Premium Essay

Singapore Airlines

In: Business and Management

Submitted By sarahmirsay
Words 8879
Pages 36
Delhi Business Review X Vol. 5, No. 1, January - June 2004


Amit C. Kamath * Jonas Tornquist **



THIS case study investigates the strategic environment of the airline industry operates. In particular, the role of Singapore International Airlines (SIA) in the global airline industry is considered. The study uses the concept of the “Three Ring Circus” (KCI , 2002), as an overarching framework, whereby the Past, the Present and the PFuture is used for studying the strategic issues in the airline industry and SIA.

The past focuses on the key strategic drivers in the airline industry over the past 10-20 years and provides a historic industry overview. The present serves the role of looking at the airline industry and SIA’s present strategic drivers and what is important to consider in this environment. The Possible Futures, or PFutures, looks at what potential drivers or strategic advantages may be present in future, and how SIA is responding to some of these issues. The research in this project is mainly qualitative. It is based on interviews with key people within the airline industry, government officials, industry analysts and stakeholders. The analysis is also based on a review of the airline industry literature as well as the personal reflections of the authors in drawing together some key issues and insights that may help formulate, inform and prepare SIA’s strategy for moving forward into the unpredictable future. This paper begins with a simple model for considering strategic and economic issues in the global airline industry. After this, we examine the Past, where a brief history of the airline industry is followed by sources of uncertainty and an examination of key strategic drivers. The section on…...

Similar Documents

Premium Essay

Singapore Airlines

...Singapore Airlines’ history can be traced back to 1 May 1947, when a Malayan Airways Limited (MAL) Airspeed Consul took off from Singapore Kallang Airport on the first of three scheduled flights a week to Kuala Lumpur, Ipoh and Penang. · Over the next five years, larger capacity DC-3 aircraft were introduced. This meant faster and more comfortable flights, and the extension of services to destinations in Indonesia, Vietnam, Burma (now Myanmar), North Borneo (Sabah) and Sarawak. · Inflight refreshments improved from the original thermos flask of iced water to sandwiches, biscuits and cold cuts plus a choice of hot and cold drinks, and alcoholic beverages served by a lone hostess. Known as “female pursers”, these hostesses are the forerunners of today’s Singapore Girl. In May 2008, Singapore Airlines created history again by being the first carrier to operate an all-Business Class service between Asia and the USA with its launch of all-Business Class non-stop flights from Singapore to New York (Newark). After operating as Malaysian Airways and then as Malaysia-Singapore Airlines, SIA was officially launched in 1972. Today SIA’s network reaches out to 93 destinations in 42 countries, serving Asia, Europe, North America, the Middle East, the South West Pacific and Africa. Its regional airline subsidiary SilkAir serves 21 destinations in 8 countries. SIA has also created a number of strategic alliances with other major world airlines to serve other markets jointly. Remarkably......

Words: 2862 - Pages: 12

Premium Essay

Singapore Airlines

...shareholder in Singapore Airlines (SIA). The report provides critical assessment of the company's overall performance, assessment that would be relevant and meaningful to shareholders. Two major airlines have been selected to provide competitor comparison throughout this report.  The two competitor airlines - Japan Airlines Ltd and Qantas Airways - have been selected because they are representative of current commercial passenger aviation competition within SIA's predominant operating region (Asia Pacific region). It should be noted that the 2010 and 2011 reporting periods occurred during a time of major reorganisation for Japan Airlines. In February 2010 Japan Airlines Corporation was de-listed from the Tokyo stock exchange and, after corporate reorganisation proceedings, was re-listed in 2012 as Japan Airlines Co. Ltd. Thus, financial information during this period is unavailable. We have utilised a number of analysis tools to generate a transparent position of the financial position of SIA and measured this position against competitor airlines operating in the same region and flying similar routes. Executive Summary This report provides an analysis of Singapore Airlines from the perspective of a shareholder. The airline’s performance has been evaluated by utilising various tools in the areas of profitability, investment utilisation, financial condition as well as dividends and cash flow. The analysis encompassed examining trended performance (ratios) of the......

