestic flights. This has narrowed their target market as well as caused their competitors to come into Singapore’s domestic market. From this domestic/local market other airlines companies are earning profits, which should have ideally been earned by Singapore Airlines itself. Singapore Airlines might consider itself loosing out on some easily earned profits since it is the national flag carrier. Considering this, it is reasonable to assume that if Singapore Airlines broke into the domestic market with flights, it would be earning more than others since it already has consumer trust and preference engraved in its name.

Too many expatriate employees in the organization:

The cabin crew employed in Singapore International Airlines hails from many ethnicities within the South/Southeast Asian region. Besides Singapore itself, the other countries are mainly Malaysia, Japan, Korea, India, Taiwan and Indonesia. However, the pool of available talents within Singapore is insufficient to draw from for long. Given the fact that SIA had some of the

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lowest labor costs among leading carriers, this home-based cost advantage had proven to be a critical ingredient in the success of the company. Any fall-off in the availability of local talent could adversely affect the operating costs, especially if it necessitated the recruitment of expatriate personnel. Expatriate employees are generally paid much higher compensation compared to local people. Not only is their base pay higher than those of local employees, they have to be paid many additional benefits like housing allowance, schooling expenses for their children, travel expenses, etc. Compensating expatriate personnel can only add to the rising costs experienced by Singapore International Airlines.

Effects of Downsizing on Customer Service

We have seen that Singapore Airlines has faced a severe episode of downsizing in June 2003. It lay off 400 of its employees and an additional 156 members of its cabin crew. Along with this, Singapore Airlines also had to cut down 22% from its management salary and also proposed further wage cuts from its cabin and ground staff. This undoubtedly suggests that Singapore Airlines may not be able to uphold its standard of service due to this severe downsizing. It is obvious that a minimum level of manpower is required to provide a certain level of quality in an airlines service. It has been evident in the past that the services provided by Singapore Airlines is exclusive and of a higher standard that other airlines. In a situation like this it may mean that Singapore airlines will be under threat of loosing the exclusiveness in its services.

Gender discrimination is evident in the organization:

Pay equity is one of the major concepts of Human Resource Management. The pay must be equal between both genders. Same must happen to in terms of contracts. SIA took advantage of local labor laws and practices in staffing cabin positions. About 60% of the cabin staff was female and it was expected that most of them would only fly for five or ten years. But the problem is male cabin crew members were employed as regular employees. On the other hand female crew had to work through a system of five-year renewable contracts. Only five such contract renewals were permitted. It shows little decimation on women. They must hire women crew on regular basis too. If they don’t do so they should expand the contract time to five years to at least 7-8 years. Not only will this bring some equity between the two genders, it will reduce some costs of the company in the long run

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In the case of SIA, we have seen that the company doesn’t have many problems that can push them back. It has reached its highest pick and the goal has been achieved. The employee satisfaction is highest, the customers are happy, the organization is earning a huge amount of money and every thing is going fine with it. But recently, Singapore International Airlines has been affected by various external effects that have led to fallouts. Firstly, the breakout of SARS has had sever repercussions on the airline business of various Asian countries. Singapore Airlines had to go through major re-adjustments in its operations to cope with the decimated passenger traffic in its prime Middle East markets. It had to lay off 400 employees along with 156 cabin crew staff and senior management salary was cut down by 22% on the average.

Also, the fact that Singapore Airlines was in fact being largely supported and financed by its government also caused a lot of discrepancies and created conflict between the executive decision makers of the company and the ones being laid off. People were under the impression that Singapore Airlines was gaining unfair advantage over the other corporations of Singapore since it received full backing of its government even during taking the critical decision of laying off such a large number of employees. For that reason all the recommendation should be based on it, which we have been mentioned below.

1. Duplication of Services by the Competitors

Duplication of Singapore Airline’s innovative services and ideas has been a major problem for Singapore Airlines. Singapore Airlines has been the leader in bringing numerous and successful new ideas of gaining passenger satisfaction. They offer a choice of meals to their economy class passengers,

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provide extensive video and audio entertainment of the highest quality and facilities that were absent till they promoted the idea. Even though this makes Singapore Airlines the market leader in bringing new and innovative ideas into the market there lies a problem of duplication. Here, it is seen that competitors of Singapore Airlines are quick to copy or imitate the ideas as their own. Even though Singapore Airlines was responsible for the formulation of many such ideas it looses its credibility when others copy from it before Singapore Airlines can gain the exclusivity for having it.

Gain Copyright of Individual Services

Before breaking into the market with a new idea, Singapore Airlines may choose to go to the high authorities and legally enlist its services as different individual commodities. Hence it can gain exclusive copyright over that particular service and will be the only one legally allowed to provide that service in the industry. For a certain period of time, Singapore Airlines may gain exclusive permission to do this and after the expiration of that time period, it may even get royalties from the companies who want to copy or adopt that idea.

Gain Recognition and Possible Revenues from Ideas

This way, Singapore Airlines will be recognized as the founder of its unique ideas. Since the service that Singapore Airlines comes up with will be treated as an individual commodity and it will be Singapore Airline’s sole registered property. Through this method the ideas of Singapore Airlines will not only stay its own, but others who are willing to adopt those ideas will also compensate Singapore Airlines for it. Singapore Airlines will not only retain its credibility for coming up with its ideas, it will also stand a chance to earn revenue out of it. Inversely, Singapore Airlines can also counter this problem by rearranging its resources in a way so that it does not dedicate too much resource behind coming up with, and implementing new ideas.

2. Comparatively high fare in certain flight service

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Asia had been slow in responding to the phenomena of low cost carriers. Meanwhile however, the industry has become heavily dependent on the tradition of low cost flight. All the companies are trying to minimize their operating cost so that then can charge lower fare and attract more customers. Despite all this, it is seen that fare of Singapore Airline’s first class cabin is comparatively higher than other similar kind of flights. This allows the rival airlines to capitalize on their low fare strategy and gain the upper hand on Singapore Airlines.

