Singapore Airlines-What It Takes To Be Number One
...of businessmen across the globe. In a competitive environment, the difference between the top and the bottom can be as big as a plane, or as small as a bag of chips. It is this difference which can separate the competition in the airline industry.
The case describes how Singapore Airlines (SIA) evolved from a fledging player into an industry leader, but how it is now challenged to maintain its position and retain its brand value.
SIA rewrote the rules for competition and earned accolades for its excellent aviation record, young fleet of planes and a reputation for delighting customers. Bilateral air service agreements negotiated between individual nations limited the routes of a given airline and hence the airline's growth. The global airline industry had responded to this challenge with a mix of acquisition, strategic alliances (for e.g., the STAR alliance) and related diversification strategies. In early 2004, the emergence of low cost carriers in Asia was a threat to Singapore Airlines’ (SIA) proven and successful business model, based on premium fares for premium services. To maintain what the airline’s shareholders regarded as acceptable returns, while continuing with its well-developed and highly effective work processes and systems, the company had to make deeper cost cuts in its operations. The challenge for SIA was how to balance the different and sometimes conflicting needs of the various stakeholders while effectively managing the imperatives of the massive changes taking place in the airline industry in Asia.
At the time of the case some of that luster might be fading with the advent of copycat competitors and intensifying pressures to compete on the basis of cost. The case focuses on the multi-pronged efforts at SIA to build competitive advantage. But would these strategies be sustainable in the near future? What course of action should SIA...
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