Singapore Airlines (sia)

Singapore Airlines (SIA) was established in 1972 after splitting up with Malaysia Airline System due to political disagreement between the two countries. Ever since, "SIA has earned a reputation as an innovative market leader, combining a quality product with excellent service" (Star).

SIA is the flag carrier of Singapore and has a hub at Changi International Airport. The airline has a network that spans across six continents, serving major cities in Asia, Europe, Africa, North America, Oceania & the recently added South America (Star).

SIA has one of the youngest fleets in the industry, with an average age of just over 6 years. The airline operates a modern fleet of Boeing and Airbus aircrafts (Singapore 2011).

SIA has always taken a leading role of being an organisation that sets them above the rest. They have a strong reputation for being the "industry trendsetter" (Star) their establishment in early 70s to present times, SIA has always tried to keep up with the ever changing times while ensuring that they maintain being the leaders in the industry. Their excellent services through the creation and symbol of the "Singapore Girl" together with the technological advancements have earned them the reputation of being the "world's most awarded airline" (Singapore 2011).

SWOT Analysis

Strengths

- SIA's superior reputation in the industry plus with its high quality service initiatives keeps the number of loyal customer increasing rapidly.

- SIA has a strong financing due to its ability to adapt in any economies conditions and still stay profitable (Martin 2004).

- SIA has an excellent corporate culture that has been able to attract and retain potential and top employees due to it strong brand name.

Weaknesses

- SIA is highly dependent on business travellers. Airline analysts estimate that 40 percent of SIA revenues come from first and business class travellers (AFP 2011).

- The airline business and performances are subject to the global economies.

- SIA is well known in the industry for its excellent services and customers naturally develop a very high level of expectation and therefore very minor faults can blemish its reputation easily.

Opportunities

- With the opening of the two new Integrated Resorts and the increase in tourism receipts in Singapore. SIA can increase their market share in the leisure segment.

- Singapore's excellent location and infrastructure has placed it among one of the top MICE destinations in the world (Sumathi 2011). SIA can further strengthen their market share in the business segment.

- SIA can benefit from all the open skies agreement signed by the government of Singapore and with the other countries by increasing the frequency of the flights or adding new destination to it existing network.

Threats

- New competitors especially from the low cost carrier segment who offer cheap fares and also the up and coming Middle Eastern airline with huge financial backing (Chan 2010).

- Technological advancements such as video conferencing reduces the needs for managers to travel for official meetings.

- Political turmoil in the Middle East and North Africa had pushed the oil prices to record high. It may result in high cost per passenger and much of SIA operating costs come from fuels (Andrea and Robert 2011).

- Many others airline are trying to compete with SIA by providing the same level of service and products at a lower price.

Macro-environment Analysis

Politics

SIA's strengths have also invited protectionism from foreign governments. In particular, it has been unsuccessful in gaining access on the transpacific routes from Australia to the United States. Even though, the government of Singapore has been lobbying hard for this lucrative route and allowing Qantas to set up a secondary base in Singapore without restriction (Matt, 2011). The Australian authorities still deferred decisions to allow SIA on this popular route to the United States from Australia. Citing sources, Qantas earns as much as 20 percent of its profits from the trans-Pacific route and the government cited it as a "key national asset" (AFP 2007).

Economy

SIA's profits very much depend on the global business and economies. The growth in GDP in recent years has influenced the consumer behaviour in the Singapore market. The recovery period in the economy has resulted to an increased number of affluent populations, which eventually caused a rise in the customer expenditure. In recent years, political turmoil in the Middle East and North Africa had pushed the oil prices to record high. The oil price is a concern for the whole industry and it's not something within our control (Andrea and Robert 2011). Many airlines in the world including SIA had saw profit plunge due to sky rocket oil prices.

Technology

Technological change in the macro environment can have both negative and positive effect on an industry. Through massive technological improvement a company can actually deter entry by its potential rivals. But this particular technology can go obsolete when one or many companies enter the market with same or even better technology and steal away the customers. SIA is well known for its use of state of the art fleet of aircrafts and most recent versions of technology. Its high expenditure on R&D toward continual improvement on service and use of computer reservation system to maintain a smooth flow of operations are some of the many indicators of technological implementation (Martin 2004).

Demographics

In an era of cheap, no-frills travel, SIA has overhauled its marketing strategy to put fresh emphasis on its famed cabin service with the iconic "Singapore Girl" in a figure-hugging batik uniform at the forefront. About 60 percent of SIA's more than 7,000 cabin crew are women, mostly from Singapore and Malaysia (AFP 2011). The total population of cabin crew recruits, whose average age is 24, are taught the basics of social etiquette, personal grooming, passenger handling and meal service, including food preparation and wine appreciation.