Change Corporate Strategy and Make it More Compatible With the Demands in the Market

There are various ways by which Singapore Airlines can counter this problem. Firstly, it may choose to alter its strategy to suit the market norms better. It may change its strategy to one, which concentrates on providing cost effective and affordable traveling. This would be a major change in the company’s overall strategy. Hence, the company has to go through major restructuring and changes in its operational objectives and strategies.

This is likely to be successful in the long run since it involves tuning the operation style of Singapore Airlines with the trends that has been set in the market. Even though Asia may have been late in coming up with the idea of low cost carriers, it may still very well adopt this concept since the trend has already been set and established in the market.

Upgrade to an Exclusive Level and Shift the Target Market

Also, Singapore Airlines considering taking its services to an exclusive level. Here, passengers will be able to differentiate largely between the services provided by Singapore Airlines and other airlines. In this way Singapore Airways will become a product for passengers who are looking for exclusive and luxurious flights only. This may not seem to be a feasible for a widely recognized airline but given a certain amount of time, Singapore Airlines will

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be able to establish itself as an exclusive service provider and become popular among a different class of passengers.

This recommendation, however involves a change in the target market for Singapore Airlines. While the market is aiming to attract travelers who are willing to travel cheaply, by considering this strategy, Singapore Airlines will be setting itself aside from other airlines as being different and special in various ways. Though the target market of may shift, in time Singapore Airlines may find it to be a profitable concept.

3. Limited Number of Routes of SIA

Solve the Lack of Domestic Flights

Singapore Airlines is not offering the necessary number of domestic flights. This has narrowed their target market as well as caused their competitors to come into Singapore’s domestic market. From this domestic/local market other airlines companies are earning profits, which should have ideally been earned by Singapore Airlines itself. Singapore Airlines might consider itself loosing out on some easily earned profits since it is the national flag carrier. Considering this, it is reasonable to assume that if Singapore Airlines broke into the domestic market with flights, it would be earning more than others since it already has consumer trust and preference engraved in its name.

In order to carry this out, Singapore Airlines may have to come up with a new plan of breaking into the market. It might think of possibly including a few new planes for domestic flights and/or re-organize its flight plans to accommodate the extra administrative duties that will come along with it. It may have to design these flights to be specialized in providing domestic services so that it can be differentiated as being the country’s own so that people are drawn to choose Singapore Airlines over other available airlines.

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This might prove to be a beneficial avenue for Singapore Airlines since it would be foolish for a company, which possesses the capacity to provide a service and make money out of it, to lay dormant and let its competitors get the bigger share of the profit. Being the national flag carrier, Singapore Airlines can almost take for granted that domestic travelers (mostly consisting of people from Singaporean nationality) will choose Singapore Airlines over other airlines. Hence, this recommendations is more likely to be successful than not.

Operate More Routes in United States and Europe Regions

SIA has limited routes compared to the other competing airlines. This is more so in terms of having an extensive network in the United States and the European region. They tend to concentrate mainly on regions of Europe, some regions of Africa, and also in some Australian regions. But the number of passengers from United States and Europe are comparatively more frequent air travelers than the ones in other parts of the world. This means that Singapore Airlines is loosing out on profits from a significant market, which includes frequent travelers.

Here we recommend that Singapore Airlines make more flights available to and from the Europe and US regions. Similar restructuring in plans and strategies need to take place in this case. Singapore Airlines can make use of the recently adopted Free Skies policy and take its flights to the abovementioned locations and create a market there. This may prove to be successful since it is evident that the market of Europe and USA is not yet saturated by the airlines that already operate in those regions. Hence it would only be wise for Singapore Airlines to carry out this new venture.

4. High Expenses of Official Personnel, Expatriate Pilots and Flight Staff

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If we compare the administrative salary of SIA with other competing airlines, we would see that the salary expense of Singapore Airlines is quite high. Singapore Airlines show a signal of inefficiency in its operational areas. SIA has a pretty high annual staff cost compared to its other competitors. Most of the pilots’ expatriates come from foreign companies. These expatriates are costly for Singapore Airlines, as they have to provide some extra facility to them. These extra expenses are cutting the profit margin of the company since training such large numbers of employees involves cost the airlines may not be able to bear.

Form Independent Training Centers for Pilots and Flight Staff

Singapore Airlines may chose to solve this problem by decreasing the amount of resources they spend behind training and maintaining these expatriates. They may set a requirement that states that in order to be eligible to become an expatriate for Singapore Airlines an individual will need to be pre-trained in the several aspects of working here. Inversely, they might even set up training centers, which would provide training to the potential employees of any other airlines along with those who seek employment in Singapore Airlines. This in effect would mean that Singapore Airlines would be setting up a training center for pilots and staff who seek employment in any airlines of the same standard. This would ensure that Singapore Airlines would still be giving training to its employees but instead of just investing behind their training, they would in effect also be earning revenue from those who seek employment in other airlines but have come to Singapore Airlines training center for training. This would substantially cut down the cost for Singapore Airlines.

This recommendation will be beneficial to a great extent for Singapore Airlines. By adopting this method, Singapore Airlines would in effect be creating an organization within an organization, which would be providing airline-training facilities to all who are willing. In addition to this Singapore Airlines will be able to provide training to the employees it will be recruiting in the future. This training will be coming at a much lesser cost for the company since they will be trained in a facility the company itself owns. This may also

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help Singapore Airlines in recruiting staff as well since there will be outsiders who may come to the training center randomly.

5. Effects of Downsizing on Customer Service

We have seen that Singapore Airlines has faced a severe episode of downsizing in June 2003. It lay off 400 of its employees and an additional 156 members of its cabin crew. This was mainly due to the outbreak of SARS and also other external market factors that caused passenger traffic to fall drastically. Along with this, Singapore Airlines also had to cut down 22% from its management salary and also proposed further wage cuts from its cabin and ground staff. This undoubtedly suggests that Singapore Airlines may not be able to uphold its standard of service due to this severe downsizing. It is obvious that a minimum level of manpower is required to provide a certain level of quality in an airlines service. It has been evident in the past that the services provided by Singapore Airlines is exclusive and of a higher standard that other airlines. To maintain this high a standard of services, Singapore Airlines will need all the help it can get from its work force. In a situation like this it may mean that Singapore airlines will be under threat of loosing the exclusiveness in its services.

