SLIDE 1 Facts & Figures
* Number of aircraft: 109
* Number of employees: 14,142
* Passengers per year: 18.3 million
* Sales Revenue (in US$): 9.3 billion
* Number of scheduled destinations: 65
* Daily departures: 220
* Date of entry: April 2000
* Frequent flyer programme: KrisFlyer
* Hubs: Singapore Changi
* Aircraft types: A380, B777-300ER, B777-200ER, B777-300, B777-200, A340-500, A330-300,B747-400 and B747-400 Freighters
INTRODUCTION AND HISTORY
Singapore Airlines (SIA)’ history can be traced back to May 1947, when Malayan Airways operated its first commercial flight linking Singapore with Kuala Lumpur, Ipoh and Penang. The airline was later renamed Malaysian Airways (1963) and Malaysia-Singapore Airlines (1967), which was split in two in 1972, creating Malaysian Airline System (since renamed Malaysia Airlines) and SIA. Over a period of more than half a century, SIA has earned a reputation as an innovative market leader, combining a quality product with excellent service.
SIA, together with its airline subsidiaries, Singapore Airlines Cargo and regional airline SilkAir, has a route network extending to 65 destinations in 35 countries, serving Asia, Europe, North America, the Middle East, the South West Pacific, and Africa.
SINGAPORE AIRLINES ENJOYS PREMIUM POSITIONING AS THE LEADING AIRLINE OF THE WORLD
SIA CONVERTED THEIR WINNING STRATEGIES INTO LONG TERM STRENGTHS
SIA has one of the youngest fleets of any major airline, with an average age of just over 6 years. The airline operates a fleet of MEGATOP 747s, JUBILEE 777s, A340-500s and took delivery of its first A380-800 in October 2007.
PAR EXCELLENCE IN CUSTOMER SERVICE
Excellence in customer service has been integral to SIA’s success. Superb in-flight service is the cornerstone of its reputation for customer service and hospitality.
NEWER PLANES AND LOW MAINTENANCE COSTS
Punctuality of flights and safety of passengers are top priority for SIA.
Over the years, it secured new air planes at bargain prices by taking advantage of the various offers from the manufacturers.
For example, under the ‘Launch,’ strategy SIA would be the first to try out the latest model from a particular manufacturer, obviously at a much discounted rate.
SIA would dispose off an aircraft while it still retained high re-sale value
LATEST FLIGHT GUIDANCE TECHNOLOGY
SIA has developed a reputation for being an industry trend-setter. The list of industry-leading innovations by SIA includes being the first to offer free headsets, a choice of meals and free drinks in Economy Class in the 1970s, and the first with satellite-based in-flight telephones in 1991.
LATEST IN-FLIGHT GADGETS
In 2001 the airline became the first to introduce a global in-flight e-mail system to all passengers. SIA has also taken in-flight dining to new heights with the formation of its International Culinary Panel and World Gourmet Cuisine.
The care and attention that Singapore Airlines gives its customers, symbolized by the Singapore Girl, has earned the airline many industry and travel awards, including Conde Nast Traveller’s “Best International Airline” award in 19 out of the last 20 years.
For Young Singaporean Women, a job with SIA was a lucrative and prestigious offer.
The chosen few went through a rigorous training program that was popularly described as a cross between boot camp and finishing school.
KEY PROBLEM AREAS
The tourism industry is still recovering from the after effects of 9/11.
Terrorism combined with global recession adversely affected Tourism, thus bringing down
Number of flight takers.
Stiff competition from other Airlines
SIA main competitors included Cathy Airways, Lufthansa, and the Australian Giants Quantas
All were well equipped to provide world class services along with excellent backing on Technology and Safety
Low Cost carriers emerged, taking the market by storm
SILK AIR is a no frills charter service to lower income destinations such as Malaysia, Philippines and Myanmar.
About 40% of the passengers were connecting from SIA flights, thus adding further to SIA revenue.
