PESTLE Analysis of Singapore Airline Limited - Desklib

Introduction to
Management

1
Contents
Purpose 2
Introduction of Company 2
External Environment Analysis 3
PESTLE Analysis 3
Porter’s 5 Forces 5
Issue Analysis 7
Recommendations 7
Conclusion 8
References 9

2
Purpose
The purpose of this report is to analyze the external environment of Singapore Airline Limited
with the help of PESTLE analysis and Porter’s five forces and identifying the opportunities and
threats, analyzing them and making strategic recommendations to facilitate the expansion of the
company.
Introduction of Company
Singapore Airlines Limited (SIA) is the Singapore’s flag carrier airline having its hub situated at
Singapore Changi Airport. It was founded 70 years ago on May 1, 1947 as Malayan Airways.
However, its operations commenced nearly 45 yearly ago on October1, 1972. Singapore Airlines
is ranked among the top 15 carriers in the world in terms of revenue passenger kilometers and
has occupied 10th position in the world for international for the number of international
passengers carried.
Many airline related subsidiaries are included in the Singapore Airline group. It has two
subsidiaries namely Scoot and SilkAir. Scoot operates as a low-cost carrier while regional flights
to various secondary cities are operated by SilkAir. The flights of Singapore Airlines cover five
continents which is around 62 destinations in 32 countries starting from its primary hub i.e.
Singapore.
Singapore Airlines is full-service airlines whose vision provides that it does not work to be an
excellent company, instead its basic purpose is to become an excellent citizen of the world. It is
completely dedicated towards providing the air transportation services of best quality along with
maximizing the returns for its employees and shareholders. For this purpose, Singapore Airlines
have adopted various cost-leadership and service differentiation strategies (Heracleous & Wirtz,
2010).
The main competitors of Singapore Airline include Cathy Pacific, Emirates, British Airways,
Qatar Airways, Etihad Airways, etc. Despite of the competition, it has continuously recorded
growth trends in the last years (Heracleous & Wirtz, 2014).

3
External Environment Analysis
PESTLE Analysis
Political
The airline industry is majorly impacted by the national political frameworks due to the
excessive control of the authorities despite being deregulated. The competition landscape and the
industry profitability are impacted due to the development of the industry because of favorable
government policies. Singapore is considered among politically stable countries. According to
Political and Economic Risk Consultancy (PERC), Singapore faces lowest political risk in the
continent. Singapore is a democratic country where the leaders of the nation are elected by the
people. This independence leads to political stability in the country thereby leading to peace and
improved standard of living in the country. The Liberal Aviation Policy provides a degree of
stability to the Singapore aviation. As it’s open sky policy has helped country to grow as a key
air hub. It provides liberal framework for air services and cities which are linked to
the country. The lasting influence of the government policies and force on the airline industry
must be clearly recognized by all the players of the industry while embracing market
liberalization. The failure to follow can put the Singapore Airlines in trouble and engage them in
various suits. For example, the falling prices of oil in earlier years resulted in extreme pressure
for the airline to reduce price of tickets. (Today, 2016).
Economic
The airline industry is linked with the regional, national and international development of the
economy and therefore the airline industry is affected by the economic environment. Singapore
is a free market economy which has the highest per-capita income in ASEAN. The business
sector is supported by the corruption-free environment. And the financial and legal framework
assists the business in effective functioning. The government plays an active role and owns
substantial productive assets. Recently, the economy has been diversified by the government.
Interest rates, crude oil prices, growth in GDP and peak and trough of the economic cycle impact
the airline industry by lifting the input costs of the industry. According to the results of the
research of International Air Transport Association (IATA), there is considerable growth in the
disposable income of the people which has subsequently resulted in the growth of GDP which