Sheffield Business School

BSc(Honours)Tourism Management

Title: The Success Factors of Singapore Airlines: A case study

Name: Chan Tsz Ting, Ting

Student No: 91204621

Month Year April 2010

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Sheffield Hallam University

Sheffield Business School

Title: The success factors of Singapore Airlines: A case study

FULL NAME: Chan Tsz Ting, Ting

STUDENT No: 91204621

Supervisor: Dr. Connie Mok

In partial fulfilment of the requirements for the degree of Bachelor of Science in

Tourism Management.

Month Year April 2010

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Acknowledgements I would like to thank my supervisor Dr. Mok for her in selecting the paper topic

and for her kindness advice, support and guidance in the writing of the paper.

And good care for every group member as well as me.

I would like to thank my family that gives me the unlimited support for my study.

A special thanks to Cow Wong and Vincent Chan for their help in improving “A

Conceptual Framework of the Success Factors of Singapore Airlines”.

Finally, I would like to thank all the friends that shared my pressure within this

critical moment.

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Abstract Singapore Airlines (SIA) is an airline that continues profitable in the world. SIA

has developed an image as a quality international carrier producing high profit

and has invested heavily in all forms of technology. It provides a high quality

service and uniqueness for the passengers. In this study has investigated the

success factors of SIA which based on its corporation strategic management.

This study aims to review its strategic management development, identify the

success factors of SIA and suggest ways to improve the performance of SIA.

In this study is conducted by a qualitative research methodology with a

conceptual framework based on secondary data. The main sources of this

study are the Journal, website, SIA’s Annual Report and so on.

SIA has its own pathway to lead to success. The achievements could be

categorized into nine elements: SIA’s Cultural and Philosophy, human

resources, innovation technology, alliance network and management,

Singapore Girl, excellence service quality, marketing, brand management and

communication channels. The researcher has combined them to be “A

Conceptual Framework of Success Factors of Singapore Airlines” to identify

the success factors of SIA. Four results consist of rewards and recognition,

uniqueness, healthy balance sheet and loyalty.

Through this study, a greater understanding of why Singapore Airlines can be

one of the world’s leading carriers. In the end of the study, that had been

concluding all the success factors of SIA. And recommended SIA can be the

sustain business through the excellence service, diversified product and

advertisements that can satisfy the customers’ needs and wants.

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Table of Contents Page

Title Page………………………………………………………………………..…i-ii

Acknowledgements……………………………………………………………….iii

Abstract……………………………………………………………………………..iv

Table of content…………………………………………….…………………...v-vi

List of Tables………………………………………………………………………vii

CHAPTER ONE: INTRODUCTION

1.1 Background of Singapore Airlines………………………………………1

1.2 Aim …………………………………………………………………….…..2

1.3 Objective………………………………………………………………..…3

1.4 The subject area & the areas in which the research will impact…….3

1.5 Summary of Chapters……………………………………….…………3-4

CHAPTER TWO: LITERTURE REVIEW

2.1 Introduction……………………………………….………………………5

2.2 Overview of airline industry…………………….……………………..5-6

2.3 The Core Competency of Singapore Airlines

2.3.1 Singapore Airlines Cultural ………………………………….6-7

2.3.2 The Philosophy of Singapore Airlines……………...……….7-8

2.3.3 Brand Reputation…………………………………..…………8-9

2.3.4 Singapore Airlines Uniqueness………………………………10

2.3.5 Singapore Airlines Innovation………….…………………10-11

2.3.6 Singapore Girl …………………………………………….…...11

2.4 The Corporation Strategies of Singapore Airlines

2.4.1 Brand Reputation Strategy…………………..……………11-12

2.4.2 Young Aircraft Fleet Strategy……………………………..12-14

2.4.3 Human Resources Strategy………………………………14-15

2.4.4 Exposure to Competition Strategy……………………...……16

2.4.5 Alliance and Acquisition Strategy………………………...16-17

2.4.6 Marketing Strategy…………………………………………17-18

2.4.7 Technology Strategy……………………………………….18-19

2.4.8 Diversification Strategy………………………………..………20

2.4.9 Differentiation and cost leadership strategies……..……20-22

2.4.10 Innovation and improvement Strategies…………..…….22-23

2.4.11 Crisis management …………………………………………..23

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CHAPTER THREE: METHODOLOGY

3.1 Introduction…………………………………………….…….…………24

3.2 Case study Method………………………………………...………24-25

3.3 Secondary Research…………………………………..………………25

3.4 Advantages………………………………………………….………25-26

3.5 Limitations……………………………………………………………….26

3.6 Sources……………………………………………………...………27-29

CHAPTER FOUR: FINDINGS

4.1 Introduction and A conceptual Framework………………..…………30

4.2 Success factors of Singapore Airlines

4.2.1 Cultural and Philosophy……………………………….……31-32

4.2.2 Human Resources………………………………………..…32-36

4.2.3 Innovation Technology …………………………………………36

4.2.4 Alliance network and management……………..…………36-37

4.2.5 Singapore Girl……………………………………………….37-38

4.2.6 Excellence Service Quality…………………………………38-39

4.2.7 Marketing………………………………….…………………39-40

4.2.8 Brand Management…………………………………...……40-41

4.2.9 Communication Channels

a. Internal Communications………………………….……………41

b. External Communications……………………………..……41-42

c. Connection with Customers…………………………….………42

4.3 Results of the factors

4.3.1 Rewards and Recognition………………………….………42-43

4.3.2 Uniqueness ………………………………………..……………43

4.3.3 Healthy Balance sheet…………………………….……………44

4.3.4 Loyalty…………………………………………………..……44-45

CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions…………………………………………………………46-48

5.2 Recommendations…………………………………………….……49-50

References………………………………………………………….…..……51-58

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List of Figure

Figure 1 Age of the aircraft…......................................................................13

Figure 2 Elements of differentiation and

cost Leadership strategies at SIA………………….…………..……21

Figure 3 A Conceptual Framework of

the Success Factors of Singapore Airlines…………………………30

Figure 4 Five Elements of HR Management of SIA…………………………..34

List of Appendix Appendix 1 SIA’s code share member……………………………………..…..59

Appendix 2 Singapore Airlines - International Award Winner(2009) ……60-63

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CHAPTER ONE INTRODUCTION

1.1 Background

Singapore Airlines (SIA) has grown from a regional airline into one of the

world's leading carriers. It is the national airline of Singapore and a major

carrier in the Pacific region with routes to Europe and North America (China’s

Council Foreign Trade, 2000). According to the Singapore Airlines (2010), SIA

began in 1947 as Malayan (later Malaysian) Airlines in a joint venture between

the Malaysian and Singapore governments, serving primarily the South East

Asian region. It was only have three scheduled flights a week to Kuala Lumpur,

Ipoh and Penang. In 1965, Singapore separated from Malaysia, and later the

two governments agreed to set up separate airlines. Singapore Airlines was

born in 1972. SIA is 54 percent owned by the Singapore government with

minor shareholdings.

Nowadays, Singapore Airlines enjoys a reputation as a "trend creator" in the

aviation field, almost 60 years of innovation and service has pushed the growth

of Singapore Airlines (China’s Council Foreign Trade, 2000). And this is the

mission statement from Singapore Airlines:

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"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"

Singapore Airlines have a young, efficient fleet, an educated staff attuned to

quality, and a top-ranked travel gateway (Roll, 2006). It provides the

outstanding service to the passenger to achieve their mission. According to the

Fahmy (2008), for its high-level service and operational excellence, Singapore

Airlines has won more than 100 international prizes. Even during times of

severe recession in the airline industry, SIA has been the world's most

consistently profitable airline and, unlike most, a virtual stranger to debt.

Therefore, the researcher wants to evaluate the how Singapore Airlines has

managed to make healthy profits year in year out, in an industry whose

performance over the years has been dismal. And in this dissertation will

analysis the SIA’s strategic drivers of success.