Words: 3390 - Pages: 14

Premium Essay

Singapore Airline

...Critically examine the impact of political, economic & legal factors affecting the airline industry. The airline industry has had its fair share of ups and downs the following are the factors that are affecting the airline industry Economic factors A huge amount is spend in landing fees, time spend in foreign lands and all these fees are paid in US Dollars and it might expensive to some airlines especially if the exchange rate is weak. Fuel prices are also in US Dollars so the stronger the currency of origin against the US Dollar the cheaper it becomes to reduce overall operational costs for the airlines however the sad story is that only a fewer currencies are stronger than the US Dollar. Fuel prices have consistently increased and is likely to continue into the future while price wars between airline companies have become ever more intensive due to increased competitive levels in the industry. Fuel costs as play a significant role in the day to day running of an airline as fuel costs constitutes 30% of total operational cost. This is due to existing rivalries as well as new entrants within the discount airline market segment. In contrast to its rivals SIA has preferred policies of adding extra value through customer service rather than ones of pure discounts on prices. Similarly investment in technology such as the development of an e-ticket system enhanced its strength in terms of cost effective sales and billing systems. These developments have been supported by......

Words: 2377 - Pages: 10

Premium Essay

Singapore Airline & Delta Airline

...Singapore Airline & Delta Airline Introduction Property, Plant, and Equipment (PP&E) is a significant asset category of most airline companies. PP&E usually contains more than 50% of the total assets of an airline. The depreciation of these assets is a major operating expense. The proper depreciation of PP&E in companies, such as airline with PP&E being a significant part of their assets, plays an important role in their accounting strategies. The large variation in the way of determining the depreciation expenses affects a company’s financial results and tax consequence largely. Applying reasonable yet favorable depreciation methods and assumptions is essential to a sound accounting practice. In the below comparison of the depreciation methods and assumptions used by Delta Airline and Singapore Airline, one can see the means of making different assumptions for the best interest of each business. Annual depreciation expense (1) The two airlines Delta and Singapore use significantly different methods when accounting for the depreciation of their aircraft. Delta Airlines now uses a 20 year straight line depreciation method down to a 5% salvage value. This will spread out the expense of plane ownership over a longer time, lessening pressures on the balance sheet. The 5% salvage value represents what the airline can reasonably expect to liquidate the planes for. Singapore Airlines, on the other hand, uses a 10 year straight line depreciating method to account...

Words: 1477 - Pages: 6

Premium Essay

Singapore Airline and financial performance as well as business performance of the Singapore Airlines which is the national airline of Singapore and comparing with its competitor Qantas. It will also include the impact of other major internal and external events on the company’s performance. 1.2 Reason for choosing the topic and the organisation Before choosing the topic for my Research and Analysis Project, I went through all the titles provided by Oxford Brookes University to make sure that the topic chosen would be not only feasible but also within my ability to find the information for the report. In my opinion, analysing the business and financial performance of the organisation would be the most important thing that should be understood by the modern day accounting profession. By choosing this topic, not only applying my knowledge but also it is much more related to what I have been studying so far. Studying Financial Reporting paper (F7) and Business Analysis paper (P3) support and provide basic knowledge in analysing the chosen organisation and undertaking my research project. The reason for choosing the airline industry is due to the fact that it plays significant role in our life. Without these industries, it may take quite long time to travel and we may not be able to travel or go to our destination in a reasonably short period of time. Singapore engaged in four segments: airline, cargo, engineering and others. As of March 31, 2012, group has 133......

Words: 6530 - Pages: 27

Premium Essay

Singapore Airlines

...attachment Implementing Change in SIA (Singapore Airline) Introducing SIA Ltd Singapore Airline is a global company dedicated to providing air transportation service of the highest quality of services; it has grown from a regional airline into one of the world’s leading passenger and cargo carrier. SIA is engaged in air transportation and other related businesses. It has been consistently one of the most profitable airlines in the world, and it is routinely voted the ‘best airline’, ‘best business class’, ‘best cabin crew service’, ‘best in-flight food’, ‘best for punctuality and safety’, ‘best for business travelers’, ‘best air cargo carrier’, even ‘Asia’s most admired company’. It operates worldwide as the flag carrier of Republic of Singapore, aiming to provide service of the highest quality at reasonable prices for customers and provides them with the best options for travelling. They have a modern and young fleet of aircraft and covers 40 countries and 76 cities. SIA has far-sighted planning, investment and product innovation that propelled its growing reputation and profitability. For its high-level service and operational excellence, SIA has won more than 100 international prizes. With the traditions of the Company - outstanding service, and innovative spirit, SIA will continue to progress, and render the best services to its passengers just as it always has. Accidents from SIA (Needs for change) • 26 March 1991 – Singapore Airlines Flight 117, an Airbus......

