Market Analysis of Singapore Airlines

This report evaluates the business environment of Singapore Airlines and the various threats and opportunities that the company is facing in this globalised marketplace. The analysis of the same will be done through PESTLE and Porter’s five forces analysis.

Running head: MARKET ANALYSIS OF SINGAPORE AIRLINES
Market Analysis of Singapore Airlines
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MARKET ANALYSIS OF SINGAPORE AIRLINES
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
1. Nature of the business and the other relevant facts.........................................................2
2. PESTLE Analysis............................................................................................................3
3. Porter’s five forces..........................................................................................................5
4. Recommendations...........................................................................................................7
Conclusion..................................................................................................................................8
References..................................................................................................................................9

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MARKET ANALYSIS OF SINGAPORE AIRLINES
Introduction
Airline industry has rapidly expanded and is still expanding along with the fast
growing industries in the world (Hawken, Lovins & Lovins). This report will elaborate on
one of these airline industries that has highly developed within very little period. It will
briefly discuss about the nature of its business and will expand on its market analysis. The
main purpose of this report is to evaluate the business environment of Singapore Airlines and
the various threats and opportunities that the company is facing in this globalised
marketplace. The analysis of the same will be done through PESTLE and Porter’s five forces
analysis.
Discussion
1. Nature of the business and the other relevant facts
Singapore Airlines (SIA) is a well-established national carrier in Singapore. It represents
the hallmark of the long history of advancement of the Singapore ("Corporate info", 2018). It
is typically engaged in cargo air transportation and passenger transportation; engineering
services and the airport terminal services. They are also engaged in several different activities
such as tour wholesaling and training process of their staffs. It has a global presence but with
a focus on the Australian and Asian markets, with more than 30,088 staffs. It was founded in
the year 1972 and has now become one of the largest and the most successful airline in the
world. It is the second biggest airline in the world in terms of market capitalization. The
Singapore Airlines in fact was formed in the year 1947 by Liverpool, the Ocean Steamship
Company as Malayan Airways but later, it was separated from the Malayan Airways (in
1972) and is known as SIA or Singapore Airlines from then. This widely known industry is
contributing in promotion of world trade, economic growth, tourism and international

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investment since its emergence. I operates in South West Pacific, Europe, East Asia, West
Asia, America and Africa, with near about 66 destinations in thirty six different countries
with over 106 fleets. It consists of a fleet of about 103 aircraft. Some of its reputable fleets
include Boeing 777, A380 and Boeing 747("Our Heritage", 2018). It was the first in the
world to launch the non-stop flight to Los Angeles from Singapore in the year 2007.
2. PESTLE Analysis
The PESTLE framework is concerned with the understanding of the political, economic,
social, technological, legal and the environmental forces that affects an industry or company
and its incumbent organizations (Zvirblis & Zinkeviciute, 2012).
Political- Though the airline industry has now become deregulated but still this industry is
highly controlled by government authorities. The government policy is playing a very
important role in the overall development of the airline industry and it has a major impact of
the competition landscape and the industry profitability (Contributor, 2018). The terrorist
attack in US had a great ramification of profitability in the international airline industry. It
has not only minimized the domestic plane travelling but has also reduced the experience of
global travelling. In this stage, there were heap of factors that are disappointing the services
all the airline industries but still, the Singapore Airlines in terms of performance is better than
the rest of its rival companies after the attack.
Economic- The economic factors includes the economic growth, interest rates, taxation
changes, inflation and exchange rates. As the world economy is expanding, the demand of air
travel is also increasing in a same speed (Belobaba, Odoni & Barnhart, 2015). SIA has
offered to purchase total stakes of nearly 24% in the China Eastern Airlines for near about 7.3
billion dollars. With the same, it has also been plagued by the various other economic factors