1.2 Aims of the research

Singapore Airline is a successful business in aviation industry. During the

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economy tsunami, many companies got loss and had been closed down, but

SIA coupled with consistent profitability. Why it is so stable in the market? So,

the successful factors are valuable to evaluate in-depth.

In this study is to evaluate success factors and positioning of SIA in the

aviation industry. This focus on specific elements of SIA’s strategic and

organization, such as its core competency of cost effective, service excellence

its innovation capabilities and its human resources management practices,

that the elements make SIA success in the market. And evaluate why SIA can

have the competitive –advantages in the many competitors market. Such as,

Cathay Pacific, Japan Airlines, Malaysian Airlines, etc.

1.3 Objectives of the research

SIA is the one of the World’s leading carriers that had been recognized

internationally. How it can maintain the position in the challenging airlines

industry and make healthy profits year in year.

Generally, there are three objectives in this study.

1. To review the strategic management of SIA;

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2. To identify the success factors of SIA through qualitative study;

3. To find out the competitive advantages compared with its competitors; and

4. To give some recommendations based on this study.

1.4 The subject area & the area in which the research will impact

In this research that are benefit to many sectors, for example, organization,

tourism, public, etc. The factors can apply to any company to become a

success business and have a stable profit. And make their business more

efficiency to provide the service to the public. It can improve their living

standard in the future.

1.5 Summary of Chapter

The study is organized into seven chapters. Chapter 1 is the introduction of

the whole dissertation that includes the statement of problem, objectives of

study, significance and scope of the study and the organization of the study

(the parts you have gone through above). Chapter 2 is literature review and

the strategic management of SIA, which include different kinds of strategies.

Chapter 3 describes the methodology used in the study in detail. Chapter 4 in

the design part, the diagrams will be include so as to demonstrate how SIA

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success in the challenging airlines industry. And the factors can apply to any

organization that aims to achieve sustainable success in hyper-competitive

markets. Chapter 5 is conclusions and recommendations. It is presents the

result and discusses the findings.

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CHAPTERTWO LITERTUREREVIEW

2.1 Introduction

This chapter is using the relative literatures and theories of Singapore Airlines’

management. CargoNews Express (2006) noted that Singapore airlines’

reputation as one of the world’s best airlines by using innovation and

uniqueness strategies. Therefore, in this chapter will be evaluate the factor

why Singapore Airlines success in the high competitive industry.

2.2 Overview of airline industry

The scale and scope of airline companies ranges from those with a single

airplane carrying mail or cargo, through full-service international airlines

operating many hundreds of airplanes in various types. Airline services can be

categorized as being intercontinental, regional or domestic and may be

operated as scheduled services or charters (Doganis et al. 2001).

Guardian News and Media Limited (2009) described that those variations in

the types of airline companies, their operating scope, and the routes they

serve, makes analysis of the airline industry somewhat complex. Nevertheless,

3 patterns have emerged in the last 50 years of experience:

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1) The general pattern of ownership has gone from government owned or

supported to independent, for-profit public companies. This occurs as

regulators permit greater freedom, in steps that are usually decades apart.

This pattern has not been completed for all airlines in all regions (Guardian

News and Media Limited, 2009).

2) The demand for air travel services is derived demand. That is, it depends on

other things: business needs for cargo shipments, business passenger

demand, and leisure passenger demand, all influenced by macroeconomic

activity in the markets under study. These patterns are highly seasonal, and

often day-of-week, time-of-day, and even directionally variable (Guardian

News and Media Limited, 2009).

3) The industry is cyclical. Four or five years of poor performance are followed

by five or six years of gradually improving good performance. But profitability

in the good years is generally low, in the range of 2-3% net profit after

interest and tax. It is in this time that airlines begin paying for new

generations of airplanes and other service upgrades they ordered to respond

to the increased demand. Since 1980, the industry as a whole has not even

earned back the cost of capital during the best of times. Conversely, in bad

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times losses can be dramatically worse (Guardian News and Media Limited,

2009)..

2.3 The Core Competency of Singapore Airlines

2.3.1 Singapore Airlines Cultural

Cultural is very important because it can affect all the aspects of an

organization. SIA is especially example of the worldwide organization. The

mission statement and core values of SIA are to establish quality service to

customers, places the customer service and cost efficiency, rather that the

development of global route networks, which is consistent with the study

Vandermerwe and Lovelock (1991), they find that mission is to deliver high

quality personalized service.

The underlying principle that the customer came first was carried through at all

levels of the organization. How customers were handled at each point of

contact was considered of paramount important. Company policy started that if

a trade off had to be made, it should be made in favor of the customer. SIA’s

cultural is clearly communicated to all the employees over the world (Wirtz and

Johnston, 2003).

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BusinessWeek (2010) noted that the corporate cultural encourages employees

to improve the cabin service, future works is a means for SIA staff to test out

innovative ideas throughout the operations and it’s seed recently planted that

will grow into an integral part of SIA’s culture and impact all aspects of

business. In 1972, SIA’s Senior Executive Vice-President (Commercial)

described that as a relatively small regional airline at that time, SIA wanted to

stand out and be recognized. And SIA chose cabin service to differentiate

themselves from the major international airlines and to create a major

competitive edge.

2.3.2 The Philosophy of Singapore Airlines

Phan (2007) noted that the philosophy of using a trusted, consistent and

remembered image for branding can be sound. Many people can identify with

Singapore Airlines' use of the stewardess in traditional Kerbaya uniform. It

breeds a sense of familiarity and comfort. And the 'Krisworld' entertainment

system had a stewardess comforting a huge gorilla on a rampage, advocating

the sophistication of technology and the elegance of the 'Singapore girl'.

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SIA’s corporate philosophy encourages teamwork and team players rather

than star performers. An indication of this orientation is the organization’s

reluctance to single out ‘the best performer’ or ‘the best team’ in response to

the National Productivity Board’s appeal for nominations for awards, part of

Singapore’s productivity drive (Chee, 1994).

SIA join the schemes that encourage creativity and team spirit. For example,

‘staff ideas in action’(S-I-A) is a company-wide productivity scheme which

encourages employee suggestions to improve revenue, reduce cost or

wastage, increase productivity and efficiency, enhance customer service and

improve safety in the workplace.

2.3.3 Brand Reputation

There has much debate about this issue (Chernatony 1999, Davis 1996,

Vandermerwe and Lovelock 1991 and Hardaker and Fill 2005).

Singapore Airlines decided on a fully branded product/service differentiation

strategy from the very beginning. Innovation, best technology, genuine quality

and excellent customer service were to become the major drivers of the brand.

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Throughout the course of their 32-year history, Singapore Airlines has

remained true to their brand attributes. They have pioneered many in-flight

experiential and entertainment innovations, and strived to be best in class. SIA

was the first to introduce hot meals, free alcoholic and non-alcoholic

beverages, and hot towels with a unique and patented scent, personal

entertainment systems, and video-on-demand in all cabins. The company

keeps driving innovation as an important part of the brand, and the cabin

ambience and combined experience are key factors of their success.

Roll (2006) noted that the personalization of the Singapore Airlines brand is the

mixed male and female cabin crew, where especially the flight stewardesses

commonly referred to as Singapore Girls have become very well known.

The Singapore Girl strategy turned out to be a very powerful idea and has

become a successful brand icon with an almost mythical status and aura

around her. The Singapore Girl was conceived, a personification of oriental

charm and friendliness, which the airline made real through careful recruitment

and painstaking training. Effective and original advertising, together with word

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of mouth praises from satisfied passengers, would create an aura of superior

service and style.

2.3.4 Singapore Airlines Uniqueness

Baety (2002) has found that the uniqueness of SIA are marketing and the

product. In marketing the airline follows a broadly differentiated strategy,

targeting a wide range of passengers. It differentiates itself from other airlines

through careful projection of both its image and the management of its product.