Increase Employee Efficiency and Empowerment

In order to counter this, we recommend that Singapore Airlines try to make the best out of the employees that it has been left with. It may choose to do some restructuring in its style of operation. It may re-evaluate the number of employees it needs on the ground and the number of employees it needs in its cabin crew. It may choose to take out employees out from its less important posts and concentrate on the more important ones that are directly related to providing customer service. On the ground, a major part of any airlines service is its ticket selling facilities. Selecting expert and qualified personnel from its now-limited workforce would assure that the customers would be dealing with the best of all the ground staff that is available to the

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airline. Similarly, when it comes to cabin crew, the airlines should make sure that it only sends up the best of the available crew on its flight and stresses on the importance of providing quality service and retaining its passengers.

By concentrating on this point, it may be able to uphold the quality of its service since these are the areas where the company and its customers interact directly rather than through a third party.

6. Policies of the Singapore Government

The Singapore government has made it clear to Singapore Airlines that although it is one of Singapore Airline’s majority shareholders; it is up to the company itself to keep itself successful and profitable. The prime minister of Singapore Mr. Lee Kuan Yew had stated very bluntly “The world does not owe Singapore a living”. This states the fact that the government of Singapore will not be subsidizing much for any of its local companies. It wants its industries to survive and thrive on their own with no help or subsidies from the government. The government is allowing free competition within the economy, which is proving to give Singapore Airlines less than it probably deserves. Also, there has been a recent development in the concept of “free skies” in Singapore. This essentially means that any airline of any nationality will be able to land in the airports of Singapore. Although the reverse is also true for Singapore, this has turned the airways of Singapore into a free airspace that anyone can use. This has proven to cause substantial stress for Singapore Airlines since it now has to compete extensively with free flying competitor airlines.

Appeal to the Government

In order to sort out these issues, Singapore Airlines may bring a proposal formally to the Singaporean government. The proposal should include an appeal for diplomatic and perhaps financial aid. Even thought the government maintains a stance of not giving financial aid to its companies, it still may provide Singapore Airlines with logistical and diplomatic support. This way

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Singapore Airlines will be benefited by having the backing of its government, and in case of any disputes with any foreign nationalities, it will be able to have a solid backing which will put Singapore Airlines in a more formidable position.

This method is likely to be successful even though the subsidies from the government may be a bit far fetched. Getting logistical and political backing from the government can also be a huge advantage for Singapore Airlines. There are many airlines, which do not have such a backing from their respective governments. Furthermore, considering the strong stance of the government against subsidizing its companies, this proposal might seem to be the next best option for the government. Compared to those, Singapore Airlines will have the upper hand.

7. Ever Growing Customer Demand

SIA has an ever-growing customer demand. The airlines industry is a highly competitive one and everyday competitors are coming up with their new and innovative form of customer services. To be a leader and hold on to the position, the SIA has to make sure that their services differ from others in all the aspects. Because, whenever someone comes up with a new idea, people tend to fall for that. To be close to the customers and make them brand loyal, they has to do to following things.

Attain Information Through Market Surveys

In order to attain information about the demands of the customer, Singapore Airlines may have to carry out extensive research and conduct surveys. This may include conducting interviews of regular passengers, giving them questionnaires. There is also scope of finding out more through the study of the commodities that are in demand in the market which are not directly related to the airline business. A Singapore Airlines may find that a certain

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commodity is of a high demand in the market, in which case it may consider the idea of offering a small package of that commodity during its flights. The research may suggest that commodities such as Internet, video games and fast food. In that case, Singapore Airlines might find a way to include these items among one of its offers during flight.

Meet Customer Demand

It has been seen that the customer demands in the airline business is very critical. Under the free skies policy, an airline can land on a foreign airport depending solely on the free-market demands. This means that where there is demand for an airline, it will be able to go to that location without any extensive barriers. Thus we can assess the importance of customer demands in this business.

These recommendations may prove beneficial for the company since this will ensure the proper orientation of Singapore Airline’s service with the demands of the market. This would help the airlines gain popularity and increase its general demand.

8. Effects of Alliances, Partnerships and Competition

It has been seen in the recent years that the formation of alliances has become a major trend in the airline business. However, despite this fact, Virgin airways have refused to join the Star Alliance. Singapore Airlines has been a part of this alliance and was counting heavily on Virgin joining it. This has brought about several setbacks for Singapore Airlines. Along with this it has also been seen that Singapore Airlines has was considering an acquisition with Virgin Airways. Here, lies a problem of having a big difference in the managerial styles of the two companies. Furthermore, the equity partnership that was taking place among Singapore Airlines and Air New Zealand did not prove to be successful to the extent that was expected. Also,

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the coming up of Air Asia as a significant competitor of Singapore Airlines has made it tougher for Singapore Airlines to make profit and expand. To counter this problem, Singapore Airlines has to take drastic measures to become more competitive.

Conduct a Feasibility Study

The necessity of a feasibility study is evident while considering an acquisition. Singapore Airlines has to determine the compatibility of the company it wants to acquire before it can go through with the acquisition. Whether or not the management and operation styles are similar or adjustable to suit that of Singapore Airlines has to be forecasted. Only when the two involved companies are seen to be complimentary to each other, should the acquisition be considered.

This recommendation is likely to succeed since it has been tried and tested in the past. It has been seen that unless two companies are similar in some aspects and the acquisition can benefit both parties instead of conflicting with each other, one should not carry out an acquisition. This may prove to be an important determinant for Singapore Airline’s success.

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No recommendation is adequate without implementation. A perfect planning is never of any use if there is no execution. So, implementing the parts that have been recommended is the vital most part of any given situation. Without the in the implementation part, we can never achieve our goals, so implementation in the important most part to proceed. In this part of our paper, we would like to talk about the implementations that should be done for the recommendation, in order to fulfill the main issue of the case.