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like rise in oil prices, outbreak of bird flu, the Asian tsunami, the rising terrorism etc.
However, the main economic risk is the process of SIA in its fuel costs.
Social- Changes in social trends has a great influence on the product demands of the
company as well as on the availability and willingness of the people to work for the same. In
the year 2002, a flight of Singapore Airlines, named SQ006 has experienced a fatal crash at
Taipei’s Chiang Kai-Shek International Airport (National Library Board, 2018). SIA took the
complete responsibility by saying that it was due to “pilot error” and has offered 400,000
dollars as a compensation to the died individual’s relatives. It has changed every engine
motors of each of their aircraft for retaining its customers but still the accident has influenced
heavily the mind of people and is making a societal affect on SIA (Baum, 2015). With the
same, Flu and SARS epidemic (2009) has resulted in minimizing the stock of Singapore
Airlines by four percent and has raised the passenger’s worries.
Technological- Advancement in technology is a major driver behind the improvement of
airline efficiency, enhancing the customer experience, lowering of the operational costs and
personalizing or modifying the customer service (Taneja, 2017). It also has the potential to
pose a threat to the overall airline that could change the method how people live, work and
interact with the other people. Skype web meeting, for example, is now becoming very
prevalent and this could lower the demands for face-to-face meetings and the business travel.
Legal- The legal factors include change in global and regional regulatory framework and
lawsuits in the case of service deficiency and pricing (Cattaneo et al., 2013). The airline
industry differs vastly across the countries and in this way, it is underscoring the importance
of Singapore Airlines to adhere to the existing regulatory standards as applicable. Changes in
these regulatory frameworks of SIA can affect its business and can also influence at global
level. With the same, the SIA is an international carrier and it deals with thousands of

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passengers and customers on a daily basis across different geographies and therefore, any
problem related to its service lead to lawsuits. The airline industry has also fined with 112
million dollars for allegedly being a part of the price-fixing cartel by European Commission
in the year 2017.
Environmental- Airline industry runs under the pressure of saving the environment by
minimizing the noise pollution, air pollution, and reducing the contribution to global warming
(Howes, Skea & Whelan, 2013) By having a look on these environmental factors, SIA has
maintained its successful brand position in the market and has provided its long term benefits
to its customers. If it does not continue to do the same, it may face many challenges such as
the air traffic crisis of 2010, which was caused because of the volcanic eruption in Ireland.
Due to this, SIA has spend near about 2 trillion dollars on the implementation of new aircrafts
and is working on replacing the cleaner and greener A380 aircraft to minimize the emission
of carbon dioxide by 21 percent and is still committed for reducing the same by 50% until
2050 (Bows-Larkin & Anderson, 2013). It has also replaced the old planes and is using
efficient fuel for saving energy ground resources.
3. Porter’s five forces
Threat of new-entrants-
SIA is concerned about its rivals and competitors because it is very competitive. As
compared to other existing industries, the threat of new entrants in the airline industries is
weak. It has already started with Air Canada and Garuda of Indonesia, pursuing to restrain
the SIA’s entry to the domestic markets. In addition, rise of global megacarriers like the U.S
and European airlines have merged and formed alliances in order to cut the costs ("SIA has
lost market share and needs new strategy", 2018). This has intensified the competition for
SIA to a great extent.

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Threat of services and substitute products-
Due to globalization, there is increasing investment in the transportation links
between all the major geographical hubs that includes the ones that are served by SIA
("External Industrial Environment Analysis for Singapore airline - Business & Economics -
The Best Way to Share & Discover Documents - DocGo.Net", 2018). There is also a
possibility of high-speed railway connections, which is prevailing between the major cities
of Eurasia in near future.
Bargaining power of the suppliers-
The bargaining power of the suppliers is very high in airline sector. SIA is very much
concerned about this because in case if the oil or fuel price of the jets increases, it will have a
good impact on the entire airline industry. There will be no option for the company to choose
from. For example, in December 4, 2007, increase in oil price was resulted in an increase in
the fuel surcharge for the plane/jet tickets on that very day (“Singapore Airlines 2017
outlook:”, 2018). Since supplier has the powerful bargaining power, relative position of
airline business is weak.
Bargaining power of the buyers-
The buying power of the buyers is very high in the airline industry. There are
thousands of airline companies, which are operating in the Asian region. Therefore, the
buyers have several options related to the airline he wants to fly in.
Intensity of market rivalries-
There are few rivalries in the enormous airline industry but it takes place route-to-route.
For example, the rivalries would be intensive in case if the routes were well serviced by the
different airlines, for example, the London to New York or the Paris to Frankfurt. With the

