Introduction History of Singapore Airline Singapore Airline
History of Singapore Airline
Singapore Airline( SIA) is widely regarded as one of very best airline by those travelers and competitors in the airlines’ industry ever since the company was formed on 28 January 1972. Back in 1947, it was formally known as Malaysia- Singapore Airlines, as they initiated scheduled services between Singapore, Kuala Lumpur, Ipoh, and Penang. After years later of hard work, Malaysian airline grew independently and steadily by offering international flights and only until 1971, it was separated into two airlines; Malaysia Airline System and SIA. Nevertheless, SIA is introduced as for its young fleet and excellent customer services. (“Our Heritage”, 2018) Unfortunately, in between of 1997-1998, major Asian Financial crisis occurred and had left a devastating effect on several East Asian economies, which Singapore was inevitably been affected. The crisis was mainly started in Thailand, whereby due to lack of foreign currency to sustain its currency peg to the U.S. dollar and resulted devalued stock markets, slumping currencies, and other asset prices. (Ngiam, 2001) Hence, during the crisis period, the demand for SIA flights have gone lower than before as people have fear to travel at that point in time. However, Singapore never gets defeated and strategized their planned, withstood the financial storm and even managed to maintain relatively favorable economic performance.
SIA’s Vision and Mission
“Singapore Airlines has a responsibility not only to be an excellent company, but also to be an excellent citizen of the world by enhancing the lives of the people we touch. With that aim in mind, we have made many commitments to the arts and education, to our communities, and the health and welfare of our country’s citizens, and those in countries we fly to. With this goal in mind, we’ve also made a strong commitment to preserving the environment- and our world for future generations.”
This vision statement was not an effective vision statement, as the vision statement supposed to be as short or even preferably be a one sentence vision but it has two long sentences for their vision. Furthermore, it does not clearly state and involved managers in the development process. The vision was just mainly focusing on the commuters or citizen, environment and people that joining them in future time. Even though it does have a clear vision that they want to be a company that enhances citizen lives with their service provided and build a better future for new generations.
My suggestion for Singapore Airline is “Be the first airline of choice”
“Singapore Airlines is a global company dedicated to providing air transportation services of the highest quality and to maximizing returns for the benefit of its shareholders and employees.”
According to this mission statement, I am able to identify a few of the mission statement components that a mission should have. Firstly, the products and services component was stated, “air transportation services..” Secondly, I also identified out that concern for survival, growth, and profitability was applied as it wrote “maximizing returns for the benefit….” Thirdly, concern for employees was shown, “benefit of its shareholders and employees.” Whereas for philosophy, ” highest quality”.
As of following, this mission statement is lacking a few of the components and they are, customers, markets, technology, self-concept and concern for public image.
Singapore Airlines is outperforming among other competitors in regarding their cost-effective service excellence. They did this excellence provider via a completely unique, self-reinforcing interest system that makes the values actual for all employees. This activity found to consists of five pillars in the system. They are rigorous service design and development, total innovation, profit and cost consciousness ingrained in all employees, holistic staff development and reaping of strategic synergies through related diversification and world-class infrastructure. Rigorous service design and development have a service development department that test, support and ensure that any change or service innovated are working and benefit to the company before being introduced out publicly. Total innovation is referring to a multitude of subsystems, such as reservations, catering, maintenance, in-flight services, and entertainment systems.
All these systems are meant for SIA to constantly thriving to innovate and yet is a total innovation in everything. Profit and cost consciousness needs all employees to play a part in making SIA be the most profitable company. Where they have a reward system that pays bonuses only when it makes a profit and these have consciously incurred peer pressure within staffs that see resources being wasted or money being inappropriately spent. Holistic staff development is making sure everyone has a training and development plan, regardless of how senior position employee is. A new crew will undergo longer training month than other airlines. Not just on functional skills, soft skills are being trained too. Lastly, for strategic synergies through related diversification and world-class infrastructure ensures low maintenance costs, low fuel expenses and high flight quality being delivered to the customer. (Heracleous, Wirtz & Johnston, 2004)
Singapore Airline was owned a unique brand name “first in flight” as pioneering with the aid of continuously being the first in airline enterprise. For example, they first introduced hot meals, free alcoholic and non-alcoholic beverages, hot towel with scent, personal entertainment systems and video-on-demand in all cabin. Furthermore, the air stewardess are recognized as “Singapore girls” that is representing charming, graceful, gentle and courteous. Singapore Airlines never just stop at these brand, but they constantly striving to innovate parts that contribute to this unique brand name that given. (Yun Chang, Yong Yeong & Loh, 1997)
Singapore Airlines have many internal strengths that can look into. For example, the company got trusted by many stakeholders like DBS, Citibank, HSBC, etc. to invest and support their company in any product and services that were implemented that benefit them in long-term. In technology wise, Singapore Airlines are remarkable on their latest aircraft within the fleet and using the latest technology with fuel efficiency. Adding on they make would ensure that all operational and maintenance cost was lowered to the maximum.