Over the period of time, the Singapore International Airlines has done a tremendous good job. This is mainly due to the dedication of its employees and the strategies of the organization. But recently, Singapore International Airlines has been affected by various external effects that have led to a fall. Firstly, the breakout of SARS has had sever repercussions on the airline business of various Asian countries. Singapore Airlines had to go through major re-adjustments in its operations to cope with the decimated passenger traffic in its prime Middle East markets. It had to lay off 400 employees along with 156 cabin crew staff and senior management salary was cut down by 22% on the average. Also, the fact that Singapore Airlines was in fact being largely supported and financed by its government also caused a lot of discrepancies and created conflict between the executive decision makers of the company and the ones being laid off.

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Planning and processing according to the planning is a vital thing to maintain for any organization. And planning can never be done if there is no goal. Goal must be followed by perfectly; it will never be possible for the organization to be successful by doing a planning and acting through it. To be successful in the planning part the goal must be defined; otherwise it will never be possible for any given organization to achieve its goal. Here is some of the proper planning that would help the Singapore International Airlines to achieve its goal.

1. The competitors of SIA on a regular basis copy most of the innovative and attractive services

SIA Should Gain Copyright of Certain Services and Get Recognition and Possible Revenues from these Ideas

Why This Implementation required?

Business strategy is the uniqueness of any company that gives the success to that company. What we can see that there is a problem with the strategy is that SIA’s competitors can easily copy them. For that before breaking into the market with a new idea, Singapore Airlines may choose to go to the high authorities and legally enlist its services as different individual commodities.

They should be recognized as the founder of its unique ideas. It should be SIA’s sole registered property. Hence it can gain exclusive copyright over that particular service and will be the only one legally allowed to provide that service in the industry. For a certain period of time, Singapore Airlines should gain exclusive permission to do this and after the expiration of that time period, it should get royalties from the companies who want to copy or adopt that idea. SIA should stand a chance to earn revenue out of it.

How should the implementation take place?

If Singapore Airlines can gain the permission to copyright of their certain services strategy then competitors have to think twice to copy their strategy in their business. So the SIA’s services become unique and it’ll be

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hard for the competitors to defeat with new strategy. By consulting with the policy makers SIA can make their services copyrighted and also in the future if they provide any unique services they should copyright that so that no other competitors can took that idea and implement that.

By whom should this be implemented?

Policy makers of SIA: The policy makers of SIA should be highly concerned about the duplication and as soon as the SIA developers invent some new services, they must make sure that those are copyright protected and law forbids any duplication.

Legal authorities: Legal authorities should also help SIA in the copyright process. They should also make sure that any other competitors do not copy these services and anybody violating the law, gets punished.

By when should the implementation take place?

The establishment of copyright system is not minor issue and will give rise to a lot of rethought and debates regarding this decision. It can have long term strategic implications for Singapore Airlines therefore adequate time should be allocated to the implementation of this strategy. It is estimated that the establishment of a strong and proficient copyright system could take anything from 6 to 12 months. Moreover, sufficient time should also be given so that the overall operations of the organization can be properly adjusted.

Expected results

If SIA can ensure the copyright protection and get all of its new services patented, it will be able to make a brand image in the market. Moreover the customers will be attracted to fly with SIA as they will be assured with the modern and unique services. In the same time, this thing will

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encourage developers to come up with the new ideas of customer services, as they will get the appreciation and fame for doing this. In this way, SIA can continue with an ever-developing process of unique customer service.

2. SIA has a Very High Fare in Certain Flight Service Compared to Other Operators

SIA should Change its Corporate Strategy and Making it More Compatible with the Demands in the Market by Upgrading to an Exclusive Level and Shifting the Target Market

Why this implementation required?

To counter this problem SIA should choose to alter its strategy to suit the market norms better. It should change its strategy to one, which concentrates on providing cost effective and affordable traveling. Hence, the company has to go through major restructuring and changes in its operational objectives and strategies. This is likely to be successful in the long run since it involves tuning the operation style of Singapore Airlines with the trends that has been set in the market. Even though Air Asia may have been late in coming up with the idea of low cost carriers, it may still very well adopt this concept since the trend has already been set and established in the market.

What is to be implemented?

By considering SIA’s services to an exclusive level; passengers will be able to differentiate largely between the services provided by SIA and other airlines, especially for those, who are looking for exclusive and luxurious flights only. This may not seem to be a feasible for a widely recognized airline but given a certain amount of time, SIA will be able to establish itself as an exclusive service provider and become popular among a different class of passengers. To implement this, SIA must make a change in the target market.

How should the implementation take place?

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Changing the services & target market efficiently passengers can easily differentiate the services between SIA and other airlines competitors. While the market is aiming to attract travelers who are willing to travel cheaply, Singapore Airlines should set itself aside from other airlines as being different and special in various ways. Though the target market may shift, in time Singapore Airlines may find it to be a profitable concept.

By whom it should be implemented?

The policy makers: The policy makers of SIA are the main persons who take care of all these matters and they are the right persons who know that where should SIA move its target market. They are the persons who should be concerned about where SIA is moving in regards to its target customer and what policies should be taken over.

The customers: They are also an important element for fulfilling this purpose. SIA’s target market includes those persons who are not use to look at the price but definitely at the service. And that is what SIA wishes to achieve.

Where it would be implemented?

Place is particularly very important factor for the SIA as they operate beyond its own country border. We strongly recommend the company to develop this strategy in Singapore at their company main office at first as soon as possible.

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Bye when should the implementation take place?

Time is another crucial factor in the implementation process. Implementing any plan without proper timing has no value. It can have long term strategic implications for Singapore Airlines therefore adequate time should be allocated to the implementation of this strategy. It is estimated that the establishment of a strong and proficient corporate strategy could take anything from 8 to 18 months. So the SIA must implement the plan within a specific time. They must target a date within which they will operate.

