Singapore Airlines Business Strategy Analysis

This assignment delves into the comprehensive business strategy of Singapore Airlines. It examines the airline's historical journey, key competitive advantages such as its renowned service quality and efficient operations, and explores its strategic initiatives for sustained success in a dynamic global aviation landscape. The analysis includes insights from academic research, industry reports, and news articles.

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Table of Contents
Introduction.................................................................................................................................................3
External Analysis........................................................................................................................................3
PESTLE Analysis....................................................................................................................................3
Political................................................................................................................................................4
Economic.............................................................................................................................................4
Social...................................................................................................................................................4
Technological......................................................................................................................................5
Legal....................................................................................................................................................5
Environmental.....................................................................................................................................5
Porter’s Five Forces for Singapore Airlines.............................................................................................5
The Threat of New Entrants.................................................................................................................5
Intensity of Rivalry..............................................................................................................................6
The Threat of Substitute Services........................................................................................................6
The Bargaining Power of Customers...................................................................................................6
The Bargaining Power of Suppliers.....................................................................................................6
Internal Analysis..........................................................................................................................................7
Tangible and intangible Resources..........................................................................................................7
SWOT Analysis Table.................................................................................................................................8
Possible Strategic Options...........................................................................................................................8
Option 1: Adoption of Dual Strategy on Global Market..........................................................................8
Option 2: Lowering Risks and Managing the Uncontrollable..................................................................9
Recommendation Strategy.........................................................................................................................10
Overall Conclusion....................................................................................................................................11
References.................................................................................................................................................12

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Introduction
The Singapore Airlines is one of the highly regarded airlines by most travellers and
competitors in the global airlines industry as the best airlines to use when travelling due to its
best services and customer relations. The airlines started operating in the year 1972 after the
Malaysia-Singapore Airline (MSA) split into Malaysian Airline System (MAS) and Singapore
Airlines (SIA) (Air Transport World 2014). The company is well known for its excellent
customer service, commitment to the maximization of shareholders’ returns, uncompromising
adherence to safety and security and young fleet that have given it competitive advantage in the
industry offering three classes of travel; Economy, First and Business classes. While onboard
they provide services such as relishing meals, entertainment on Kris World and it also provides
online booking. The company has recorded a consistent rise in its performance indicated by its
increasing market share and returns making it to win numerous accolades for its outstanding
services (Heracleous and Wirtz 2012).
External Analysis
This is a form of analysis which focuses on a company’s environment analyzing how the
environment influences the operation of the business. The analysis helps in depicting both the
opportunities and risks that a company is exposed.
PESTLE Analysis
PESTEL abbreviates the Political, Economic, Social, Technological, Legal and
Environmental aspects of a business organization. The following PESTEL framework therefore
illustrates the forces that affect Singapore Airlines.

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Political
The political temperatures in a nation often have significant impacts on the operations of
the airline industry owing to the fact that nearly all nations have a national carrier. Since the
national carrier symbolizes the country, the airline receives significant support from the
government which enables to smoothly carryout its operations even amidst challenges (Wirtz et
al. 2008).
Economic
The airline industry operates across different national economic boundaries and due to
their high level of resource intensity; they are prone to the prevailing vagaries of both national
and international economy. Singapore Airlines is faced with the threat of the rising fuel costs
resulting from the continuous political unrest in the Middle East which have made the fuel prices
to rise to unprecedented levels (Chan 2000).
Social
For a long time, long distance travelling has been the preserve of the wealthy in society
but with the recent increase in disposable income among most individuals, such faraway
destinations travels have become affordable. Additionally, consumer preferences has been
shifting from the original premium travels to the current low cost travel styles as noted by the
increase in the number of low cost carriers (The Times of India 2014). Based on the changing
market trends, Singapore Airlines which has been a premium carrier have started offering lows
cost travels to attract the new market. This is evidenced by their decision to expand their shares
holdings of Tigerair which is a Southeast Asian low cost carrier despite the absence of
profitability (Chan 2000).

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Technological
In a highly saturated passenger travel especially in the premium market position to which
Singapore Airlines belongs, technological innovations play a vital role to counter the stiff
competition. Due to technological advancements in the industry, Singapore Airlines has one of
the youngest fleets and is the first airline to adopt the use of new innovations such as the use of
seatback entertainment systems, headsets and reclining seats (Steven 2010).
Legal
Making changes to a country’s regulatory framework often have great impacts on
national carriers and these often result in adopting new operation strategies. The act of terror in
September, 2001 for instance contributed to the implementation of some regulatory changes in
which passengers have to undergo screening before being allowed to travel (Chan 2000).
Environmental
There has been a rising concern among most passengers for green services integrated
with their corporate social responsibility (CSR). However, Singapore Airlines have been quite
slow in responding to the new customer demands.
Porter’s Five Forces for Singapore Airlines
There are five forces which impact the performance of Singapore Airlines which
determines the probability of its market success. These forces are;
The Threat of New Entrants
Singapore’s current business activity is dominated by long-haul passenger airline
business which has resulted into weak threat of new entrants. Additionally, the investment in
airline industry requires large capital base with corresponding long lead times to recover the