A mileage accrual/ frequent flier’s program across all the three classes.
SIA also instituted the priority passenger service(PPS) which was not a frequent flier’s program but rather a premium passenger program where members received special privileges and benefits.
A global network of 15 airlines that include giants like United Airlines, Lufthansa and Air Canada.
Passengers could book flights seamlessly over 800 destinations in 120 countries thereby greatly expanding the SIA customer base.
There were also increased customer benefits for e.g. Straight baggage checking, sharing airport lounges and help from any member’s office.
RESOLVING SERVICER PROBLEMS
The company readily admitted their mistakes/shortcomings and were proactive in taking up responsibility for any unfortunate situation that would arise due to airline negligence, thus raising the trust levels among the customers.
Local level managers had the authority to settle customer unhappiness on the spot.
No monetary compensation was paid rather the senior executive would take an appointment to take the aggrieved individual to lunch and discuss the matter.
Special training programs for outstanding service on ground and its different facets such as check in procedures, boarding and delivery of baggage.
Benchmarks are set where the first bag must arrive in ‘x’ minutes after touched down, and the last bag must arrive within a certain period of time. Failing which, agents are penalised.
Complaints about the food result in the caterers getting debited.
TRANSFORMING CUSTOMER SERVICE
Special programs to motivate employees
Special feedback mechanism that looks into customer complaints against specific employees.
30% of general resources spent on renewing systems and procedures
Initially, SIA benefitted hugely from low cost labour
This changed in 1990 as Singapore’s economy boomed along with other Asian Tigers.
However the company still attracts a large pool of applicants because a position with SIA pays very well and is considered prestigious and glamorous.
The recruits are sophisticated, well travelled and most of them have a college education.
Every year Winning Ways award is given to attendants who receive the best, unsolicited comments from customers.
Every 2 years the company’s CEO presents a special citation to the top employee service providers.
CHALLENGES OF EVER-RISING EXPECTATIONS:
Initial growth was 15-20% a year
Present growth rate is 5-6% a year which is reasonably good compared to others.
However, nearly all airlines depend on domestic routes for 25-30% of the traffic
SIA cannot afford the luxury as you can drive from one end of the country to another in a cab.
80% of SIA ‘s revenue came from foreign travellers and 20% from Singaporeans
SIA purchased a 49% stake in VIRGIN ATLANTIC airlines
It was a partnership of two entrepreneurial companies with root structures
SIA also acquired a 25% stake in Air New Zealand
SIA will continue to invest selectively in other airlines with desirable roots
Increase costs for top tier carriers
Lucrative Europe Asia routes attracted fierce competition for premium passengers by constantly introducing more sophisticated and extremely expensive products
SIA realised that although small in number business and first class passengers generated roughly half the airline revenues.
SIA decided to extend the first class experience all the classes which included enhance on ground service, new in flight cuisine and top of the line coffee makers
For its 1st class passengers, SIA went beyond expectations by upgrading to advanced audio visual on demand (AVOD) units which gave passengers almost 200 entertainment options.
Well managed financial operation where the carrying cost is minimal and share holder funds are increasing on a day to day basis.
SPACE BED DECISION
British Airways has introduced lie-flat beds in economy class in 2000.
This led to some switching loyalties from SIA to BA.
SIA contacted a Swiss Engineering firm to design its own-state-of-the-art lie-flat seat, dubbed “Space Bed”
However the new Space Bed would reduce the number of seats in the economy class from 58 to 50
These space beds are extremely expensive to manufacture and maintain
Already millions have been spent on R&D and the total budget stands at $100 mil
In the uncertain environment following 9/11 attacks SIA is unsure about going ahead with the Space Bed plan
They should go ahead with the Space Bed plan as it would give them an edge over the competitors
Increase their popularity with budget travellers which is essential keeping in mind today’s global economic scenario
SIA has a strong financial backing where their debts stand at US$1 billion while their shareholder funds are about US$ 10 billion
US$100 mil will not make much difference in long term financial stability