Expected result:

If SIA can make it workable, it is going to help SIA a lot. In one sense, it is risky for going for the high price and for a selective target market. But if it works they are going to get a good profit, because they are keeping good margin here.

3. Fewer Number of Routes of SIA

SIA should increase the Number of Domestic Flights and Operate in More Routes in United States and European Regions

Why this implementation is required?

The problem, we can see in SIA is that they are not offering the necessary number of domestic flights. This has narrowed their target market as well as caused their competitors to come into Singapore’s domestic market, as we know that Singapore is a free sky country. From this other airlines companies are earning profits, which should have ideally been earned by SIA itself. It should be reasonable for SIA to break into the domestic

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market with flights; and earn more than others since it already has consumer trust and preference engraved in its name.

What is to be implemented?

In order to carry this out, SIA should come up with the new plans of breaking into the market, which should include the domestic flights and/or re-organize its flight plans to accommodate the extra administrative duties. Another aspect where SIA should focus on the routes; which is limited in compared to the other competing airlines. They should have an extensive network in the United States and the European region means they should concentrate mainly on regions of Europe, some regions of Africa, and also in some Australian regions, because the number of passengers from United States and Europe are comparatively more frequent air travelers than the ones in other parts of the world. So that SIA should make more flights available to and from the Europe and US regions. Restructuring in plans and strategies need to take place in this case.

How should the implementation take place?

If Singapore airlines design these flights to be specialized in providing domestic services so that it can be differentiated as being the country’s own so that people are drawn to choose SIA over other available airlines. SIA should make more flights available to and from the Europe and US regions. Restructuring in plans and strategies need to take place in order to focus on the routs. By implement this in their business, a new side of business and getting profit will be open in front of them. They will get an exclusive local customer satisfaction if they provide them domestic service. Moreover, if they get into the United States and the European Region, they will be able to compete with the other competitors those are giving services in a cheaper way now a days.

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By whom it should be implemented?

The policy makers: Again the policy makers have come here. Actually all the recommendation that they should implement, are evaluated by the policy makers. And they are the one who basically suggest any company to take any decision. Here also the policy makers should make such plans and come up with such ideas that will help SIA to run their business in the domestic market also and in increase their route through the United States and the European Region.

The Top-level Managers: The administrative persons are important here because they will refer the ways of entering in the new market and re-organize its flight plans to accommodate the extra administrative duties. They are also needed for planning the routes. The managerial persons are also important as they are going to take the main decisions and restructuring the strategies that are needed.

When should this implementation take place?

It is actually a strategic plan for the Singapore airlines and we all know it’s not easy to implement the strategic plan in momentum. It’s a long term implication so SIA need time to establish this. But time is a crucial factor in the implementation process. Implementing any plan without proper timing has no value. So the SIA must implement the plan within a specific time. They must target a date within which they will operate. We suggest that it is done as soon as possible.

Expected Result:

If SIA can implement this in their business, a new side of business and getting profit will be open in front of them. They will get an exclusive local customer satisfaction if they provide them domestic service. Moreover, if they get into the United States and the European Region, they will be able

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to compete with the other competitors those are giving services in a cheaper way now a days.

4. High Expenses Behind Official Personnel, Expatriate Pilots and Flight Staff

SIA should Form Independent Training Centers for Pilots and Flight Staff so that They Can Reduce the High Expense of the Top Personnel

What is to be implemented?

We see that the administrative salary of SIA compared to other competing airlines, is quite high. SIA has a pretty high annual staff cost and as most of the pilots’ expatriates come from foreign companies, they are costly for SIA. These extra expenses are cutting the profit margin of the company since training such large numbers of employees involves a big cost.

SIA should solve this problem by decreasing the amount of resources they spend on training and development and maintaining these expatriates. They should set a standard of eligibility those are needed to become an expatriate for SIA such as- an individual will need to be pre-trained in the several aspects of working here. It will be easy for SIA also then to make them familiar with their culture. At the same time, they should set up training centers, which would provide training to the potential employees of any other airlines along with those who seek employment in SIA. This will also ensure that SIA would still be giving training to its employees but instead of just investing behind their training, they are earning revenue from those who seek employment in other airlines but have come to SIA’s training center for training.

How it would be implemented?

The competencies are developed by workers in industry to reflect the work they do within their facility. Because it is experienced workers who develop the competencies, it ensures they are relevant and acceptable to the workplace.

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Evaluation of employee competency is based on self assessment, prior learning assessment and a subject matter expert validation of work. Training needs identified by the competency assessment process can be fulfilled with remedial training available at all times using the CD-ROM based training materials, available online training, or other instructor lead seminars and training. It addresses industry-related training as well as other workplace skills, such as communication, computer literacy and interpersonal relations.

This will be beneficial to a great extent for SIA if it is implemented properly. By adopting this method, SIA is also creating an organization within an organization, which would be providing airline-training facilities to all who are willing. In addition to this Singapore Airlines will be able to provide training to the employees it will be recruiting in the future. This training will be coming at a much lesser cost for the company since they will be trained in a facility the company itself owns.

What job roles do people possess? How are these roles defined? What is common among the roles? What skills or competencies support each role? What learning events (courses, meetings, demonstrations, on-the-job training, etc.) support and build these competencies? How does a new hire begin their training? This may seem daunting, but defining existing job roles is worthwhile, and brings many insights into the company's needs for competent performance. The data from such surveys also helps to build measurable ways to determine when employees attain needed skills, and conversely, may identify training needs that are not yet met.

If more and more applicants for these training programs are called from the home country and neighboring countries then the cost pressure exerted due to the expatriates will soothe down significantly. SIA is highly depended on the expatriate due to shortage of labor I the home country and also not all the employees available have the required level of skill. This is where the training can come into use. The potential candidates form home and neighboring countries can be trained and molded as per the needs of the company so that SIA can reduce its dependency on foreign employees.

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Who would implement it?

