Singapore International Airlines: Strategy with a Smile
Airline industry is considered global because it is characterized by the movement of services between countries, i.e. international trade, the existence of international organizations (ICAO, IATA, etc.), the availability of the natural resource potential in the countries and highly skilled workforce. In general, driving forces of globalization include a new round of scientific and technical progress; the activities of transnational corporations that operate globally and spread around the world uniform business standards; expansion of the Internet as global communications, business and entertainment environments; the activities of international economic organizations; and expansion and aggravation of global problems, forcing humanity to unite their efforts to overcome them (Hollensen, 2014).
Concerning the country of origin, first of all, it is about the origin of capital. Companies of developed countries have private capital, while of developing countries – part (sometimes large) may belong to the state (Hollensen, 2014).
Singapore Airlines is a global airline service provider in the air transportation for passengers and goods of the highest quality. Singapore Airlines is not just an airline and one of the most respected travel brands around the world. The three main components of its success are a service, innovation and route network. Singapore Airlines offers unsurpassed service on board, about which even other airlines talk. Innovations contribute to the formation of high image of SIA on the market. For example, SIA became the first airline to introduce free drinks and headsets. It pioneered the implementation of telecommunication services on board. It was the first to carry out the longest flight in the world, Singapore – New York on the A340-500 aircraft. The advantages of Singapore are the location at the crossroads of international routes, as well as competent and motivated employees. Due to such opportunities Singapore became a better place for business and tourism. Also, the development of the Internet give airline companies opportunities. Threats concern terrorism, security level, fuel cost and a number of competitors’ increase. Recommendation may relate to elaboration of the innovative security mechanism (Singapore Airlines, 2015).
SIA is the participant of Star Alliance, the youngest alliance. There are four advantages of such airlines associations that influence the strategic decision of joining the multinational airline alliances, namely to obtain marketing advantages of large size and distribution network; cost savings; reduction of competition on duopoly routes; and bypass of rules in bilateral air service agreements. Another important feature of the alliance, which benefits both the participants and passengers, is the integration of bonus programs for frequent flyers. With regard to the problems associated with aviation alliances, many carriers point out, first of all, the complexity of entering into similar associations. Already a member of the alliance, the airlines often have to work in tougher conditions, “tied” to the partners and unfavorable rates. Star Alliance in turn seeks accommodation of “under one roof” at airports around the world and actively promotes the overall brand (Havel and Sanchez, 2014). Singapore Airlines acquired a 49% stake in Virgin Atlantic in 2000. The total purchase price amounted to approximately 551 million pounds. However, the past years, Singapore Airlines has continued to invest in the British carrier, which gave reason to assess the total amount of its investment in over 600 million pounds (Singapore Airlines, 2015).
Therefore, global airline alliances exist on the market for more than ten years, and this allows speaking about the stability of this kind of partnership, as well as its further development. Association will seek new partners not only among the carriers of the classical model, but also among low-costs, airlines and rail operators.
References
Havel, B. F. and Sanchez, G. S. (2014). The Principles and Practice of International Aviation Law. Cambridge: Cambridge University Press.
Hollensen, S. (2014). Marketing Management: A Relationship Approach, 3rd ed. New York: Pearson.
Singapore Airlines (2015). The Path of Progress: Annual Report FY2014/15. Retrieved from https://www.singaporeair.com/pdf/Investor-Relations/Annual-Report/annualreport1415v1.pdf [Accessed: 8 February 2016]