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investment thereby making it quite difficult for new firms to enter the business. However, there
are few entrants in the market in which Singapore Airline operates and they include Air Asia and
Jet Star (Cook, Tanner and Lawes 2012).
Intensity of Rivalry
The airline industry is often characterized with some level of internal intense rivalry
which usually occurs on a route-by-route basis. Despite the fact that routes can be serviced by
variety of airlines, the rivalry is usually quite intense forcing companies to either adopt price
cutting strategies or provide high quality services to expand their market share. Based on its
performance resulting from high quality services has enabled Singapore airlines to capture the
Kangaroo Route (Wang 2014).
The Threat of Substitute Services
The threat of substitute services to the airline’s short-haul element of the business s
moderate resulting from its business structure. Globalization has led to the rise in investments in
transportation links that exist between of the geographical hubs among whom are served by
Singapore Airlines.
The Bargaining Power of Customers
Generally, the bargaining power of clients in the airline industry is quite low due to the
low switching costs. The low switching costs have resulted from the decline in high street airline
offices and the proliferation of the internet (Chan 2000). Most airlines are however debating on
increasing the switching costs through such strategies as loyalty schemes.
The Bargaining Power of Suppliers
In most instances, the airline suppliers have a relatively strong bargaining power since
most airline fleets are supplied through a duopoly market structure. On the other hand, the airline

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engines are supplied through oligopoly markets. With such a few number of suppliers in the
industry, most producers can easily dictate the prices of their products.
Internal Analysis
Tangible and intangible Resources
Tangible resources are those assets which can be accorded monetary value and can be
physically measured. Some of the Singapore Airlines’ tangible resources include Changi Airport
which contains facilities such as hanger, catering center and hangar (Cook, Tanner and Lawes
2012). Singapore Airlines currently have an estimated 22% 747-400 aircrafts out of the total
global aircraft production. These planes have higher flying range, with efficient fuel
consumption and quieter cabin than most that found in most airlines in the industry (Wang
2014). The company further has a comprehensive human resource management system in which
the firm provides extensive training and motivation to its workers to enhance their skills and
knowledge.
Intangible resources are classified as the identifiable resources which cannot be accorded
monetary value neither can they be seen, touched or be physically measured (Steven 2010). By
estimation, Singapore Airlines as by the June 2017 amounted to about $ 309 million. These
intangible resources include Goodwill.

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SWOT Analysis Table
Strengths Weaknesses
-Singapore Airlines has the youngest fleet
which has the highest fuel efficiency
-Have recorded consistent growth in sales and
profits in the last two years.
-The company is an innovator
-Having share holdings in Tiger Airways
-Having some restrictions to access certain
routes
Opportunities Threats
-Expansion of its partnerships
-Having a promising business growth in India
-Experiencing low cost operations by Scoot
-Having a constant steady growth
-Consistent fluctuations in the aviation fuel
-Competition from other carriers like British
Airways outside Middle East
Possible Strategic Options
Option 1: Adoption of Dual Strategy on Global Market
Over the years, Singapore Airlines has remained a legendary in the industry owing to its
client appeal which led to her winning the prestigious Condé Nast Traveler’s Readers’ Choice
Award for remarkable twenty-two times. Essentially, the firm emphasized the elements that
differentiated it – quality service at low costs – and these have always given it a competitive
advantage in the market. Markides and Sosa (2013) refer to this strategy as a repeatable model
where the company ensures that the two elements go hand in hand. It maintains its service levels
through proper recruitment, intense staff training, regular innovation and integration of well-
developed organizational culture. It also supports low cost for its products and services through
the use of rigorous standardization protocol, lower maintenance costs and outsourcing some
critical facilities such as payroll and ticketing (Markides and Sosa 2013).

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To remain competitive in the global market which is characterized by cut throttle
competition, SIA must adopt its successful dual strategy as a global player. According to
Heracleous and Wirtz (2012) since becoming a global actor is no longer considered as a choice
for the airline, it must use its adaptable strategy to cushion itself from potential risks and losses.
Evidently, the adopted dual approach is consistent with the carrier’s strengths and therefore using
it in a global strategy would enable the firm to reap most of the benefits from the volatile market.
Option 2: Lowering Risks and Managing the Uncontrollable
While it is true that the uncontrollable remains unprecedented and unplanned for, their
effective management is essential to the success of the business. For instance, the impact of war,
fluctuations in the oil prices, local epidemic and even government intervention is always
essential for success in an airline industry (Olienyk and Carbaugh 2011). Thus, to properly
manage the uncontrollable it is important that SIA engage in the formation of partnership and
alliances to ensure the growth of its network. Wu (2016) observes that through these agreements
the company will diversify its routes to different market regions and this allow proper
understanding of the dynamics of the industry from various perspectives.
It’s worth mentioning that while the approach of alliances presents the best way for the
company to stay ahead in the aviation sector, it must indulge into manageable investments with
corresponding lower risks. Given that exploiting new market regions through a partnership with
other large airlines, Singapore Airline is exposing herself to major international threats and risks.
It must mean therefore to protect its safe economic zones; the company must strategically invest
in lower risk ventures especially in a new market just as a way of protecting its interests when
the market is not as welcomed as anticipated. Another way of lowering the potential risks is by