Introducing fast-track and competency management system for their employees is a part of the HR issues, thus would be implemented by the HR department itself. For solving one of the preceding problems we have already suggested to open a HR department where every single policy under it would be reformed so that all the activities occur in a systematic way. We all know that for implementing any plan into the reality the person plays the vital role for its success. No plan can be successful if it is not implemented in proper manner by the right person. Here the HR managers must change their approach towards the labor union and also designate supervisors for keeping eyes on the issue to figure out whether they are proceeding well or not. So finally we can say that HR department would implement this plan with great effectiveness.

Human Resource Managers: They are the most important persons here because they have the main authorization of recruiting and defining the salary, according to their job value. They are the people who make sure of this that they are recruiting those people who have some basic training at least. They should make sure of it that they are managing their budget properly and not wasting anywhere.

The persons from research and development department: These persons are important because they are going to give the training. For the existing employees, they know better that what training is needed to whom and what is the best way of giving them the appropriate training. They will also come up with the new ideas of practical training, which is very important for continuous improvement.

Where it would be implemented?

Place is particularly very important factor for the SIA as they operate beyond its own country border. We strongly recommend the company to

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develop this strategy in Singapore at their company main office at first as soon as possible.

When it would be implemented?

Time is another crucial factor in the implementation process. Implementing any plan without proper timing has no value. So the SIA must implement the plan within a specific time. They must target a date within which they will operate. We suggest that it is done as soon as possible. They need it for their survival and good image.

Expected result:

It will help SIA in a large extent as they are getting the best employees as they are providing the training by themselves. Also it will be a source of income to SIA. They are also getting a chance of getting the new recruits easily and at a lower cost by opening a training center by them. So it should be beneficial to SIA if they continue this process.

5. Minimizing the Effects of Downsizing

Increasing employer efficiency and empowerment to get the best out of the available number of employees

Why this implementation is required?

Singapore Airlines has faced a severe episode of downsizing in June 2003 where it lay off 400 of its employees and an additional 156 members of its cabin crew. It also had to cut down 22% from its management salary and also proposed further wage cuts from its cabin and ground staff. This is likely to hamper the standards of services it provides the customers with exclusive services. This may also suggests that Singapore Airlines may loose out on its one of its qualities it is well known for. To maintain this high a standard of services, Singapore Airlines will need all the help it can get from its work force.

How this implementation would take place?

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The first step to the implementation of such a sensitive and important decision requires the consent and knowledge of the employees concerned. Employees all ranks and class absolutely detest anything related to a decrease in their pay. What the management needs to do is to communicate their problems and justify the cause reason for such an action. If the employees can be convinced that in the long run these steps are going to be beneficial to them then they will co-operate with the authority more readily.

It is better to implement the plan first on the top management and then after a few months on the low paid staffs to avoid any discriminatory conflicts.

The junior level staffs are always more or less defensive towards pay cut or freeze or any such measures. They suspect the company of trying to take advantage of an economic situation to make even larger profits at the cost of their well deserved salary. What the company can do is, introduce this plan first on the higher level management and then gradually move down the hierarchy. In that way the lower level managers won’t feel exploited as they can well perceive it as a company emergency situation.

A formal letter from HR signed by the chairman and CEO should be issued which laid out the process. Clearly mention in this letter that the Staff can earn back the salary they've sacrificed – plus a bonus – should the company achieve a 50% or better income to cost ratio taken on a month-by-month basis. Possibility of bonus for taking a cut: People taking a 15% salary cut could get back their salary plus 7%. 20% salary sacrifice earns a salary return plus a 17% bonus, while a 25% cut would repay salary plus a 25% bonus and so on.

Assure the employees whenever and however possible that these are temporary steps to ensure the survival of the company in hard times. As soon as the company sees the light of success their pay and salaries will go back to the original level. These are alternative action plan to layoff. So in a way employees are benefiting form these measures more than anybody else.

Legal issues should be carefully studied to ensure lawful execution of the plan.

There might be attempt to sabotage the company the law suits and other legal actions when such sensitive decisions are implemented. The

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employees become resentful and thus may wan tot attack the company. Therefore it is absolutely necessary the at all the legal angles relating to such steps are properly explored and studied so that these actions are lawfully executed.

Continuous review of the plan is necessary for proper and time updates.

The HR department must be always on the toes to ensure that the plan is executed with peace and harmony through out the organization and it does not be come a source of resentment towards the company. Also what is necessary is to assess that if the company is truly benefiting form all these. There are certain cost associated with pay cuts and freeze related to employee dissatisfaction and demotivation. If the company is main more benefits over cost is something the organization must review form time to time.

Who would implement it?

Every plan should be implemented by the right person, because no plan can be successful if it is not implemented in proper manner by the right person. Minimizing operating costs without harming human resources through rationing, pay freeze, pay cut is a big issue which cannot be implemented easily. Before starting the process the SIA must choose the right person for the implementation. The CEO along with the help of the top management and the HR department must implement this plan.

Middle Managers: This idea has to be implemented by the middle managers. They will be responsible for instructing the lower level workers about the change in their style of working and their expectations. They will have to instruct the lower class employees on what they have to do, what changes will have to be made, and what expectations the company will have from them from here on end.

Supervisors: The supervisors will also play a large role in implementing this recommendation since they will be the ones who will be looking after the proper execution of the decision. These are the people to whom the ground crew and the cabin crew are supposed to report to. They will need to oversee whether the newly empowered employees are abusing their newfound power, or whether they are doing what they are supposed to. Without the proper monitoring of the supervisors the implementation of this concept will not be effective.

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Where it would be implemented?

The place where the plan would be implemented is also an important issue for the SIA. They operate all over the world. However, uniformity is a very important consideration when it comes to such a decision. Thus it should be implemented through out the organization so that nobody feels that other was treated more favorably.

When this implementation would take place?

They must target a date within which they will operate. We suggest that it is done as soon as possible. They need it for their survival in the economic crisis the world is facing today. If it is too late the plan might not be effective anyway.

Expected result:

Singapore Airlines may expect the depleted workforce to be productive to its highest extents. The capabilities of each employee will be used appropriately if allocated properly. This will help Singapore Airlines maintain the quality of its service even with a smaller sized workforce.