Words: 2323 - Pages: 10

Premium Essay

Singapore Airlines. the International Airline Industry

...The International Airline Industry Background The airline industry has been limited in expanding because of national and international regulations. Even the dominant players in this market have only been able to keep their dominance over their own markets, except for United States. In United States, the state owned national flag carriers have been the key players of this industry. But in 1990, the competition started to increase in this industry. This was caused due to deregulation, privatization and advent of new technology. During the nineties every major country in the world saw deregulation in airline’s industry. In 1978 United Stated deregulated its airlines and saw an increased competition in their local market. Similar thing happened to European Union when they disbanded their country specific barriers to free market competition among air carriers. Asia also followed the same route. Some regions in Asia quickly deregulated themselves. Many small national carriers in Latin America were privatized. The emergence of free market competition was expected to be more dominant as many European Nations were discussing implementation of opening transatlantic market with USA where landing rights would be determined by free market forces, rather than regulation. The countries signed bilateral agreements between countries that enabled the airlines of those countries to provide landing and takeoff facilities for air carriers of those countries. Privatization and......

Words: 12121 - Pages: 49

Premium Essay

Competitive Position of Singapore Airlines

...position of Singapore Airlines Module No : EG3080
 Module Title : Business Application in Engineering Submitted by : Chia Kok Kwang Alvin (K1068496) Table of Contents Page 1. Abstract 3 2. Introduction 4 3. Background 5 4. Singapore Airline’s Macro Environment (PESTEL Analysis) 6 5.1 Political Factors 6 5.2 Economic Factors 7 5.3 Socio-cultural Factors 7 5.4 Technological Factors 8 5.5 Environmental Factors 8 5.6 Legal Factors 9 5. Competitive forces and firm strategy (Porter’s 5 Forces Analysis) 10 6.7 Threat of new entrants 10 6.8 Threat of substitutes 10 6.9 Power of buyer 11 6.10 Power of supplier 11 6.11 Competitive rivalry 12 6. Strategic Capabilities (SWOT Analysis) 13 7. Strategic Choices (Porter’s Strategies) 14 8.12.1 Cost leadership 14 8.12.2 Focus 14 8.12.3 Differentiation 14 8.12 Strategic choice of Singapore Airlines 15 8. Challenges ahead of Singapore Airlines 16 9. Conclusion 17 10. References 18 & 19 1. Abstract Singapore Airlines leaves a deeply positive impression in many people’s heart as a leading airline that is dedicated to bring the highest level of products and services. We will look into how Singapore Airlines......

Words: 3194 - Pages: 13

Premium Essay

Singapore Airlines Leadership

...Singapore Airline Case Study Grand Canyon University Professor: Dr. Kimberly Bennett March 25th, 2015 Singapore Airlines Case Study Introduction Singapore Airlines (SIA) is the national airline of Singapore which has achieved growth and success over the years due to the strength of the brand name and industry leading innovations and excellent customer service. Airline operation and quality of service (QOS) is the main contribution of SIA dominance in airline industry. Challenging economy forced SIA to change business or operational strategy in order to be survival and competitive. To combat the threat of competitor’s and surviving in a challenging environment, SIA is taking the step to innovate its in-flight services. Singapore Airlines leaves a deeply positive impression in many people’s heart as a leading airline with their product promotion and catchy advertisement, this does resonates with their QOS and onboard services. SIA Service Quality “Corporate image and reputation is considered an asset which gives the organization a chance to differentiate itself aiming to maximize their market share, profits, attracting new customers, retaining existing ones, neutralizing the competitors’ actions and above all their success and survival in the market” (Fombrun and Shanley, 1990; Bravo et al., 2009; Sarstedt et al., 2012). Quality of service (QOS) makes the brand and its reputation in this modern economy, it holds true for any industry and country......