The successful differentiators are able to convey a message to customers

about the uniqueness product. SIA has been successful in presenting a

consistent image of high-quality service.

With the Singapore Girl, Stefan Floridian Waters formed the scent in the flight

attendants’ perfume, was blended into the hot towels served before take off

and generally permeated the entire fleet of Singapore Airlines planes. The

patented aroma has since become a unique and very distinct trademark of

Singapore Airlines (Martin, 2005).

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2.3.5 Singapore Innovation

Jochen (2006) pointed that SIA has establish the three-step centralized

innovation process. SIA’s innovation is heavily driven by customer needs. And

SIA is a profit-oriented organization. It is not an institute of technology. It must

make business sense and that is the guiding principle. To support the guiding

principle that they have to make profit and customers must want to return, all

innovations, in one way or another must be something that customers need,

although sometimes customers may not know what they need.

In the SIA’s three steps centralized innovation process: there are idea

generation and concept, design and development of new service and

managing new service launches. The department follows a well-defined

innovation framework guiding its activities, which new-service development

process opportunity identification and selection, concept evaluation, design

and development, etc (Loizos et al., 2006).

2.3.6 Singapore Girl

Lindstrom (2005) and Gwen (2009) defined that the Singapore girl was turned

into an icon. The selection criteria for staff were inflexibly stringent. Besides

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the fact that cabin crew have to be under 26 years of age, the first hurdle

required a woman whose body would perfectly fit the one-size uniform. Their

beauty had to compare to the models used in the enticing advertisements.

Then there was above and beyond the normal training for flight attendants.

They not only had to look the brand, but also they had to act the brand. This

included strict instructions on how to speak to passengers, how to move in the

cabin and how to serve food. And they are the icons of quality service.

2.4 The corporation Strategies of Singapore Airlines

2.4.1 Brand Reputation Strategy

SIA in among the few airlines that have a very strong and positive brand

reputation in the world (Brandscape, 2009). The high brand value is a result of

conscious decisions and strategies implemented over a long period of time.

According to Dr Cheong Choog Kong, SIA’s former chairman and CEO: The

Singapore Girl was conceived, a personification of oriental charm and

friendliness, which the airline made real through careful recruitment and

painstaking training. Effective and original advertising, together with word of

mouth praises from satisfied passengers, would create an aura of superior

service and style.

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Post and Griffin (1997) noted that SIA’s branding strategy in notable in several

other aspects. It adopts a global approach to advertising by using the same

advertisement in international media as well as in overseas markets. Moreover,

the broad basis of SIA brand positioning (the Singapore Girl, a great want to fly,

and latest fleet) has been consistently emphasized since its inception. And the

success in banding was the Singapore Girls became the only commercial

figure in the world. All the area described the Singapore Girl as “one of the

world’s most instantly recognizable faces”. SIA investments are heavy and are

maintained even during industry downturns, it is different to another airlines.

2.4.2 Young Aircraft Fleet Strategy

One of the core elements of SIA’s strategy is young aircraft fleet in. And it

claims to have world's most modern fleet (BBC news, 2000). In 1980s, it was

able to maintain the fleet age at around 2-3 years. Since 1994, though its

average fleet age has risen to between 5 years, it also remains much lower

than the industry average of more than ten years. In keeping with its policy of

maintaining a young fleet, which stands at an average of 6 years 7 months as

at 24 January 2010, it renews its fleet frequently (Singapore Airlines Annual

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Report 08-09). In the Figure 1, it shows that SIA maintain the youngest fleet

than the other airlines in the industry wide.

Figure1:Ageoftheaircraft

Source: Singapore Airlines Annual report (1997)

Singapore Airlines has never painted an aircraft without its tail livery. Even

special liveries such as the Tropical Megatop and the Star Alliance livery still

retain the signature-stylised bird on their vertical stabilizers (Bálint, 2008).

New aircraft, based on the latest technology, are more fuel-efficient. The lower

fuel costs have enabled SIA to outperform many of its rivals on a relative basis

during periods of high oil price. And it maintains the low accident rate with the

young aircraft fleet. Singapore Airlines has always enjoyed an enviable

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reputation for safety - until the Taipei disaster, none of its long-haul flights had

ever suffered a fatal crash (Michelle, 2000).

Singapore Embassy (2004) and Agence France Presse (2000) noted that

Consistently high profitability and cash flow from operations is the key

facilitating factors for its aircraft acquisitions, which in turn may be attributed to

its low costs and differentiated product.

2.4.3 Human Resources Strategy

Chee (1994) described that Human Resources is a certain link between a

business strategy that focuses upon service excellence and attention to the

people who provide that service. SIA relies upon the commitment of the people

to maintain a competitive edge. Among the stated corporate goals in one that

refers specifically to human resource: ‘To adopt human resource management

practices company-wide that attract, develop, motivate and retain employees

who contribute to the company’s objective.’

Nitin and Wirtz and Loizos (2008) noted that the issue of only employing

quality personnel appears to be a recurring theme. For example, its

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recruitment brochure declares ‘Singapore Airlines is looking for outstanding

graduates and professional in all disciplines who have the energy, enthusiasm

and determination to succeed in a tough commercial world and who have a

good record of academic and non-academic achievement’.

The tight labor market in Singapore is more acutely felt at the clerical level and

in maintaining high standards with the cabin crew. Since the stewardess is key

symbol of the airline’s marketing strategy, even senior management is involved

in the final selection. According to Mr Choo, senior manager of crew services,

SIA looks for cabin applicants who have that empathy with people and SIA try

and see whether the person is cheerful, friendly, humble, because we don’t

want him or her to fly and then give the passengers a bad time on board the

airline (Nitin, 2008).

The training and development function is a cornerstone of the organization’s

human resource policy. SIA’s training under in two main types: functional and

job specific versus management and general skills. Functional training is the

responsibility of the line management and tends to be decentralized to different

training centers. Each training center focuses upon specific job skills (Cheong,

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2008).

Based on their HR management, it provide outstanding service on the ground,

means it focusing on improving service at reservation, ticket offices and most

importantly at each airport SIA flew to. Making positive customers’ perception

of ground service is very important. Their commitment in service on the ground

has been implemented already (Pillay, 2004).

2.4.4 Exposure to Competition Strategy

SIA through regulation of flying rights as well as direct subsidies are driven

more by national pride than by economic soundness, SIA remains a notable

exception. The government is remains the majority owner of SIA. There has

been surprisingly little government intervention in SIA’s operation. The

government support to SIA, and it plays no direct role in running the company

(Loizos, 2006).

SIA forced to compete with larger and well-established airlines from other parts

of the world; SIA developed one of the most efficient cost structures among all

airlines. Despite the low yield due to stiff competition, and the long average

stage length of its fights, it was able to turn profits because its costs were even

xxvii

lower (Cheong, 1995).

2.4.5 Alliance and Acquisition Strategy

Presswire (1998) noted that a highly regulated environment prevented airlines

from undertaking acquisitions and led to the formation of alliances. SIA formed

a network of alliances by 1995 to improve access to key market. This network

included equity stakes of 5 % and 2.8% Delta Air Lines and Swissair

respectively.

According to Hamill (2002), as part of its international strategy, in April 2000

SIA joined the Star Alliance, one of the three major airline alliances (the other

two being Oneworld and Skyteam). In the meantime various divisions of the

SIA Group have been investing in China and India through strategic alliances

with local organizations that include, cargo division, airport services,

engineering services and catering. SIA to ensure provide the excellent service

in different area.

Orient Aviation (2010) stated that SIA’s alliance and acquisition strategies over

period of ten years between 1995 and 2004 and some of its partners were

xxviii

low-profit airline. By 2000, the network had grown and included a number of

high-profit partners such as United airlines, SAS and Lufthansa. Between 2000

and 2004, there was further turnover among SIA’s alliance partners with some

going bankrupt. And SIA has been particularly caution is its alliance formation.