6. Policies of the Singapore Government

SIA should make appeal to the Government so that they will be eager o give them subsidies so that they can compete in the local as well as the global industry

Why this implementation is required?

This states the fact that the government of Singapore will not be subsidizing much for any of its local companies. It wants its industries to survive and thrive on their own with no help or subsidies from the government. The government is allowing free competition within the economy, which is proving to give Singapore Airlines less than it probably deserves. There has also been a recent development in the concept of “free skies” in Singapore. This essentially means that any airline of any nationality will be able to land in the airports of Singapore. Although the

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reverse is also true for Singapore, this has turned the airways of Singapore into a free airspace that anyone can use. This has proven to cause substantial stress for Singapore Airlines.

How would this implementation take place?

In order to counter these effects, Singapore Airlines was suggested to make a proposal to the Singapore Government. This has to be done keeping in mind that government policies and regulations are a serious matter and Singapore Airlines is in fact asking the government to make an exception of some sort for it. Even though Singapore Airlines is not asking for subsidies, asking for the backup and support of a government would involve extensive browsing through government law and regulations.

By whom it would implement?

We all know that for implementing any plan into the reality the person plays the vital role for its success. No plan can be successful if it is not implemented in proper manner by the right person. It will be best implemented by the CEO as per the authorization of the directors.

Executives and Decision Makers: They will be the right arm of implementing this idea. The executives and decision makers will be the ones who will have to come up with the proposal to the government. While doing this, they will have to keep in mind, about the various executive barriers they will have to overcome, and on what points they will have to stress in the proposal. These executives will have to make sure they capitalize on their strengths and minimize their weaknesses.

Legal Agents: Apart from the executives and decision maker, Singapore Airlines will have to take help of law professionals in order to implement this idea. Professional lawyers will definitely be more aware and careful of the legal implications Singapore Airlines will have to go through. Hence it is imperative for Singapore Airlines take help from professionals in this aspect.

Where it should be implemented?

Place is particularly very important factor for the SIA as they operate beyond its own country border. We strongly recommend the company to

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develop this strategy in Singapore at their company main office at first as soon as possible. Because their origin is Singapore so they must ask for the subsidiaries to the Singaporean government.

When should the implementation take place?

Implementing any plan without proper timing has no value. Though it’s a governmental issue so it would take time for the both SIA and also the government. So the SIA must implement the plan within a specific time. They must target a date within which they will operate.

Expected result:

Singapore Airlines may expect a favorable feedback from the government. The proposal, if made properly will convince the government that Singapore Airlines has made a reasonable request, which will be beneficial to both the airline and the country in general.

7. Ever Growing Customer Demand

SIA should go for Massive Market Survey and According to that Survey They should meet the Demands of the Customer

Why this implementation is required?

Under the free skies policy, it has been seen that an airline can land on a foreign airport depending solely on the free-market demands. This means that where there is demand for an airline, it will be able to go to that location without any extensive barriers. Thus we can estimate the importance of customer demands in this business.

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How it would take place?

Through a proper market survey, Singapore Airlines has to find out what are the determining factors of capturing market demand. In order to do this, it will have to prepare an effective questionnaire, which will collect relevant information from the regular, and also the potential customers. To take it to the customers, Singapore Airlines can hire part-time employees whose job would be to go into the market, especially to valuable clients with the questionnaire and gather the information and present it back to the company.

By whom it will implement?

Service department managers: These are the individuals who will be formulate the questionnaire and arrange for the recruitment of the part-time employees who will carry out the survey.

Part-time employees: They will have to be recruited according to the needs of the company. They will have to be tuned properly with the priorities of the company and should be able to represent the company in its best terms confidently and effectively. They should be able to create a good impression on the ones they approach.

Where should it implement?

Place is particularly very important factor for the SIA as they operate beyond its own country border. We strongly recommend the company to develop this strategy in Singapore at their company main office at first as soon as possible and also in the other countries where SIA’s offices are established.

When it would be implemented?

SIA must implement the plan within a specific time. They must target a date within which they will operate. We suggest that it is done as soon as possible. They need it for their survival and good image.

Expected result:

Through this method, Singapore Airlines will be able to get a clear picture of the demands of the customers. It will be able to change or adjust its

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strategies to make it more suitable and consumer friendly. This will ensure them the satisfaction of the customers and in turn increase profitability.

8. Effects of Alliances, Partnerships and Competition

SIA should conduct a feasibility study

Why this implementation is required?

Singapore Airlines has been considering an acquisition with Virgin Airways. Here, lies a problem of having a big difference in the managerial styles of the two companies. Furthermore, the equity partnership that was taking place among Singapore Airlines and Air New Zealand did not prove to be successful to the extent that was expected. Also, the coming up of Air Asia as a significant competitor of Singapore Airlines has made it tougher for Singapore Airlines to make profit and expand.

Also, the coming up of Air Asia as a significant competitor of Singapore Airlines has made it tougher for Singapore Airlines to make profit and expand. To counter this problem, Singapore Airlines has to take drastic measures to become more competitive.

How this implementation will take place?

The necessity of a feasibility study is evident while considering an acquisition. Singapore Airlines has to determine the compatibility of the company it wants to acquire before it can go through with the acquisition. Whether or not the management and operation styles are similar or adjustable to suit that of Singapore Airlines has to be forecasted.

By whom it will implement?

Strategic Decision Makers: Singapore Airlines will have to depend on these individuals to take these decisions. Only the highest executive authorities along with the board of directors of any organization is qualified to take decisions regarding engaging in alliances and partnerships. However, the consent of the employees who work there should also be taken into consideration as much as possible while taking this decision.

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Where should it implement?

Place is particularly very important factor for the SIA as they operate beyond its own country border. We strongly recommend the company to develop this strategy in Singapore at their company main office at first as soon as possible and also in the other countries where SIA’s offices are established.

When it would be implemented?