Whereas for excellent service, “Singapore Girl” have unconsciously being imprinted in every mind and they are already known to referred as Singapore Air stewardess identity. Having their in-flight entertainment system to be the latest and updated for travelers to enjoy during their flight and even more impressively, SIA has their very own SIA Engineering service center which advantages them to maintain their fleet at the lower cost. (“SIA Engineering Company”, 2018) Their bravery for introducing their biggest-ever product launch and pioneering in their services have brought them advantage of travelers having good impression and impact about Singapore Airlines.
Even though it was impactful that Singapore Airline has their first bigger-ever launch during the midst of the worst economic crisis, it also disadvantages them from having the opportunity to grow as they are the leaders in this aspect. Their biggest launch was supposed to attract all different countries of travelers, but due to the crisis, they are just attracting on the wealthy ‘markets’ like Americans and Europeans on their launch. The market has seemed to shrink and limited the source of revenue when they invested a big lump sum of capital in. Increasing their services to U.S., Europe, and Australia are just technically going cost more of their jet fuel price, as it gotten to be a long hauled flight. Singapore Airline was not just an only airline in the industry, they are competing in a highly competitive market even though with their ” first in flight” brand.
This would be great opportunities for SIA because they are ranging from Asian flight routes to other global markets like U.S., Europe, and Australia. Singapore Airlines can think of merger or acquisitions (M&A) of any airlines during the crisis period. For example, they either work together with another budget airlines or buy over the company at a lower price. Since economic crisis, they can re-negotiate for aircrafts that bought or lease buyback it, so that they maximize on their capital. Using this chance of economic crisis, SIA can also focus on different market segments instead of first class segments. For example they can improvise their service provided for economic segments for more source of revenue from travelers as alternative for first class.
The biggest-ever product launch by SIA, but Asian crisis was unknowing when it ends and the strategic investment decision might be obsolete if implemented at the wrong timing. Worst was, SIA volunteered to forego annual salary increment which will discourage the crews and even the talents from joining SIA. As this aspect was something that was least wanted to know and for that, all these talents will highly be poached by other competitors. If SIA product is successful to lure many travelers to the company even during the crisis, other airlines might suggest cutting the fares to attract back their customers or even received suggestion from other airlines to merge as one and if SIA agrees, more resources and routes being used.
Evaluation And Conclusion
After a thorough analysis and breakdown of Singapore International Airlines’ key strengths, weaknesses, opportunities and threats, I believe that their response to the crisis was a meticulously calculated strategic move, worthy of a market leader looking to assert its pole position in the aviation service industry.
Announcing their biggest-ever product launch right in the middle of an economic crisis is a clear example of Warren Buffett’s most famous investment sayings, which is to “Be fearful when others are greedy and greedy when others are fearful”. This move was simultaneously paired with their announcement of earnings reduction. This transparency led me to believe that not only the launch was strategically timed by SIA, they were confident in their decision as a premier airline and had no qualms over their investors’ confidence shaking their belief in the right direction for the airline.
This was no doubt met with an 8% fall in stock price as the markets reacted badly to the initial news. However if one has done their fundamental analysis on SIA’s finance numbers, they would have probably bought stock at the cheaper prices after the panic selling.
SIA was also not afraid to sink its teeth deeper in fellow competitors’ when they were reeling from the crisis. Cathay Pacific plunged into the red for the first time in twenty years in the wake of the Asian Economic Crisis on August 5, 1998. The next month on September 11, 1998, Singapore Airlines launched brand new product and services in all 3 classes, which cost S$500 million. This launch also coincided with the seventh consecutive year SIA was voted the Best Airline in the World by the readers of the Business Traveler Asia Pacific. With their strategies of maintaining the youngest fleet and deploying the latest technology, what better time to do so than in a crisis as a sign of market superiority? This has significant brand awareness and reputational impact in the long run.
SIA also did not forgo their policy of prudence. While being ambitious, they balance and diversify their offerings so as to minimize the impact of the crisis. Reduction in capacity for the Southeast Asian region and increased services to the U.S., Europe and Australia shows an appropriate response due to a competency of understanding in market trends. Hello Kitty, a popular fictional cartoon character shows out of the box marketing in bad market times to attract potential customers. Together with the volunteered actions of the management to forgo annual increments, it all comes together to show how concrete SIA’s internal organization policies are. Their emphasis on training at all levels, rigorous recruitment and selection procedures and rewarding staff, these are elements the airline can fall back on, no matter their ambitious product launch is a success or not. Not many companies in the world has such competitive advantages like SIA.
Of course, belt-tightening measures such as the deferment of aircraft delivery had to be done. One cannot have your cake and eat it. In SIA’s quest to be the top airline, there have to be a compromise on certain resources. And that is a trait that market leaders need to have to be the best.
In conclusion, this product launch is a bold but genius move by SIA. By capitalizing on their competitive edges, which they have built through holistic internal organization policies, they are able to hold true to their ambitious strategies to be a premier international airline. There was a level of risk but it was not without careful judgment. After all, one cannot simply be complacent in its ambition to be the best airline in the world.