Words: 1644 - Pages: 7

Premium Essay

Delta & Singapore Airlines

...Depreciation at Delta & Singapore Airlines 1. a. Delta Airlines   | Prior to | Between July 1, 1986 | April 1,1993 |   | July 1, 1986 | & March 31, 1993 | Forward |   | | |   | Fixed Price $100 | | |   |   | | |   | Residual Value | 10% | 10% | 5% | Asset Life | 10 | 15 | 20 | Depreciation | $9 | $6 | $4.75 | Calculation | (100-10/10) | (100-10/15) | (100-5/20) | b. Singapore Airlines   | Prior to | April 1,1989 |   | April 1, 1989 | Forward |   | |   | Fixed Price $100 | |   |   | |   | Residual Value | 10% | 20% | Asset Life | 8 | 10 | Depreciation | $11.25 | $8.00 | Calculation | (100-10/8) | (100-20/10) | 2. Delta & Singapore Airlines both use the straight line depreciation method. The salvage values and asset lives used by both companies differ. Delta uses a higher average asset life than Singapore, but their residual value is less than Singapore’s. This is done because airlines use different types of fleet’s. Once newer technology was introduced, airlines claimed that they could operate a new fleet of aircraft for a longer period of time thus depreciation was over a longer period of time also. The older planes required less usage but higher maintenance costs, so airlines may want to increase its average usage period creating a lower depreciation rate. This would allow the airlines to show a greater net profit due to the decline in depreciation expense. 3. Delta Depr. Year |...

Words: 397 - Pages: 2

Premium Essay

Csr Audit of Singapore Airlines

...UB School of management | Singapore Airlines | Audit of Corporate Social Responsibility | | Team Greatbatch | 12/6/2012 | Maria Kristic Chaitanya Pavuluri Srutakirti Das Anthony Ilaqcua Mark Rutecki Contents Introduction 2 Environment 3 Engine Efficiency and Alternative Fuels 3 Operations and Infrastructure 5 Evaluating Environmental Initiatives 6 Harapan Rainforest Initiative 7 Social Activities: Philanthropic 8 Social Activities: Strategic……………………………………………………………………………………………………………………9 Evaluation…………………………………………………………………………………………………………………………………………..9 Economic Sustainability 10 Conclusion 11 Works Cited 12 Appendix 12 Introduction Over its 100 year history, the airline industry has been one of the most dynamic and fastest growing industries in the world. More people than ever are flying as air travel has become more accessible and is one of the safest ways to travel. Since 2002 there has been a 61% increase in safety with just 1 accident for every 2.7 million flights. In 2011 alone, 2.8 billion people flew 3.1 trillion miles on routes out of 3,800 commercial airports. 48 million tons of cargo, worth 5.3 trillion was shipped by air, accounting for approximately one-third of world trade. The industry supports 57 million jobs and 2.2 trillion in economic activity (SIA Safety, Security & Environment Dept., 2012). However, the industry is also one of the most regulated, with many governments being......

Words: 4831 - Pages: 20

Premium Essay

Singapore and Delta Airlines Discussion

...Depreciation at Delta and Singapore Airlines Case (Introduction) A question is asked, “What makes a business successful?” While this question can have many answers, the financial standing among of the businesses in comparison can make a strong argument. One way to tell how financially fit said business by looking at the net earnings Airline companies consider Property, Plant, and Equipment (PP&E) as a significant portion under the asset category on the balance sheet. 1. Calculate the annual depreciation expense that Delta and Singapore would record for each $100 gross value of aircraft. (a) For Delta, what was its annual depreciation expense (per $100 of gross aircraft value) prior to July 1, 1986; from July 1, 1986 through March 31, 1993; and from April 1, 1993 on? 1a.       Pre- 1986: (100-10)/10 = 9 annual depreciation 1986-1993: (100-10)/15 = 6 annual depreciation 1993-beyond: (100-5)/20 = 4.75 annual depreciation (b) For Singapore, what was its annual depreciation expense (per $100 of gross aircraft value) prior to April 1, 1989; and from April 1, 1989 on? 1b.             Pre-1989: (100-10)/8 = 11.25 annual depreciation             1989-on: (100-20)/10 = 8 annual depreciation 2. Are the differences in the ways that the two airlines account for depreciation expense significant?  Why would companies depreciate aircraft using different depreciable lives and salvage values?  What reasons could be given to support these differences?......

