The Strategy of Singapore Airlines

The strategy that Singapore Airlines has been following is that of 'Related Diversification', a kind of diversification where the group is grossly involved into an expansion mode or eagerly adds products and/or markets to its already existing line [1]. Singapore Airlines' current line of business is related to transportation of travellers as well as cargo, terminal services at the airport, and engineering services.

Due to this large amount of diversification, the group is able to achieve high cost efficiencies and maintain high quality standards. An added advantage of applying 'Related Diversification' strategy is that it helps in transfer of knowledge. Subsidiaries not only act as a platform for immense management skills, but also as huge source for knowledge base. Singapore Airlines related businesses in aircraft maintenance, food catering and overall management of the Singapore Airport have reaped high margins, in terms of profit, in comparison to the their main airline operations, since the overall industry health in these sectors has been fairly well.

The global award winning Singapore's Changi Airport, is being catered by a large amount of ground services by the SIA's Terminal Services division. Such extra ordinary facilities and high quality management skills at the airport attracts travelers from all around the world e.g. Australia, India, New Zealand, United States of America etc. to pass through this infrastructural marvel. Another charm is obviously the world's best Airline that provides out of the world experience and premiere in-flight entertainment facilities, Singapore Airlines.

Because of related diversification, the entire Singapore Airlines Group along with its subsidiaries follow the same culture and management policies, that accentuates provision of cost-efficient but an excellent service [1]. These subsidiaries are independently responsible for their own profits and losses, even though they are a part of the same group. The entire concept of 'Outsourcing' is not applicable to Singapore Airlines Group; this is because the class of service that is provided by Singapore Airlines group will be unsurpassed by any external supplier [1]. Therefore, the strategy of following related diversification has provided synergies, great knowledge transfer and cost efficiencies.

Group Segment % of Operating Profit Subsidiaries

Passenger Flight [2] 91[2] Singapore Airlines, Silk Air, Tiger Airways(49% stake), Virgin Atlantic (49% stake) [2]

Terminal Services at Changi International & Food Operations [2] 18.9[2] SATS - Singapore Airport Terminal Services Limited [2]

Cargo[2] -27[2] NA

Engineering Services[2] 12.5[2] SIAEC- Singapore International Airlines