2.4.6 Marketing Strategy

The differentiation marketing strategy exploited by SIA is based on service and

the image of Singapore Girl is a key part of this brand image. The Singapore

Girl stands for friendly customer orientated staff delivering superior customer

service. This has become the most important competitive advantage for SIA.

Staff training and development programs have helped SIA retain and improve

its customer service level through measures such as language courses and

attitudinal programs to ensure professional service amongst employees. As a

result the awareness of the Singapore Girl image among global customers is

high. This is beneficial given the argument that companies who are able to

attract customers are those who are with better customer service (Pillay,

1989).

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It is reasonable to say that the effective marketing strategy helped SIA reduce

cost pressures in competing in the airline industry through value adding

targeted market segmentation. The use of Singapore Girl as an icon for SIA

has enhanced its competitive position in the industry (Chan, 2000). Changing

consumer behavior though has shaped airline companies’ strategies

particularly in considering terrorist linked attacks. Customers use safety as an

important criterion in choosing travel methods with substitutes such as trains

generating threats to airline companies in particular markets. And SIA

repositioning brand image from quality orientated to safety may prove difficult

and costly. However given the broader political and legal contexts it is arguably

a necessity for SIA to pursue this strategy (Fulton, 2007).

2.4.7 Technology Strategy

There has much debate about this issue (AdoiMagazine 2009, Roll 2004,

Kottler and Keller 2006, ASDNEWS,2010 and Cris 2009).

SIA had a strong reputation for in-flight firsts. For example: the first airplane

that uses sky telephone. The first that introduce personal entertainment

system and video-on-demand. Introduce the suite (class beyond first (2007)).

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First airlines operates Boeing B777 and A380 air fleet etc. Singapore Airlines

recognizes that each innovation has a relatively short life span. Once other

airlines adopt it, it is no longer considered "innovative". Therefore, the airline

continues to invest heavily in R&D, innovation and technology as an integrated

part of the business strategy to further differentiate itself.

On the technology side, Singapore Airlines still maintains the youngest fleet of

aircraft amongst all major air carriers, and keeps to the stringent policy of

replacing older aircrafts for newer, better models. The use of new technology,

include the modern air fleet, because it can reduce the operations cost and

maintenance cost of the fleet, it more efficient. In long term this will deliver

remarkable saving performance finance of SIA. They have always been first in

line to take delivery of new aircraft types like Boeing 747 jumbo jets, Boeing

777, and they will become the first airline to fly the Airbus Super jumbo A-380

in 2006. Even the aircrafts are sub-branded like 747-Megatop and 777-Jubilee

to further distinguish SIA and its brand from competitors.

The strategy behind the technology program is clear: It enhances cost

efficiency to use the latest aircrafts and at the same time, Singapore Airlines

uses these events for marketing purposes. An example of this was the new

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non-stop services to Los Angeles and New York launched in 2004, which

attracted huge publicity in global media and kept the innovation promise of the

brand alive. The special aircrafts for these long-range routes (Airbus A340-500)

are sub-branded Leadership to further distinguish the brand promise.

On the flight, SIA also use "the most modern fleet", with a lot of facility to

satisfy the passengers such as TV screens, video entertainment,

satellite–linked air to ground telephone service. With these all service, the

passengers feel an amazing experience in flight with Singapore Airlines.

2.4.8 Diversification Strategy

The Singapore Airlines Group has 36 direct subsidiaries and associated

companies (Singapore Airlines, 2008). SIA Group subsidiaries include

Singapore Airport Terminal Services (80.8%), Singapore Engineering

Company (81%), and Singapore Airlines Cargo (100%) (Singapore Airlines,

2008). Its airline subsidiaries which include 100% ownership of regional carrier

Silk Air, budget carrier Tiger Airways (49%), and Virgin Atlantic (49%) cover

the key customer segments within the industry. According to CEO Chew

Choon Seng “we intend to play in all the segments – SIA at the high end, Silk

Air on middle ground and Tiger Airways at the low end” (Doganis,2006). The

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shareholders in Tiger Airways include Temasek (the Singapore government’s

investment arm as well as SIA’s majority owner) and

Irelandia Investments, the private family investment vehicle of Anthony Ryan,

the founder of Ryanair, one of the world’s leading budget carriers.

2.4.9 Differentiation and cost leadership strategies

There are many debates about this issue (Nitin et al.2008, Roll 2004, Rezaul

2007 and Scholes and Jonhson 2005).

Strategies of differentiation and cost leadership have usually necessitated

different and incompatible investments and organizational models. A strategy

of differentiation for example implies high quality offerings, and significant

investments in innovation, staff development and branding, leading to higher

costs than average. SIA achieves a differentiation strategy, but intriguingly,

without a cost penalty. In fact, as noted above, SIA has significantly higher

efficiency than its peer group, the key feature of a successful cost leadership

strategy. Table 1. is the outlines of the elements discussed above in relation to

the dual strategy of integrating elements of differentiation and cost leadership

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Figure 2.: Elements of differentiation and cost leadership strategies at

SIA

Source: Loizos and Jochen (2009)

Loizos and Jochen (2009) noted that Strategic alignment can be represented

as consisting of four key elements. First, environmental conditions (macro- and

microelements relating to the industry), secondly the strategy of the company

that should be appropriate for the environmental conditions, thirdly the core

competencies that should effectively support the strategy, and finally the

organizational level (including elements such as processes, culture, and

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functional strategies) that should deliver the necessary core competencies.

This core competence is the ability to achieve a differentiated offering with

exceptional levels of efficiency, which labeled “cost-effective service

excellence”.

2.4.10 Innovation and improvement Strategies

SIA’s approaches to overcoming its key challenges in delivering sustained

service excellence are in one way or another all linked it constant innovation

and improvement. It is the company’s strong innovation capability that has

enabled it to sustain service excellence and secure its service leadership

position over decades (Dian ,2009).

Airline News (2009) noted that innovation in everything, all the time.

Importantly, this also supports the notion of cost-effectiveness. Continuous

incremental development comes at a lower cost than radical innovation, but

delivers that necessary margin of value to the customer: The point is that, on

the route, SIA just have to be better than their competitors in everything, just a

little bit better in everything. This allows SIA to make a small profit from the

flight to enable to innovate. As a way of inspiring discontinuous service

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innovations, SIA strives to gain a deep understanding of trends in customer

lifestyles, and debates their implications for the future of better service in the

air. SIA have the Product Innovation Department that continuously looks at

trends and why people behave in a certain manner, why they do certain things.

And then they do a projection of 3–5 years of what is going to happen . It is

really about what are the customers’ lifestyle needs.

SIA has made a clear strategic choice of being a leader and follower at the

same time. It is a pioneer on innovations that have high impact on customer

service, for example in-flight entertainment, gourmet cuisine that includes fine

wines, the ability to order one’s choice of dishes in advance by Internet, ‘beds’

in the air. However, it is at the same time a fast follower in areas that are less

visible from the customer’s point of view, such as revenue management or

CRM systems. In doing so, SIA relies on proven technology that can be

implemented swiftly and cost-effectively; this reduces the implementation risk

while delivering the necessary functionality (Arce, 2004).

2.4.11 Crisis management

Temporal (2002) and Kulwant (2004) stated that there is complete and utter

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shock at an airline that has the trust and confidence of the world. SIA is a

major international brand with global aspirations. The company has a crisis

management center that immediately swings into action, with its PR staff

assigned to work around the clock in two in two 12-hour shifts. They answer

media “hotline” questions without delay. They promise that they will update the

media at every opportunity. It is a promise made by the brand itself. This was

good crisis management planning of planned to one person only was to

address the media, so the airline spoke through and with one voice and

without error.

CHAPTER THREE METHODOLOGY

3.1 Introduction

This chapter is aimed to describe the methodology had been used in this study.

