Abstract.3
Introduction..4
Airline Industry Overview6
Branding SIA7
SIA: Strategic Human Resource Management..8
Strategy & Organization.9
SIA: Business Model.10
Conclusion & Implications...11
References....13
Abstract
The dramatic change in airline industry has mandated airlines re-engineer business operations, processes, management styles and, not least, service delivery methods and platforms. Singapore Airlines (SIA) is an example of a global carrier which has managed to weather negative fluctuations in airline industry, to continue to perform successfully and yield solid profits over years. SIA is well known for service quality and cost-effectiveness. To explore how SIA has managed to present an example of a company combining apparently contradictory value propositions, i.e. service quality and cost-effectiveness, SIA's response to change is discussed. From marketability and branding perspective, SIA consistently emphasizes feel for her customers and introduced a range of services which make flying a conviennent experience. From a strategic human resources management perspective, SIA invests intensively in staff development and re-orientations. From a strategy and organization perspective, SIA adopts a dual strategy by which she caters for service quality and cost-effectives. SIA emphasizes a corporate culture of familial bond and ownership. SIA adopts an agile business model which adapts to changing customer base and needs. Recommended actions and implications are discussed.
Singapore Airlines
Introduction
Change is central to airline industry. In recent decades alone, major and smaller airlines have undergone changes across business operations, service delivery and strategic partnerships. The phenomenal growth of IT innovations, supply chain management strategies and, not least, promotional activities, particularly via social media and in-flight has spurred further radical changes still in airline industry. The exponential growth, moreover, of people, capital and service / goods flows across borders has redefined centrality of hubs to international movements. In an interesting study investigating market restructurings in different regions as people, capital and services / goods cross borders, findings show notable disparities in growth rates in different regions (Bowen, 2009). For example, where Sub-Saharan African region has seen steady decline in international traffic, western Pacific Rim has registered an increase in market share and network growth (Bowen). Unsurprisingly, in a region, i.e. western Pacific Rim, which has continued to capture more market shares from global, established players, one can find numerous examples of niche market, regional players as well as more stellar performers.
One outstanding example is Singapore Airlines (SIA). Initially part of Malayan Airways Limited (MAL) ("Singapore Airlines - Our History," n.d.), SIA has been on a long journey changing organizational structure, introducing new innovations and forging broader strategic innovations. Given how service is cardinal in airline industry, SIA has managed to align her organizational resources as to deliver services and products at most competitive costs. SIA's leadership has been notable right from start in not only introducing new conveniences – significant as is in a service-dependent industry – but also in launching completely lines of service and broadening her flight networks as well as strategic partners. Indeed, SIA's record is remarkable including, for example, first free headsets in Economy Class in 1970s, first airline to introduce satellite-based in-flight phones in 1991, International Culinary Panel (a comprehensive panel of world-renowned chefs first introduced in 1998 for in-flight meals), first airline to offer audio and video on demand (AVOD) capabilities on KrisWorld in all classes in October 2001 and first to fly A380 from Singapore to Sydney on 25 October 2007 ("Singapore Airlines - About us," n.d.). This is not to mention her record-breaking long-haul flights from Singapore to Los Angeles in February 2004 and Singapore to New York in June 2004 ("Singapore Airlines - Our History).
The report is made up of five sections: Airline Industry Overview, Branding SIA, SIA: Strategic Human Resource Management, Strategy & Organization and SIA: Business Model. "Airline Industry Overview" highlights basic changes in airline industry in recent decades and impact on SIA. "Branding SIA" discusses branding strategies SIA has adopted to deliver on a world-class promise of premium service. "SIA: Strategic Human Resource Management" explores practices adopted at SIA for staff employment, engagement, development and motivation. "Strategy & Organization" explores successful strategies and effective organizational makeups SIA has adopted in order to implement change in response to challenging and dynamic industry. Finally, "SIA: Business Model" discusses how by adopting an effective business model SIA has managed to combine both service differentiation and cost-effectiveness. The report concludes by conclusion and implications.
Airline Industry Overview
As noted, airline industry has seen dramatic changes in centrality of hubs and growing disparities in market shares (Bowen). Given changing movement habits and patterns across borders, airline companies have had to respond differently. The abundance of information across social networks and over online platforms has made, moreover, personalized service a necessity. Therefore, in addition to internal organizational restructurings, strategic airline alliances (i.e. Star Alliance, Oneworld and SkyTeam), strategic partnerships (with restaurants, hotels and entertainment facilities, for example) and new jet fleets – airline companies have to cater for increasingly demanding passengers in all airport and in-flight activities.
As new, smaller players continue to increase competition – particularly across Asia Pacific region – airline companies have been facing growing pressures in order to remodel existing services as to cater by fewer resources for an increasing base of medium and low tier passengers. Indeed, one notable pattern of international travel in recent years has been a surge in numbers of passengers of more disposable income but who still cannot afford business and premium services. SIA represents one ideal example of an airline company which has managed to develop a dual strategy (more details under "Strategy & Organization"). From a regional airline as part of Malaysian Airlines, SIA has had to drive her growth based on her own cost leadership practice by balancing service quality and cost-effectiveness. This has been achieved – as will be detailed shortly – by combining a broad range of practices and maintaining brand integrity.