Words: 879 - Pages: 4

Premium Essay

Singapore Airlines Business Operations Management

...Company Profile Singapore airline (SIA) was incorporated as a wholly owned subsidiary of the Singapore government on 28 January 1972 as a public company with limited liability. It is one of the most successful airlines today having the most recent and youngest fleets in the world. It has evolved from being a regional airline to one of the top ranked airlines in the world at present. As on March 1999, it carried 525 passenger flights a week out of Singapore. It operates in four segments namely airlines operations (which includes passenger and cargo air transportation), engineering services (airframe maintenance, line maintenance, fleet management programs etc.), training of pilots and tour wholesaling, Cargo operations (includes cargo transportation and related activities). It has a worldwide coverage including 110 cities in over 42 countries. It is dedicated to providing air travel services of the highest quality to its customers and also providing maximum benefits to its employees and shareholders. It has a first mover advantage in providing various additional services which are as follows: - Free headsets, choice of meals and drinks during 1970’s. - Introduction of satellite-based telephones - Involving one of the best panel of chefs for in-flight meals - First to operate world longest flight (Singapore to Los Angeles) - On demand inflight audio and video services In this report, four significant operations aspects of Singapore Airlines will......

Words: 6562 - Pages: 27

Premium Essay

Strategic Decision Marking – Singapore Airlines (Sia)

...1.0 Introduction Singapore Airlines (SIA) flew its first flight way back in the year 1947. It was then known as Malaysian Airlines, which became two separate entities – SIA and Malaysian Airline System (MAS) in 1972. In between that period from 1947 till 1972, the airline was named MAS when the Federation of Malaysia was born after gaining independence from the British government in 16 September 1963 and later renamed as Malaysia-Singapore Airlines in May 1966. The airline’s key advertising strategy was the “Singapore Girl”, a personification of charm and friendliness where stewardesses dressed in a designed “sarong kebaya” uniform by Pierre Balmain, a French couturier. Stewardesses also wore a standard make-up and hairdo. With its stringent training and modern facility, the airline had since gained great reputation for its service and became the top 10 biggest international airline in the world and one of the most profitable airlines. 2.0 Situational Analysis SIA established in the year 1972, has grown and consolidated its position to become one of the world’s largest and most successful airlines. It is the national carrier of Singapore, which has an international presence, but a focus on the Asian and Australasian markets. It owns an expansive and relatively young fleet of planes (Singapore Airlines, 2014). It’s published mission statement, "Singapore Airlines is a global company dedicated to providing air transportation services of the......

Words: 5796 - Pages: 24

Premium Essay

Singapore Airlines

...Quick ratio This measures the absolute liquidity position of the firm. In calculating quick asset, inventories are excluded from current assets (Nilanjan,Kaushik, 2014). Source:(BPP, 2011) [pic](Source: annual report of Jahwa and Softto, 2012-2014) (chart 6: quick ratio of Jahwa and Softto 2012-2014) The quick ratio provides a more rigorous assessment of a company’s ability to pay its current liabilities because inventory is reduced from current assets, therefore this ratio better reflects a company’s ability to pay its current liabilities. (Wan,Zhang&Jiang, 2014) From the graph, we can see that inventory has little influence on the company’s liquidity. A quick ratio of more than one indicates that the most liquid assets of Jahwa and Softto exceed their total debts (Wan,Zhang&Jiang, 2014). Therefore, neither of companies has liquidity risk, and Jahwa has stronger solvency than Softto. But excessive quick ratio indicates that the portion of cash and trade receivable are large and therefore the company may loss some beneficial investment opportunities (Chen, 2014). 3.2.4 Investor’s ratios Earnings per share (EPS) EPS means the portion of a company’s profit allocated to each outstanding share of common stock. (Chen, 2014). Source:(BPP, 2011) [pic](Source: annual report of Jahwa and Softto, 2012-2014) (chart 7: earning per share of Jahwa and Softto 2012-2014) As illustrated in the graph, the EPS for Jahwa increased from 0.95 in 2012 to......

Words: 363 - Pages: 2