All the data conduct by using a case study method. And it is a conceptual

framework is based on the secondary data. It is because there were difficulties

to set the questions and asked about the success factors of SIA. So, the

researchers made use of the descriptive research study.

The method was used to gather information. In this method, it is possess

xxxvii

significant advantages over primary data. It can be obtaining more quickly and

is less time consuming. Data shall be collected from multiple sources, allowing

for a number of different perspectives to be taken into consideration in the

development of the recommendations. Nonetheless, researcher has to bear a

risk of inaccuracy, lack of availability and very hard to rule out alternative

competitive.

3.2 Case study Method

The Case Study Method is based on focused stories rooted in reality providing

contextual information such as background, characters, setting, and enough

specific details to provide some guidance. Cases can be used to illustrate,

remediation, and practice critical thinking, teamwork, research, and

communication skills (Barrows and Tamblyn , 1980).

Case study research excels at bringing to an understanding of a complex issue

or object and can extend experience or add strength to what is already known

through the research. Case studies emphasize detailed contextual analysis of

a limited number of events or conditions. Researchers have used the case

study research method for many years across a variety of disciplines. In

particular, have made wide use of this qualitative research method to examine

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contemporary real-life situations and provide the basis for the application of

ideas and extension of methods. And in which multiple sources of evidence are

used (Yin, 1984, p. 23).

3.3 Secondary Research

Secondary data is data that has already been collected by someone else for a

different purpose (Hazel Hall, 2007). Secondary data include raw data and

published summaries, as well as both quantitative and qualitative data. Ruffa

(2008) deduced secondary research provides a wide range of information, and

conceptual and theoretical framework to support the study. The chosen data

were based on data’s availability, updated, reliability and relevantly. The

research has reviewed the data that are relevant and there is valuable

viewpoint on SIA.

3.4 Advantages

The major advantages of the analysis of secondary data is the researcher can

control the data collection process, so that can ensure data quality, minimize

the number of missing values, and assess the reliability of the instruments.

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And it allowed multiple resources of information that contain large number of

valuable information. You may not need to worry about informed consent,

human subjects’ restrictions, etc. Moreover, the qualitative research method

was more reliable, valid, efficient, and effective than the quantitative research

method in term of the cost, time and personal bias. The secondary research is

possible that the study would be cheap and less time consuming.

3.5 Limitations

There are a number of problems and limitation that the research will face. In

this study, the research collects all the information from the printed material

and Internet. It may be exactly reflecting the truth because of researching

some company’s working paper the people may saying all positive things to

build up their reputation. It is no all the fact of the company. Beside that, the

data also come from Internet, which is released by the third party, so it raises a

risk that the information is not accuracy. And it is less degree of control on

Internet. Nowadays, the advanced technology led to have a huge information

support for the related data. In the wide based of information, the researcher

needs to select carefully to avoid the bias and accuracy. If not, it will be bias

drawn as the result of inaccurate findings on Internet.

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3.6 Sources

In this research, secondary sources it also can be classified into internal

sources and external sources. For example, internal sources included the

annual report of SIA and the external sources that mean the industry journal,

statistics, etc.

It will be consulted through those parts of sources academic journals,

textbooks, the Internet. Most of the secondary data were collected by the

following sources:

Journals:

- HR Focus

- The Wall Street Journal

- Nation’s Business

- Personnel Journal

- Managing Service Quality

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- Business Strategy in Asia-A casebook

- International Human Resource management

Textbooks:

- The Airline Business in the Twenty-first Century

- Global Airlines: competition in a transnational industry

- Air Transportation: A Management Perspective

- The Global Learning Organization

- Flying High in a Competitive Industry

Media source:

- Singapore News

- Business Traveller

- Business Week

- The Financial Times

- Air Transport World

- Fortune

- World of Airline News

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- Forbes

- CNBC

Internet:

- http://www.singaporeair.com/saa/index.jsp

- http://gbr.pepperdine.edu/

- http://news.airwise.com/airlines/singapore.html

Annual Report of SIA:

Interim and annual reports for this year are the important sources for

examining the financial performance with the year-to-year financial

comparison and they enable the researcher to obtain the information

about the operation of SIA.

Other sources:

- audio player of the conversation by Harvard Business School

Professor Rohit Deshpande

- http://blogs.hbr.org/cs/2008/08/singapore_airlines_winning_str.html

It was through this method, that this study was able to gain wider range of

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information about SIA’s strategies. The secondary data will be into account to

eliminate the bias.

CHAPTER FOUR FINDINGS

4.1 Introduction and A conceptual Framework

The researcher has to find out the success factors of Singapore Airlines. This

chapter has focused on the management level and business of SIA. Based on

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the literature review, the researcher examined and gathered it as to find out the

success factors of SIA. And the researcher designed a model to comprise nine

success factors of SIA that were reported in the literature review and listed

below.

Figure 3: A Conceptual Framework of the Success Factors of Singapore

Airlines

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4.2 Success factors of Singapore Airlines

4.2.1 Cultural and Philosophy

The first component was Singapore Airiness’ cultural and philosophy. In SIA

cultural, it focus on service is absolutely clear. The mission statement and core

values establish, without question, that quality service to customers is a

fundamental objective and aspiration of the airline. It is a customer-oriented

cultural. Every major issue, question or decision is considered in light of their

commitment to providing world-class customer service. The customers are the

first priority in anytime.

And SIA’s cultural is clearly communicated to all the employees over the world;

it is encouraged teamwork and team players. So, all the staff can perform well

in their own position and maintain the quality service for all the customers for

many years. From 1972, Malaysia-Singapore Airlines (MSA) they paid

particular attention to the quality of their cabin service until now it become a

part of the corporate culture, with the company encouraging its employees to

search out ways to continually improve the service.

xlvi

Philosophy was another factor contributed to Singapore Airlines’ success. In

the complex aviation environment, SIA need for clear, visible objectives to give

direction to the company’s progress is evident. And SIA philosophy of using a

trusted, consistent and remembered image for branding can be sound. Many

people can identify with Singapore Airlines' use of the stewardess in traditional

Kerbaya uniform. It breeds a sense of familiarity and comfort. A recent

television advertisement promoting the 'Krisworld' entertainment system had a

stewardess comforting a huge gorilla on a rampage, advocating the

sophistication of technology and the elegance of the 'Singapore girl'.

Singapore Airlines used four concepts to run the company. Firstly, SIA has to

deliver the highest quality of customer service that is safe, reliable, and

economical. Secondly, is to generate the earning that provides sufficient

resources for reinvestment and satisfactory returns to shareholders. Thirdly,

SIA adopt human resource management practices that attract, develop,

motivate, and retain employees who contribute to the company’s objective.

Finally is to maximize the utilization and productivity of all resources.

4.2.2 Human Resources

One key element of SIA’s competitive success is that it has good reputation on

xlvii

the HR management. Typical of service businesses, the people especially

front-line staffs at SIA are a core part of the offering and the most visible

element of the service from a customer experience point of view. Beside that

SIA gaining recognition for its organizational performance, the quality of SIA’s

management was also noted when it took first place in survey commissioned

by Asian Business to identify Asia’s “most admired companies”.

One of the SIA’s goals is refers specifically to human resources: “To adopt

human resource management practices company-wide those attract, develop,

motivate and retain employees who contribute to the Company’s objectives.” It

shows that human resource management is very important to SIA. And SIA’s

human resource function is the best be described within the context of the

hierarchical structure. And it may be represented by the four main grades of

employees; there are divisional directors or senior vice-presidents, managers,

administrative staff and general staff. Credit should really be given to senior

management for SIA’s success. The general staff are employees in first-line

supervisory positions, skilled and semi-skilled workers, cabin crew, clerical

personnel, computer programmers and licensed aircraft engineers. Service

quality is the core part of the ‘product’ and front-line staff tend to be the most

xlviii

visible element to consumers, hence significantly influencing service quality.