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evaluating and validating a potential company for a partnership before engaging in business with
it (Pearson and Merkert 2014). This is vital to ensure that the firm only makes alliances with
those companies that have success stories and good reputation in the international market.
Recommendation Strategy
The best strategy that Singapore Airlines should adopt to further expands its sales volume
and profit margin in the global market is the first option which is the adoption of dual strategy on
the global market. Based on the company’s SWOT analysis, the firm should maximize on its
strengths to enhance its global competitiveness to position itself strategically as one of the best
and admired airlines in the global airline industry.
As observed by Heracleous and Wirtz (2014), Singapore Airlines should put in place
every viable strategy that propels it to keep its superiority and stay ahead of the stiff airline
competition in the global market irrespective of the prevailing economic conditions. The
company should also strive to maintain its competitive edge in the industry despite the strategies
that are employed by its main competitors such as British Airways. The company needs to have
an in-depth understanding of the business strategies used by some of its leading competitors
which include Cathay Pacific, British Airways, and Virgin Atlantic to enhance the quality of
services of its travelers while on board (Heracleous and Wirtz 2012). In understanding the
business strategies of its competitors, the company should capitalize on the weaknesses of its
competitors and through its domination of the global markets, Singapore Airlines will create a
conducive avenue for foreign investments (Heracleous and Wirtz 2010).

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Overall Conclusion
Singapore Airlines is viewed as one of the best airlines globally enjoying a significant
percentage of the global market share. Based on the changing market trends, Singapore Airlines
which has been a premium carrier have started offering lows cost travels to attract the new
market. Based on the firm’s external and SWOT analyses, it is quite evident that the company
enjoys considerable market share and competes favorably in the global industry. Despite the
various challenges in the global economy, Singapore Airlines has maintained its level of service
quality, ethical standards and Corporate Social Responsibility (CSR). In summary, therefore,
improving and restructuring the firm’s business strategy will further propel the company to
greater heights in the global airline industry.

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References
Air Transport World. 2014. Singapore Airlines boosts Tigerair stake. Online at
http://atwonline.com/finance-amp-data/singapore-airlines-boosts-tigerair-stake .
Chan, D. 2000. The story of Singapore airlines and the Singapore girl. Journal of Management
Development, 19(6), pp.456-472.
Cook, A., Tanner, G., and Lawes, A., 2012. The hidden cost of airline unpunctuality. Journal of
Transport Economics and Policy 462), pp.157-173.
Heracleous, L. and Wirtz, J., 2010. Singapore Airlines’ balancing act. Harvard Business
Review, 88(7/8), pp.145-149.
Heracleous, L. and Wirtz, J., 2012. Strategy and organisation at Singapore Airlines: achieving
sustainable advantage through dual strategy. In Energy, Transport, & the
Environment (pp. 479-493). Springer London.
Heracleous, L. and Wirtz, J., 2014. Singapore Airlines: Achieving sustainable advantage through
mastering paradox. The Journal of Applied Behavioral Science, 50(2), pp.150-170.
Homsombat, W., Lei, Z. and Fu, X., 2014. Competitive effects of the airlines-within-airlines
strategy–Pricing and route entry patterns. Transportation Research Part E: Logistics and
Transportation Review, 63, pp.1-16.
Markides, C., and Sosa, L., 2013. Pioneering and first mover advantages: the importance of
business models. Long Range Planning, 46 (4), pp.325-334.
Olienyk, J., and Carbaugh, R. J., 2011. Boeing and Airbus: Duopoly in jeopardy?. Global
Economy Journal, 11(1), pp.4.

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Pearson, J., and Merkert, R., 2014. Airlines-within-airlines: A business model moving east.
Journal of Air Transport Management, 38, pp.21-26.
Steven, Z., 2010. Singapore Airlines: Case analysis. Publications Oboulo. com.
The Times of India. 2014. Tata Sons-Singapore Airlines 'Vistara' set for October launch online at
http://timesofindia.indiatimes.com/business/india-business/Tata-Sons-Singapore-Airlines-
Vistara-set-for-October-launch/articleshow/40063616.cms
Wang, S. W., 2014. Do global airline alliances influence the passenger's purchase decision?
Journal of Air Transport Management, 37(1), pp.53-59.
Wirtz, J., Heracleous, L. and Pangarkar, N., 2008. Managing human resources for service
excellence and cost effectiveness at Singapore Airlines. Managing Service Quality: An
International Journal, 18(1), pp.4-19.
Wu, C.L., 2016. Airline Operations and Delay Management: Insights from Airline Economics,
Networks and Strategic Schedule Planning. Routledge.