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same, there are other routes, which are monopolized by few carriers, such as that of the
Kangaroo Route. Kangaroo routes involve connections between the New Zealand, Southeast
Asia and Australia. Since there are fewer carriers that are functioning in this route, therefore,
the competition is inclined to be less fierce.
4. Recommendations
 Instead of having more number of partnerships, SIA could prefer to add more
destinations and aircrafts. It will help SIA to develop its customer service and will
sustain its present position.
 It must always be conscious about its external environment and identify the prevailing
opportunities and threats in its business for remaining competitive in the market.
 It could make use of lesser number of benefits by the existing alliances and by
contributing to its partners with services and other benefits.
 It is observed that SIA is not working much on branding and marketing. This has
resulted in low customer satisfactory level. Hence, it must work more on this in order
to remain competitive by providing excellent services to its customers and continuing
to have a strong workforce. This in turn will increase the customer satisfactory level.
 It must improve the channels and media of communication. This in turn will
contribute in improving its entire communication plan. Executive officer of SIA must
remove the ineffective employees from the industry and hire employees for looking
after tasks like scanning magazines, newspapers, articles, journals, reviews, forums,
bulletins and so on to become aware of the information that are unseen and to take
appropriate decisions accordingly for the future operation and functioning. It must
also choose quality managers for every department to help dealing with different
forces present in its business environment.

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MARKET ANALYSIS OF SINGAPORE AIRLINES
Conclusion
It can be concluded from the above analysis that the external environment has
enormous influence on Singapore Airlines. However, there is less danger for it in terms of
rivalries and competition. The company may succumb to the competition any time. The
PESTLE and Porter’s Five Forces analysis of SIA has helped in identifying and evaluating
some of the main barriers in international, economical and political sectors. It is observed that
oil price is the main and most sensitive issue that is prevailing globally and with each passing
day, it is getting into the receipt of more instability. Due to this, the power of supplier is high.
There is a high need for the company to develop more new markets as well as low cost arm to
meet up the changing demands of the customers and to maintain its present position, SIA
must take into account its external surroundings.

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MARKET ANALYSIS OF SINGAPORE AIRLINES
References
Baum, T. (2015). Human resources in tourism: Still waiting for change?–A 2015
reprise.
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Belobaba, P., Odoni, A., & Barnhart, C. (Eds.). (2015).
The global airline industry. John
Wiley & Sons.
Bows-Larkin, A., & Anderson, K. (2013). Carbon budgets for aviation or gamble with our
future?. In
Sustainable aviation futures (pp. 65-84). Emerald Group Publishing
Limited.
Cattaneo, O., Gereffi, G., Miroudot, S., & Taglioni, D. (2013). Joining, upgrading and being
competitive in global value chains: a strategic framework.
Corporate info. (2018). Singaporeair.com. Retrieved 10 January 2018, from
https://www.singaporeair.com/en_UK/us/about-us/
External Industrial Environment Analysis for Singapore airline - Business & Economics -
The Best Way to Share & Discover Documents - DocGo.Net. (2018). DocGo.Net.
Retrieved 10 January 2018, from https://docgo.net/external-industrial-environment-
analysis-for-singapore-airline
Hawken, P., Lovins, A. B., & Lovins, L. H. (2013).
Natural capitalism: The next industrial
revolution.
Howes, R., Skea, J., & Whelan, B. (2013).
Clean and competitive: motivating environmental
performance in industry.

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MARKET ANALYSIS OF SINGAPORE AIRLINES
National Library Board, S. (2018). Crash of Singapore Airlines Flight SQ006 |
Infopedia. Eresources.nlb.gov.sg. Retrieved 13 January 2018, from
http://eresources.nlb.gov.sg/infopedia/articles/SIP_1813_2011-07-13.html
Our Heritage. (2018). Singaporeair.com. Retrieved 10 January 2018, from
https://www.singaporeair.com/en_UK/us/flying-withus/our-story/our-heritage/
SIA has lost market share and needs new strategy. (2018). The Straits Times. Retrieved 12
January 2018, from http://www.straitstimes.com/singapore/sia-has-lost-market-share-
and-needs-new-strategy
Singapore Airlines 2017 outlook:. (2018). CAPA - Centre for Aviation. Retrieved 12 January
2018, from https://centreforaviation.com/insights/analysis/singapore-airlines-2017-
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