SIA’s Singapore Girls have become synonymous with the airline and the

personification of quality service while most other airlines have not managed to

‘brand’ and promote their cabin crew as successfully. So, in HR the front-line

staff is very important it is because from a customer experience point of view,

consumers often see front-line staff as the firm itself.

And here are the five elements behind SIA’s effective HR management.

Figure 4.: Five Elements of HR Management of SIA

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In the employee recruitment, the company has stringent selection and

recruitment process. SIA said that the right people are the most important

asset of the company and the wrong people are a liability. SIA getting its right

stars with hiring the right people. To support its service excellence strategy,

SIA’s Human resource strategy begins with recruitment, where SIA adopts a

highly rigorous and strict selection process. Cabin crew applicants are required

to meet a multitude of criteria starting with an initial screening based on factors

such as age ranges, academic qualifications and physical attributes. After

these baseline requirements are met, applicants go through three rounds of

interviews, uniform checks, a water confidence test, a psychometric test and

even a tea party.

l

For the training and retraining, SIA has invests huge amounts of money in

infrastructure and technology. At SIA, they believe that people actually do

make a difference, so the company has in place a very comprehensive and

holistic approach to developing the human resources. Essentially, SIA do two

types of training, namely functional training and general management-type

training. Training is one of its focal points in its human resource and service

excellence strategy. Even though training is often emphasized as a key

element of success in service industries, SIA remains the airline with the

highest emphasis on this aspect. Newly recruited cabin crews are required to

undertake intensive four-month training courses—the longest and most

comprehensive in the industry. SIA’s training is aimed at enabling cabin crew to

provide gracious service reflecting warmth and friendliness while projecting an

image of authority and confidence in.

SIA had build up a successful service delivery teams. Effective teams are often

a pre-requisite to service excellence. The nature of many types of service

requires people to work in teams, often across function in order to deliver

seamless customer service.

li

Empowerment of the front line is especially important during service recovery

process. SIA strive for instantaneous service recovery. It is one of the company

biggest differentiators. When some going wrong, the staff will react quickly.

SIA had set reward systems, it is the key to motivation and service staff must

get the message that they will be recognized and rewarded for providing

quality service.

4.2.3 Innovation Technology

In SIA, maintaining a young fleet has been one of the success factors of SIA.

SIA using the young fleets it means cost saving, on-time departures, lower

maintenance costs, fuel saving, higher market profile, and improved staff

morale. Beside that, it can up the reputation in the market.

And SIA got to find ways to move faster than the competitors and create an

enduring advantage for the company. Although SIA know that there will be a

million problems, but once they agree on the principle of “technology in the

sky” s a competitive tool. SIA using the innovation technological is wanted to

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match the high-tech service with their soft service. For example, installation of

small TV screens at each First and Business Class seat, offering passengers

video entertainment.

4.2.4 Alliance network and management

Alliances generate mixed reaction form industry executives partly because of

their different degree of success. Alliances may be inescapable since an

increasingly larger proportion of customers require global connectivity. And

alliances particularly useful in lean times when schedule coordination

reciprocal service provision and economic of scale through pooled purchasing

are vital. In SIA’s customers seamless travel to many more destinations

through SIA's code share arrangements with many of the Star Alliance

partners. In addition, customers can enjoy a range of Star Alliance

benefits such as flight redemption and upgrade redemption awards on most

member carriers. SIA has code share arrangements with many member

airlines (Appendix 1).

4.2.5 Singapore Girl

The personalization of the Singapore Airlines brand is the mixed male and

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female cabin crew, where especially the flight stewardesses commonly

referred to as Singapore Girls have become very well known. SIA engaged

French haute-couture designer Pierre Balmain at the inauguration of the airline

in 1972. He designed a special version of the Malay sarong kebaya as the

uniform, which later became one of the most recognized signatures of the

airline. A very designated and visual part of the entire brand experience.

The Singapore Girl strategy turned out to be a very powerful idea and has

become a successful brand icon with an almost mythical status and aura

around her. The Singapore Girl encapsulates Asian values and hospitality, and

could be described as caring, warm, gentle, elegant and serene. It is a brilliant

personification of SIA's commitment to service and quality excellence. The

icon has become so strong that Madame Tussaud's Museum in London

started to display the Singapore Girl in 1994 as the first commercial figure

ever.

Singapore Airlines also runs one of the most comprehensive and rigorous

training programs for cabin and flight crew in the industry to make sure the SIA

brand experience is fully and consistently delivered.

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The social status of the Singapore Girl has also reached near-celebrity in Asia.

This has allowed Singapore Airlines to be highly selective in the recruiting

process for talent that has added further to the strength of the brand icon and

the legend around it.

4.2.6 Excellence Service Quality

“Singapore Airlines” is reputation for outstanding passenger service in the

airlines industry. SIA clearly understand that they need to please and satisfy

the higher and higher expectations and increasingly demanding customers by

delivering excellent and outstanding service to them. They have pioneered

many in-flight experiential and entertainment innovations, and strived to be

best in class. SIA was the first to introduce hot meals, free alcoholic and

non-alcoholic beverages, and hot towels with a unique and patented scent,

personal entertainment systems, and video-on-demand in all cabins. The

company keeps driving innovation as an important part of the brand, and the

cabin ambience and combined experience are key factors of their success.

SIA pays a lot of effort and investment on training and innovation in technology

to facilitate the in-flight and ground services as excellent as it can. In the HR

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training, they learn how to provide a good customer service and the main point

is demonstrate to all SIA staff members that continuous learning and

improvement are important principle for success. In the competitive airline

industry, SIA has find way to move faster than its competitors and create an

enduring advantage for the company. And SIA keeps in eye for new ways to

improve and grow and will continuously introduce new innovations and tracks

competitor’s progress.

4.2.7 Marketing

The differentiation marketing strategy exploited by SIA is based on service and

the image of Singapore Girl is a key part of this brand image. The Singapore

Girl has been mentioned before. In the marketing side this is beneficial given

the argument that companies who are able to attract customers are those who

are with better customer service. And it is reasonable to say that the effective

marketing strategy helped SIA reduce cost pressures in competing in the

airline industry through value adding targeted market segmentation. The use of

Singapore Girl as an icon for SIA has enhanced it competitive advantage in the

industry.

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Nowadays, Customers use safety as an important criterion in choosing travel

methods with substitutes such as trains generating threats to airline companies

in particular markets. New entrants or existing rivals who positioned

themselves as safe airlines such as Jetblue have exploited this opportunity to

increase market share yet repositioning SIA’s brand image from quality

orientated to safety may prove difficult and costly. However given the broader

political and legal contexts it is arguably a necessity for SIA to pursue this

strategy.

The latest slogan, "First To Fly The A380 - Experience The Difference in 2006",

was marketed to promote SIA as the world's first airline to fly the A380-800

double-decker super jumbo in 2006. It is one kind of the marketing of SIA.

4.2.8 Brand Management

SIA has gained international brand recognition and acceptance and are widely

accepted as having gained international clout in the provision of their products

and service. It is one of the main success factors of SIA. SIA decided on a fully

branded product and service differentiation strategy from the very beginning.

Innovation, best technology, genuine quality and excellent customer service

lvii

were to become the major drivers of the brand.

It has been as consistent in its communication vehicles as it has been in its

brand strategy. The primary message “Singapore Airlines—A Great Way to

Fly” has been consistently conveyed in exclusive print media and also in

selected TV-commercials of very high production value to underline the quality

aspirations of the brand. All communication messages are featured using the

iconic Singapore Girl in different themes and settings. SIA’s strong positioning

and commitment to the brand has given it a competitive advantage in the new

landscape. Their challenge is therefore to deliver on their brand promise to

provide premium quality, innovation and excellent service over the long run.

