Management Accounting Report: Problems, Challenges, Solutions

This report provides a detailed analysis of the management accounting practices of Singapore Airlines. It begins with an introduction to management accounting and then delves into the problems faced by Singapore Airlines, including rising fuel costs, increased regulations, flight delays, and overcapacity in the Southeast Asia market. The report then outlines the challenges, such as increased competition and financial struggles, despite its reputation for excellence. The core of the report focuses on potential solutions, including cost control, innovation through research and development, waste reduction, improved route accessibility, and collaboration with other companies. The conclusion emphasizes the need for continuous improvement and competitiveness in the globalized industry, highlighting the importance of addressing carbon emissions, fuel usage, and government policies. The report underscores the significance of adapting to the changing business environment and investing in research and development to maintain a strong foothold in the aviation industry. The report uses multiple sources to support its claims.

Running Head: MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Problem of Singapore Airlines...............................................................................................2
Challenges..............................................................................................................................3
Solution..................................................................................................................................4
Conclusion..................................................................................................................................5
Reference....................................................................................................................................7

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Introduction
Management accounting is the profession, which involves devising of the
management systems of planning and performance, partnering in the management decision
making and providing the expertise in the financial reporting and control for assisting the
management for formulation as well as implementation of the strategy of the organization. It
is the internal functions of the business that faces many challenges and carries several
responsibilities.Even though the focus of the management accounting is on the improving the
operations of the company, there are few problems and challenges that exist with the function
of the business. Hence, this report aims for the analysis of the problems, challenges and the
solution of the Singapore Airlines, followed by the conclusion. Singapore Airlines Limited is
flag carrier airline of the Singapore with having its hub at the Singapore Changi Airport that
was founded in the year 1972. This is the airline that is ranked one of the best airline all
around the world (Singaporeair.com. 2019).
Problem of Singapore Airlines
There are many of the problems that are faced by the Singapore Airlines. It is because
of the rising costs of the fuel as well as increased regulations, SIA is dealing with these major
problems with their own consumption of fuel as well as emissions of carbon.In the recent
years, the industry of aviation has been affected by the rising of the costs of the fuel as the
fuel contributes 40% of the total operating costs of the industry as well as with the regulations
of more emissions such as EU Emissions Trading Scheme there has been more critical need
for the airlines for improving the productivity of the fuel (Maas, Schaltegger and Crutzen
2016). There also involves delays of the flights of Singapore Airlines. Moreover, the
decisions as well as the performance of the Singapore Airlines was affected by different
external factors. As this airline is mainly controlled by the agreements and policies of
government. Therefore, this has resulted into the fact that the airline will not be able to fly to

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any of the other country or the other destination with having no proper authorization. These
deregulations in the industry of aviation has opened the door for the different new entrants in
the industry that has ultimately increased the level of competition. Further, another problem
of the Singapore Airline is overcapacity in the market of Southeast Asia (Teker, Teker and
Güner 2016). The major rises in the competition includes full service flags and LCC that has
given rise to the execs of the supply. The pressure has been created on load and yield factors
of the Singapore Airlines because of the growth in the demand of middle as well as economic
class and swift pace added by the capacity in the market of short-term, long term and the
medium term. Although, Singapore Airlines has still have the major items of premium in
business but there are ton more of the carriers that are close to highest point. The rising price
of the fuel has increased the running cost of the flights as well as rise in the tickets pricing
(Kaplan and Atkinson 2015).
Challenges
Singapore Airlines is used as the gold standard among the other airlines, however,
because of the introduction of the new airlines, whole industry is performing well. All of
these has sharper the competition level. Singapore Airlines, for the years has earned
numerous awards on its superior service, innovations as well as consistency of the high
profitability. The company during its initial years has delivered the service of goods quality
as well as it was able for making the profit at same time (Karwowski 2015). However,
because of the fast changing another 10 years, the picture is markedly different. The financial
performance of the Singapore Airlines has suffered and meanwhile there was improvement in
the overall industry such as during the years 2012 and 2018, the revenues of the group has
improved from $15 billion to $15.81 billion that is very slightly improvement (Lopes, Ferraz
and Rodrigues 2016). The profits was attributable to the group shareholders varies in between
$229 million and $410 million, despite of showing the marked improvement for the three

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years of those six years has represented the slim margin over their revenues and asset bases.
On the operational basis, there was breakdown of the load factor for the every five years was
higher than that of the actual load factor that suggested that the operations of the flight were
losing the money (Kimes and Wirtz 2015). The shares price of the company has reflected the
actual struggles that is after reaching the peak of $20/share the prices of the share was
dropped to $9.90/share in March 2009, which have recovered to $15 and $16 in 2010 and
2011 for several month and in later period it has remained in between $10 to $12/share. The
company has set the benchmark in the industry of aviation for the fact that it was among the
few airlines that would buy the new planes, they could finance through financing by the help
of internal funds or by the help of issuing the debt that has resulted into the lowering of the
costs and serving as the sources of the differentiation. However, in recent years many of the
airlines have young as well as younger fleet particularly in the fast growing carriers of
Middle Eastern such as Emirates, Etihad and Qatar (Heracleous and Wirtz 2014).
Hence, the challenges that are faced by the Singapore Airlines shows that the
company needs for continuously reinvesting itself by the developments of the new
competencies such as fleet renewal. Singapore Airlines have to find the new inspirations for
maintaining the differentiation that is against the rivals and development (Nothhaw,
Tungkunanan and Manon 2016).
Solution
The solutions that would be provided to the problems and challenges of Singapore
Airlines will be as follows:
 Singapore Airlines being recognized as one of the most reputed airlines
internationally in respect of the quality, management as well as profitability has faced
the most difficult conditions of operating. Hence, they should try to control the cost of

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operations by identifying as well as reducing the expenses related to the business for
increasing the profit. If the cost is cut down then it would be helpful in attaining the
objectives of the organization. The management of the company should keep close
eye on the affairs of the business and they should take action whenever, the actual
results is not matched up to the budgeted figures and the expectations. This would be
helpful in earning profit (Stephens and Ukpere 2014).
 They should shift their vision for being greener as well as boosting their innovation by
increasing the spending on Research and development (Honggowati et al. 2017).
 They should try to reduce the waste by the help of recycling the waste with the help of
selling or by doing the trading in the planes.
 The company should improve the accessibility of the routes as well as air traffic
control system for reducing the delays of flight. It will help in reducing the usages of
fuel. It has been observed that almost 10% of the fuel of the aircraft would be reduced
by the more efficient management of air traffic.
 The company should link up with the other companies in the same sector for
providing herself with the platform for learning from the others (Tappura et al. 2015).
Conclusion
Therefore, it is concluded from the analysis that in order to grow continuously in the
globalized industry the company needs to have loss-free record as well as they should remain
competitive by the continuous improvements. The major problems that are faced by the
companies is carbon emissions, usage of fuel, allocation of resources, increasing of
competitions, increasing of internal costs as well as government policies. These can be
minimized by the measures such as green technology, cost reduction, better planning of
routes and so on. Moreover, the challenges of the company can be handled by remaining
competitive in the fast changing business environment by continuously reinventing the new

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and innovative methods of doing things as well as by investing in the research and
development work. They should also keep close eye on their competitors as it will help the
company to keep in pace of the changes that are taking place in the industry. Hence, these
measures will help the company for defending the firms’ foothold in the industry of aviation
and ensuring their long-run survival in the industry.

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Reference
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