Issues
The main issue perplexed SIA was to redefine its superior strategy of differentiation, of which it had taken pride for decades. A couple of other issues also posed significant pressure on SIA management. The outbreak of SARS in major Asian countries, along with the Iraq War, dampened air traffic and forced SIA to execute layoffs and wage cuts. These implementations were distrusted by employees and thus, negatively impact the morale. Moreover, globalization and the rapid expansion of budget airlines both push SIA to reposition itself.
Analysis
Having been ranked among the best carriers across the world, SIA’s legendary commitment to superior service was a sophisticated system. The impetus SIA could stick on its promise was the subsidiaries it wholly owned and joint venture, which, in turn, provided operational support to not only SIA but also majorities of airlines operated in Singapore.

SIA was extremely open to embrace new technologies. They attempted to bring their customers conveniences and a brand new experience from the ticket booking process to destination baggage handling. It was not merely some physical actions, but embedded their emotion and truly, sincerely treated people.

SIA possessed the latest equipment. They seriously took care of the fleet, and updated the fleet frequently. Thus, SIA stocked a high quality of pool of talents. They carefully selected the fleet and designed interior structure to gain signal values, which was part of the differentiation strategy.
A finely tuned recruitment and training strategy fostered a system meld the human assets into a formidable source of competitive strategy. SIA has exceptional people and enjoyed a steady stream of success.

Deregulation and privatization in airline industry boosted the competition. SIA could spread its wing into more intercontinental routes with the help of alliances. But skies-open also meant more and more carriers would engage in Singapore; threaten to its market share. The lack of a common standard among airlines could significantly erode SIA’s brand value under so-called code-sharing system. On the other hand, the more urgent problem was SIA tried to distinguish itself and thus deliberately and carefully constructed its own differentiation strategies, now became industry norm, some of them, at least. They were not unique to SIA any more. This was crucial, as differentiation lied at the heart of SIA’s success.
SARS and Iraq War were merely catalyst that aggravated the situation. The severe competition would eventually reveal all problems and force SIA to re-understand them, although painful, inevitable!
Recommendation
1. Effectively communicate the situation with employees to gain their understanding over wage cuts etc. The purpose is to reduce resistances. Losing morale will only sharpen the problem. 2. Create a platform to listen to customers’ opinions, see what they want. And maybe redefine their differentiation from the equipment itself, like more leg space for all seats, which indicates less capacity, SIA has such kind capacity. 3. More flexible and competitive price. I am from Singapore, and I know that tickets of SIA are generally more expensive than other carriers. That is what you pay for their superior service. But the problem is customers are much more pricing sensitive than ever, and to survive, changes may be necessary.