SWOT Analysis: Singapore Airlines Use of Competitive Advantage For Growth (2018)

Singapore Airlines
Use of Competitive advantage for growth(2018)
Premium brands capture the public imagination when they stand out from the rest.
Obvious examples are Earl Grey tea which connoisseurs recognise for its distinctive
name, flavour and taste, Rolls-Royce for its pedigree of no-expense-spared luxury and
Parker pens for their stylishness coupled with functionality.
Another premium brand that is widely respected in this country is Singapore Airlines
(SIA) which is particularly well known for the quality of its product offering and
excellence of customer service standards. Singapore Airlines’ customer service
standards are symbolised by the distinctive uniform of its flight stewardess, a sarong
kebaya in batik material designed by Parisian couturier Pierre Balmain, reflecting its
Asian heritage.
In the modern service economy, it is frequently customer service that differentiates one
product from another. A prime example is the airline business, where passengers may
be travelling for many hours. During these periods people want to relax in comfort,
knowing that their individual needs are being catered for. SIA aims to provide the best
product for its passengers, plus the best customer service available. This case study
highlights how SIA is achieving an advantage in the competitive airline industry.
After operating as Malaysian Airways and then as Malaysia-Singapore Airlines, SIA was
officially launched in 1972. Today SIA’s network reaches out to 93 destinations in 42
countries, serving Asia, Europe, North America, the Middle East, the South West Pacific
and Africa. Its regional airline subsidiary SilkAir serves 21 destinations in 8 countries.
SIA has also created a number of strategic alliances with other major world airlines to
serve other markets jointly.
Remarkably for the airline industry SIA owns all its aircraft, unlike many other airlines
who lease a substantial part of their fleet. It also has one of the youngest fleets of any
major airline, with an average age of just over five years.
SWOT analysis
SIA initially needed to carry out an analysis of its operating environment. The traditional
business tool for doing this is a SWOT analysis (strengths, weaknesses, opportunities
and threats). The strengths and weaknesses are factors internal to the organisation.
Strengths and weaknesses

SIA’s key strength lies in the location of Singapore as an important crossroad of the
world. Singapore is a relatively small country which has been one of the economic
success stories of the last 25 years. As with other South-East Asian economies
Singapore’s success lies in the strong trading links that the country has developed in
the global economy. As a former British colony which gained independence in 1965, it
had to market its services globally to be successful.its subsidiary Silk Air connects
Singapore with more international destinations in the region than any other Southeast Asian
airline it hasoffers fare deals from destinations around the globe.
Singapore Airlines is the first airline that owns A380 in the world, and this gives Singapore
Airlines a big opportunity in air service market
It is well established as an airliner with strong customer service image.
In its early days the airline was much smaller than its rivals. This was a major
internal weakness. SIA, as the national airline, was faced with an intensely competitive
global market in which the big players like British Airways operated on many routes with
large fleets of aircraft. Until recently many countries have restricted access to air routes
and airports in order to protect their national airlines against foreign competition.
Today all this is changing, as, along with many other areas of international trade, there
is strong pressure to open up markets and allow greater competition. However, in the
early years SIA had to work very hard to secure the right of access to many important
countries and airports. It took many years of struggle to achieve landing rights at
Heathrow, followed by Manchester. Most recently SIA is seeking access to transatlantic
routes from the UK.
SIA is committed to the notion of 'open skies', i.e. open access of routes to airlines with
the consumer deciding with whom he or she wants to fly. It continues to be a bone of
contention for SIA that while Singapore has opened its own airport to other airlines, SIA
is still restricted from access to other routes, e.g. transatlantic.
SIA service is personalized but the flight service does not have sophisticated technology
component with use of Information technology. Passengers are happy with service but
at the mean time expect online games, online video and audio channels.
Opportunities and threats

The main opportunity facing SIA was the rapid growth in air transport for both
passenger and cargo. Today the globe is a much smaller place, people can move
rapidly from one continent to another in a matter of hours and more people have the
disposable income to afford this. However, there are threats to an airline like SIA from
the major national carriers of much larger countries, and restrictive regulation of air
routes.
The major threats are hence the growing competition by airliners from larger countries
like Korean air, Qantas, improving their customer service like that of SIA. At the
meantime Qatar and Cathay pacific are raising technology based service.
SIA has disadvantage of being an airliner from a small country. SIA has small domestic
market. Where as many large countries still have protected their national airliner giving
them the advantage over the airliner from smaller countries.
Like all airlines, Singapore Airlines' operating costs are affected by the prices of jet fuel and pose
a significant threat. International prices of crude oil have always been volatile and bfluctuated
widely due to a variety of factors that are not within the control.
The SIA Group is Singapore’s largest private sector employer with a 28,000 strong
workforce. The airline is committed to the development of its human resources. The
airline has been able to develop its distinctive competitive edge in customer service
through its people. From an early date SIA recognised the importance of customer
service in gaining and retaining customer loyalty. SIA has always placed great
emphasis on quality training for staff, which has established its cabin crew as the
'hallmark' of efficiency and customer service. This has led to greater competitive
advantage.
SIA wants to grow in international market, but has not been able to achieve growth as
per expectation
Airlines business has higher barrier to entry because of high capital requirement,but
Singapore airlines despite having adequate reserve,fund and access to finance has not
been able to grow beacause of protectionist policies by larger countries.
Financial performance:2018
Singapore Airlines (SIA) posted a profit of S$893 million in the financial year ended
March 31 — the highest since 2011, and a 148-per-cent increase from a year ago.
In a press release issued on Thursday (May 17), SIA said the performance was largely
attributed to a higher operating profit and an impairment of the Tigerair brand and
trademarks last year, among other factors.
The previous financial year saw the national carrier post a profit of S$360 million.
For FY2017/2018, SIA's group revenue rose by 6.3 per cent to S$15.8 billion, with
improvement seen in all business segments. In the fourth quarter, operating profit for
the group increased S$187 million — compared to the same period in the last financial
year — to S$214 million.
The company announced a final dividend of 30 cents per share for the financial year, on
top of the interim dividend of 10 cents per share paid to shareholders in December.
However the DE ratio has increased and Earning per share has slightly decreased in
2018
Questions to be addressed
a. Start with case synopsis
b. Identify the strength, weakness ,opportunities and threats to SIA
c.Prepare Space matrix to locate the position of Singapore airlines
d.What type of Growth and business strategies will you prescribe for Singapore Airlines
DEAD LINE 20 JUNE 11:00 PM

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Singapore Airlines

Use of Competitive advantage for growth(2018)

Strengths and weaknesses

Opportunities and threats

DEAD LINE 20 JUNE 11:00 PM

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