It will be better for SIA if they implement this as early as possible because it’s a matter of competition. So to defeat the competitors it should implement within a month in the head office then other offices.

Expected result:

The results from this idea can be expected to be beneficial to Singapore Airlines when it is considering acquisitions or mergers or any organizational excursion involving other companies. It may gain the best results out of any acquisition or merger it undertakes.

9. Women employees are not treated equally with male employees in Singapore International Airlines (SIA). So, they are violating the Equal Employment Opportunity (EEO).

What implementation is needed?

SIA can start recruiting their male cabin crews exactly the same way they are recruiting their female cabin crews. Then there will be no question of discrimination or violation of Equal Employment Opportunity (EEO). Also if all jobs are on contract, then it becomes easier for SIA to replace or shift positions easily.

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How it would be implemented?

Removing gender discrimination from the company

SIA hires the male employees as regular employees whereas the female employees are hired on the basis o five years contract. This is an act of sexual discrimination. On the basis of your sex the term of your employment is made. This is an unethical practice. SIA can argue that the fitness and outlook of the Air hostesses are important criteria on the basis of which they should be retained. However, it can be counter argued that if any individual is indeed not fit to provide service on the flights after say five years than she can be provided a position on the ground or on the training arena or anywhere else. It is not only to suit the company from EEO violation but can actually help the company in many ways. These employees of five years experience are well known with the norms of the organization and thus can use their experience in various other positions of work for SIA. Moreover the motivational aspect of such a step is also incredible.

A specific unit must be established within the HR to oversee EEO issues

HR and EEO have a long bitter history with one another. The HR department has been on more than one occasion been harassed by the EEOC. Thus it is mandatory on today’s world to dedicate an active unit within HR which is going to oversee and handle the EEO issues arising in the company. Gender equality is a fundamental human right and an essential condition for achieving effective democracy. The Constitution of the International Labor Organization (ILO) affirms that "all human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity". Countries are increasingly committed to the promotion of equality of opportunity and treatment for women and men in the world of work. But governments and the social partners face difficulties in making the principles and provisions of international instruments effective in national law and practice. They often seek information and advice from the ILO on the different approaches taken in different parts of the world to give practical effect to gender equality principles.

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Prepare a formal guideline that includes all the rules that must be complied with and the action that would be taken on non-compliance

Every one of personnel-related actions is affected by EEO law. To prevent such violations, it's not enough to simply know that the law forbids discrimination. You should know the specific kinds of discrimination to avoid in your day-to-day activities with job applicants and staff. Job involves many different personnel functions, including hiring, training, promotion, termination, and others. Below given some examples of actions taken to fulfill EEO responsibilities:

Ensure bias-free selection processes by forming diverse selection committees, evaluating candidates on job-related criteria, and completing and maintaining necessary records such as the Interview Data Form.

Promote accountability for EEO by ensuring that responsibilities in this area are clearly indicated in the applicable job descriptions of managers and supervisors who report to you.

Evaluate the performance of supervisory staff in implementing established EEO responsibilities.

Educate employees by participating in relevant training and education programs on campus and encouraging subordinate staff with EEO responsibilities to do the same.

Provide reasonable accommodations such as assistive devices, job restructuring, and site modification for disabled staff members.

Maintain a hospitable work environment; ethnic jokes and harassment of any kind should not be tolerated.

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Review all personnel activities for potential differential impacts on different groups and unintentional bias in such personnel actions as selection, salary increases, promotion, reclassification, layoff, corrective action, training, and termination.

Encourage and invest in staff development, ensuring that all staff have access to opportunities.

Make sure all staff are informed of the organization's non-discrimination policy and the procedures for resolving discrimination complaints.

Complaint Procedure Procedures must be strongly established and promoted

Complaint Procedures

To protect all employees and prospective employees from discriminatory situations both informal and formal complaint procedures are available. Either or both may be used.

Informal Complaint

Most complaints, grievances and misunderstandings can be resolved satisfactorily in an informal conference between the employee and his or her immediate supervisor.

If, however, the employee does not wish to discuss the concern with the immediate supervisor, the employee may talk with an EEO counselor. The role of the EEO counselor is to serve as a bridge between employees and management and to resolve EEO problems on an informal basis.

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If a matter is not resolved through consultation with an EEO counselor, an employee may request a conference with the supervisor of the employee’s immediate supervisor.

Formal Complaint

If a matter is not resolved through the informal procedure, or if the complainant does not wish to use the informal procedure, a formal complaint may be filed.

A formal complaint must be made in writing and must give the name and address of the complainant, state the basis of the complaint and indicate whether the alleged discrimination was based on race, color, national origin, religion, gender, age, disability, marital or veteran status or any other legally protected status. The complaint must be submitted within 180 days of the conduct giving rise to the complaint. A complainant will at all times be free from reprisal.

A complaint may be filed by an employee or by an applicant for employment who believes that discrimination in employment has been practiced against him or her or that an employment practice has resulted or will result in discrimination in employment against him or her. An employee, a former employee or an applicant for employment may file a complaint of general discrimination practices, provided that the complainant shall furnish the names of individuals who are adversely affected by those practices.

Who would implement it?

Every plan should be implemented by the right person, because no plan can be successful if it is not implemented in proper manner by the right person. Removing discriminatory practices is a big issue which cannot be implemented easily. Before starting the process the SIA must choose the right person for the implementation. The CEO along with the help of the HR department must implement this plan.

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Where it would be implemented?The place where the plan would be implemented is also an important issue for the SIA. They operate all over the world. However, uniformity is a very important consideration when it comes to such a decision. Thus it should be implemented through out the organization so that nobody feels that other was treated more favorably.

When it would be implemented?

Time is another crucial factor in the implementation process. Implementing any plan without proper timing has no value. So the SIA must implement the plan within a specific time. They must target a date within which they will operate. We suggest that it is done as soon as possible. They need it for their survival and good image.

Expected Results:

There will be no questions arise about gender discrimination and also Equal Employment Opportunity (EEO) if all jobs are on contract, then it becomes easier for SIA to replace or shift positions easily.

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