SIA has achieved a high level of brand awareness among consumers through

its branding strategies. The SIA brand has come to symbolize in the minds of

consumers the very attributes that the SIA company espouses - a young fleet

of aircraft, innovative products and services, and a market leader in the

industry. The successful branding and promoting of its cabin crew that created

one of the airline industry’s most recognizable figures is an unprecedented

achievement of SIA.

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4.2.9 Communication Channels

a. Internal Communications

SIA is a large organisation, with more than 28,000 staff located in cities and

subsidiaries throughout the world. People from different cultures must work

together to produce a seamless and positive customer experience. SIA help to

keep everyone on the same wavelength, SIA publishes a variety of department

newsletters and a monthly company-wide magazine. Regular dialogue

sessions between management and staff keep communications flowing. A

"Staff Ideas in Action" scheme ensures that new suggestions are constantly

put forward for improvement. It is to maintain a well communication within the

company,

b. External Communications

Whether the advertisement is about new destinations, new airplanes, new

cuisine on board or brand new seats and video services, the legendary “SIA

Girl” is always featured in the advertising layouts and copy. It is the bottom line

for SIA is not the plane, the seat, the video or the destination. The bottom line

is delivering quality service, and the Singapore Girl is the brand identity - the

public personification of that service. The Singapore Girl represents

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impeccable quality service. In the airline's external communications, she is

always there.

c. Connection with Customers

SIA makes a concerted effort to stay in touch with customers through in-flight

surveys, customer focus groups and rapid reply to every compliment or

complaint they receive. SIA consolidates this input with other key figures to

create a quarterly "Service Performance Index" that is closely watched

throughout the airline.

Frequent flyers are especially well connected with special messages, offers

and publications sent regularly to members of the priority passenger "PPS

Club". Very frequent flyers achieve an elite "Solitaire" status, with a wide range

of valuable privileges, including most convenient check-in, additional baggage

allowance, priority seating and waitlist and more.

4.3 Result of the factors

4.3.1 Rewards and Recognition

SIA achievements have been recognized around the world. Last year, SIA had

lx

won a numerous of awards (Appendix 2).

While excellent staff performance is rewarded with increased pay and position,

the most prestigious award of all is reserved for extraordinary acts of truly

superior service. "The Deputy Chairman's Award" is given yearly to teams or

individuals who respond to unique customer situations with exceptionally

positive, innovative or selfless acts of service. This award carries no financial

benefit, but it is the most revered accolade in the airline. Winners and their

families are flown to Singapore for a special dinner celebration, the story of

their unique efforts is published in the monthly "Outlook" magazine, and their

personal status as a "Deputy Chairman's Award Winner" remains a badge of

distinction for life.

4.3.2 Uniqueness

Uniqueness is one of the advantages that can win the other company in a

competitive industry. SIA use of the “Singapore Girl” icon is unique in the

industry; it can be immediately associate with Singapore Airlines itself. The

Singapore Airlines brand is unique in the sense that the boardroom takes

dedicated leadership of the brand strategy unlike many other Asian companies.

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Innovation, best technology, genuine quality and excellent customer service

were to become the uniqueness of SIA. Beside that, the management style,

brand name, company’s cultural and philosophy also the uniqueness of SIA.

Above all factors are enhancing the uniqueness of SIA to attractive customer.

4.3.3 Healthy Balance Sheet

Singapore Airlines Group achieved a net profit attributable to equity holders of

$1,062 million for the financial year 2008-09. The Company performed well in

the first half of the financial year, it build up the health balance sheet. Whatever,

in the economy tsunami, SIA was still coupled with consistent profitability.

Singapore Airlines Group will continue to build on the fundamentals that have

served it well. This includes exercising cost discipline in the management of

finances to ensure that the Company’s balance sheet remains strong. It will

also keep on investing in the training and development of its people, and in

systems and infrastructure so as to uphold the highest customer service

standards.

lxii

A key indicator is that the load factor represents and determines the breakeven

point between cost and profitability. It is also affected by other cost related

factors in determining the profitability of an airline company. SIA is a

successful example in obtaining better performance in respect of its load factor

for passenger journeys.

4.3.4 Loyalty

One of the results of the result of the success factors is loyalty. And loyalty is

divided in two parts, first is customers another is employee. Customers'

perception of the price or value equation, will affect their future buying behavior

and loyalty among other factors are crucial for the future. Singapore Airlines

stay true to the brand and keep delivering on the fairly high-cost promise of

quality, innovation and service. This requires heavy, on-going investments and

healthy cash flows, which can only be achieved though a continuous

price-premium strategy and satisfactory passenger load factors. A load factor

is one of the most important determining factors of profitability within the airline

industry.

lxiii

A well Human resource management can build up the employee loyalty. SIA

does not claim to be the best paymaster in Singapore. It participates in salary

surveys conducted by professional organizations to compare with market

norms. However, in terms of the total compensation packet, which includes

benefits like medical, travel, loans, insurance coverage, etc., SIA is one of the

best. So, the compensation rewards can minimize turnover of employee and

increase the employee loyalty.

lxiv

CHAPTER FIVE CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions

In this study, the objective involved evaluation of the success factors of

Singapore airlines. Through the secondary research, it can show that SIA was

the top leader in service, technology and innovation in the airline industry. SIA

has a unique culture that maintains excellent service. SIA is a success

company in the airline industry.

The critical elements that lead Singapore Airlines to success are essential.

According to the information provided in this paper, it shows that SIA success

factors are divided in nine components and four results. For the nine

components of SIA’s success factors are Cultural and Philosophy, human

resources, innovation technology, alliance network and management,

Singapore Girl, excellence service quality, marketing, brand management and

communication channels. And the four results are rewards and recognition,

uniqueness, healthy balance sheet and loyalty. The researcher has developed

the Conceptual Framework of the Success Factors of Singapore Airlines which

has not been seen before. And the previous researcher has not been

summarizing the SIA’s success factors before.

lxv

Compare to other airlines, SIA has made to outstand of excellent service

quality and the good reputation with the Singapore Girls and have the clearly

goals. In the SIA’S Cultural and Philosophy it shows that quality service to

customers is a fundamental objective and aspiration of the airline. It is a

customer-oriented cultural. The customers are the first priority in anytime.

Beside that the employee is focus in teamwork.

In human resources, SIA had planned to have a well HR management and

system which can motivate the employee in different position, to increase

employee loyalty and have a stringent selection and recruitment process. All of

this are ensure that they can provide outstanding service and image of SIA.

SIA always use the innovation technology, is has the name of "trend creator" in

the aviation field. SIA using the young fleets it can cost saving, on-time

departures, lower maintenance costs, fuel saving, higher market profile, and

improved staff morale. SIA is only one airline use this strategy in the airlines

industry.

Beside that, SIA has alliance network and management can increasingly larger

proportion of customers require global connectivity. And alliances particularly

lxvi

useful in lean times when schedule coordination reciprocal service provision

and economic of scale through pooled purchasing are vital. So, it is one of the

reasons that lead SIA success.

Singapore Girl is a very powerful idea and has become a successful brand

icon of SIA. The Singapore Girl encapsulates Asian values and hospitality, and

could be described as caring, warm, gentle, elegant and serene.

In Excellence Service Quality, SIA understand the customers need and they

provide many in-flight experiential and entertainment innovations, and strived

to be best in class to satisfy the customer needs

Marketing based on service and the image of Singapore Girl is a key part of

this brand image. And the effective marketing strategy helped SIA to reduce

cost pressures in competing in the airline industry through value adding

targeted market segmentation.

SIA decided on a fully branded product and service differentiation strategy

from the very beginning. Innovation, best technology, genuine quality and

lxvii

excellent customer service were to become the major drivers of the brand. And

it is one of the important factor lead the SIA success.

And SIA management can communicate successfully to people, whatever the

internal, external and communication with the customers. Based on the

communication it can build up the good relationship with customer and

employees. And SIA believe that employee and customer is the asset of a

company.