Branding SIA
Often, national carries have played a major role in nation building and branding a country (Raguraman, 1997). As such, SIA's history and development best emphasizes her role as a leading player not only in aviation industry by also as an important source of national income. By expanding her network of destinations, moreover, SIA becomes a brand increasingly visible and valued internationally. To pose herself as a world-class carrier, SIA has invested heavily in her people and fleets only to deliver images of novelty, quality and cost-effectiveness.
Probably, one external market factor has helped SIA to grow from a regional hub into a major international tourism destination (Lohmann, Albers, Koch & Pavlovich, 2009). Thanks to growth of air transport networks and deregulation, SIA has managed to capture increasing market share from global airline companies over years. This has been achieved by SIA's realization of how experience matters in building loyalty (Berry & Carbone, 2007). By catering for an increasingly demanding passenger base consistently and in innovative ways, SIA is converting her passengers into repeats. Indeed, SIA has well harnessed her social media presence as to emphasize her core raison d'être values of quality and profitability for stakeholders. On her YouTube platform, for example, SIA emphasizes in her introduction of new Premium Economy class a message of "priority" by which both quality in service delivery and cost-effectiveness are emphasized ("Singapore Airlines," 2015).
Interestingly still, SIA has a strong organizational structure and qualified frontline cabin crew. Training and international communication has been shown, indeed, to be key in delivering on SIA's promise of quality (Chong, 2007). By investing in her staff extensively and her continuous celebration of development and emphasis on a sense "family" among staff, SIA is adapting responsively to demanding passengers and dynamic market needs.
SIA: Strategic Human Resource Management
SIA places great emphasis on staff development and service quality. Unsurprisingly, SIA performs periodical training for her staff and prolongs her orientations for new staff. In line with best practices in industry – and, indeed, in all industries – which show investing in staff and training leads to high performance and greater returns on revenues (Martel, 2003), SIA strategic human resource management practices include – based on an in-depth case study (Wirtz , Heracleous & Pangarkar, 2008) – strict selection and placement processes, prolonged development and re-development, effective service delivery groups, supporting front-line crew for further control of service quality and, not least, recognizing and rewarding excellence.
Strategy & Organization
In response to changing international traveling scene, SIA – like all carriers, small and big – is engaged in a number of strategic partnerships and alliances. Adopting a collaborative strategy, SIA has managed to maximize her value proposition by expanding her network of collaborators, a practice which is shown to be of clear benefits to airlines (Evans, 2001).
In addition to her external partnership strategy, SIA has also adopted a dual strategy, one which is based on service differentiation and cost leadership (Heracleous & Wirtz, 2012). More specifically, by adopting a strategy which reconciles apparently conflicting values, i.e. quality and cost-effectiveness, SIA has – according to (Heracleous & Wirtz, 2010) – reconciled four paradoxes namely: offering service excellence cost-effectively; innovating in both a centralized and a decentralized manner; being a technology leader and a follower; and achieving standardization and personalization in her processes.
SIA's emphasis on service quality at competitive cost – which has been made possible by generous investment in staff and equipment – is an example of a successful strategy which has converted SIA from a small national carrier serving Malayan States into a global airline covering an ever increasing network of nations and hubs (Singh, 1984). Congruent to streamlining and "pulling in" of her organizational resources for market competitiveness, SIA differentiates her value proposition by catering for her clients' informational needs which are, indeed, communicated effectively across her online and offline platforms (Clemons, Gu & Spitler, 2003). This is achieved by effective management systems aligned to business needs to ensure competitiveness and growth (Teo, Eng & Lim, 1998).
Notably, SIA's senior management ("Key Executives for Singapore Airlines Limited," n.d.) has maintained a corporate culture which is centered on a sense of familial bond and collaboration. Evidently, SIA's has been shown to drive company's success and steer her change by sustaining service excellence based on pillars of understanding customers and anticipating needs, developing and motivating frontline staff and, nor least, overseeing service delivery focusing on details and profits (Wirtz & Johnston, 2003).
SIA: Business Model
The reengineering of service deliverables is one measure SIA consistently adopts and one which makes her more agile and dynamic in face of an increasingly challenging airline industry. In a recent example of how agile her business model is SIA has introduced a premium economy cabin and hence reducing economy class capacity (Raghuvanshi, 2015). This new value differentiation should, according to industry experts, improve profitability on medium- and long-haul routes. Further, by "upgrading" a standard offering, i.e. Economy Class, SIA is providing medium- and lower-tier passengers with an experience encountered formerly in Business and Premium offerings and hence giving an example of quality service delivered cost-effectively. If anything, by continuing to blend offerings SIA enhances value propositions not only across her service offerings but also across airline industry.
Conclusion & Implications
Airline industry has seen radical changes in recent decades. In response, airlines – small and big – have opted for a blend of similar and different strategic engagements. One strategy major airlines have opted for alliances by which hubs and connection services – in addition to a host of others – are shared based on preset agreements.
One outstanding success in recent decades is SIA. Born a regional airline, SIA has expanded into one of world's best airlines. This has, in fact, been achieved by adapting to industry's dynamic and challenging ecosystem by adopting effective practices.
Given SIA's business model, her value propositions are flexible enough as to embrace broader customer base.
SIA has limitless business opportunities in still more markets. These opportunities can be captured by investing her partnership networks for medium- and lower tier passenger base. Given recent economic downturn, SIA has a window into further profits by pursuing her "upgrade feel" services at cost-effective offerings.
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