Based on those factors, it creates four results that make SIA to be success and

also recognize that SIA achieved their goals. There are rewards and

recognition, uniqueness, healthy balance sheet and loyalty. Combined all of

those factors it should be “A Conceptual Framework of the Success Factors of

Singapore Airlines”.

5.2 Recommendations

First, the researcher suggested that in a high competitive international market,

SIA want to maintain its superiority and top in the market, whatever in the bad

times with a global economy. SIA needs to wholly understand the plans being

lxviii

pursued by the competitors, for example, Cathay Pacific, British Airways, etc. It

should be improve the comfort and quality of service to the customers. And

SIA needs to keep the differentiate products or service to examining the

strengths or weakness.

Second, the research focused on the expectation of the customers. SIA need

to sustain their business through the improvement to fulfill the customers’

needs and wants. For example, they can make some survey or interview to

ask the customers what can the SIA improve and what they expected in SIA. It

is a directly method to know what their wants and needs.

Third, Singapore Airlines should remain competitive by providing better service

and comfort to customers than the competitors based on this in the long- term

the market will grow. And SIA need to keep their reputation as one of the

leading airlines in the world for providing the superior quality service or product

to the customers and SIA should continues to improve the in-flight service and

technology, for example, space bed and TV, etc.

lxix

Finally, SIA is an international recognized airline so they need to update the

information for the customer all the time and more advertisements to promote

their company, whatever in the TV, web site, SMS, etc. Based on this SIA can

fulfill the customers’ needs and maintain the sustainability of the business

through the excellence service and diversified product.

( 10,577 words)

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Appendix 1

SIA has code share arrangements with these member airlines.

Air Canada

Air New Zealand

All Nippon Airways

Asiana Airlines

EgyptAir

LOT Polish Airlines

Lufthansa

South African Airways

Swiss International Air Lines

Turkish Airlines

US Airways

lxxx

Appendix 2 Singapore Airlines - International Award Winner (2009)

OCTOBER 2009

Guardian/Observer Travel Awards (UK) Best Long Haul Airline (6th consecutive year) Best Business Class

Condé Nast Traveler (USA) 2009 Readers’ Choice Awards Best Global Airline (21 out of 22 years)

The Nordic Business Travel Supplier Award 2009 (Helsinki) The Best Nordic Travel Supplier 2009 (2nd year winning) SIA being the supplier with the overall highest customer satisfaction

TTG Annual Travel Awards (Asia Pacific) Travel Hall of Fame (7th consecutive year))

Securities Investors Association (Singapore) SIAS 10th Investors’ Choice Awards 2009 Transport/Storage/Communications Category Most Transparent Company Award 2009 (5th consecutive year) Golden Circle Award)

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Condé Nast Traveler (USA) 2009 Business Travel Awards Best Transpacific Airline for Business Class)

SEPTEMBER 2009

SmartTravelAsia.Com (Hong Kong) Favourite Airline Poll Results, 2009 Best Airline Worldwide Best Business Class Best Cabin Service

Business Traveller (Asia Pacific) 2009 Best Airline (18th consecutive year) Best Asia-Pacific Airline Best First Class Best Business Class Best Economy Class

Business Traveller (UK based) 2009 Best Asian Airline Best Long Haul Airline Best Business Class Best Economy Class Best Cabin Staff

E-Travel Blackboard Reader’s Choice Awards (Australia) Best Airline International Best Airline First Class Best Airline Economy Class

Asian Wall Street Journal Award 2009 Singapore’s Most Admired Company since 1993 - Singapore Airlines (1st place on Top 10 Companies in Singapore) Attributed also for Reputation; quality of service and products, innovation in responding to customer needs, and long-term management vision

July 2009

Aviation Week (USA) Top Performing Companies survey results for 2008 SIA ranked first

AB Road (Japan) Airline Ranking Overall Best Airline (2nd year) Best Cabin Service, aircraft/products, inflight meals and ground service

AFTA National Travel Industry Award (Australia) Best Airline International Online (2nd year)

Travel & Leisure Magazine (USA) World’s Best International Airline (14th consecutive year)

ExecutiveTravel Magazine (USA) Executive Travel Leading Edge Awards Best International Airline Best International Airline for First Class Service

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Best Airline for Flights to Eastern and Southeastern Asia Best Airline Customer Service - Asia Best Frequent Flyer program - Asia

JUNE 2009

BILANZ survey (Switzerland) Leading bi-monthly Economy & Finance Magazine SIA voted as best worldwide Business Airline for the 5th consecutive time in a row Rated top for First, Business class, food, service and inflight entertainment

TravelAge West (USA) 2009 Wave Awards Best Airline, International (3rd consecutive year)

MAY 2009

Telegraph ‘Ultras’ Travel Awards (UK) Best Airline in the World

Business Traveller Middle East Award Best Asian Airline Serving the Middle East (8th consecutive year)

APRIL 2009

2009 Global Reputation Pulse survey (New York) The World’s Most Reputable Companies – Singapore Airlines (Ranked 10th)

Reader’s Digest Trusted Brands (Singapore) Platinum Award – Airline Category in Singapore Gold Award – Airline Category in Asia

Skytrax World Airline Awards 2009 (UK) Best First Class Best First Class catering

MARCH 2009

Fortune Magazine (USA) Top 50 World’s Most Admired Companies (Ranked 33rd)

Go Asia (Germany) Best Asian Airline (6th consecutive year)

Reise & Preise Travel Magazine (Germany) Best Business Class

Frost & Sullivan Asia Pacific Aerospace & Defense Awards (US) Voice of Customer Airline of the Year

www.travel.ru (Russia) Star Award to SIA for Best Scheduled Carrier to SEA, Australia and Oceania (2nd year)

FEBRUARY 2009

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DestinAsian (Asia’s leading luxury travel and lifestyle magazine – Hong Kong) Readers’ Choice Awards (4th time running, top of all categories in airline poll) Best Airline – Overall Best Airline for Premium Class Travel Best Airline for Economy Class Best In-flight Entertainment Best Frequent Flyer Programme

Asiamoney Corporate Governance Poll 2008 (Hong Kong) Best Overall for Corporate Governance in Singapore Best for Shareholders’ Rights and Equitable Treatment in Singapore

Asiamoney ( Hong Kong) 2009 Travel Poll Asia’s Best Airline (13th consecutive year) - Asia’s Best Airline for First Class - Asia’s Best Airline for Business Class - Asia’s Best Airline for Economy Class - Asia’s Best Online Booking Tool - Asia’s Best Online Check-in Facilities

Grand Travel Award 2009 (Sweden) Best Intercontinental Airline (3rd consecutive year)

Wanderlust Travel Award 2009 (UK) Top Worldwide Airline

Reise Blick (Switzerland) Best Airline 2008 for Long-haul flights (2nd year)

JANUARY 2009

Singapore 1000 Award (22nd Annual) Sales/Turnover Excellence (Transport/Storage)

‘Reisrevue’ (Netherlands Trade Publication) Best Scheduled Airline 2008 (6th consecutive year)

Business Traveller Germany Travel Awards 2008 Best Airline to North/South America - Safety & condition of aircraft - Service on board, Cabin Crew - Service on the ground, Lounges - Cabin Comfort, seat pitch - Food & Beverage

Overall Best Airline on Routes to ther Far East and Australia (8th time) - Safety & condition of aircraft - Service on board, Cabin Crew - Service on the ground, Lounges - Cabin Comfort, seat pitch

Global Traveler (USA) Best Airline in the World 2008 (5th consecutive year)

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ABS-CBN News Channel (Philippines) Executive Class Top 10 List in Travel 2008 Best International Airline

Clever Reisen (Germany) {quarterly travel magazine} Most popular Airline by online portal t-online de Best Inflight Entertainment and outstanding seat Comfort in Economy class

Business Traveler USA 2008 Airline with Best Economy Class Service in the World