Problem

The problem began during and after the difficult economic conditions such as the SARS
outbreak in 2003 and the Middle East crisis. The relation between the group management and the
labor unions began to sour, particularly after the wage-cuts and lay-offs of over 414 employees.
It was regarded as the highest number of lay-offs in the history of SIA. It went on for a further
wage-cut and lay-offs in order to trim its operating costs. The whole incident was being regarded
as self-serving by the Unions. The full support from the SIAs major shareholder, the
Government of the Singapore was also considered by the unions as suspicious and they did not
like it a bit. They thought these excuses were used just to downsize the number of employees.
HR issue
There is a weak Human resource management is deployed that company is made the employee
come to believe that the company is using SARS and Iraq war as a convenient excuses to
downsizing in Human resource capital. This also became the realized issue that a presence of
unfriendly union is where about in the company. In the job cuts in 2002-2003 left a bad taste in
SIA employee during the economic crisis. The normally friendly unions had publicly expressed
concern over the layoffs and salary reductions that followed in the wake of SARS and the Iraq
war. Many among the rank and file viewed these actions as self-serving and suspect since the
company had achieved close to normal passenger loads after the specter of SARS had faded.
This distrust was indeed disturbing and seemed to spread across all ranks of employees from
pilots to ground crew. This disturbing issue shouldnt be going unrecognized or unnoticed as
might not be creating a problem for now, but it can became a problem in a later on progression
with time as the situation for the company became more critical . The company is facing more
decisive than its previous and if this misunderstanding is not properly dealt with it will backfire
on the company as a vital wave in a bad situation.
The generous expatriate pilots compensation package should be clarified among the other local
pilots. So that the differentiation wont be there and understanding that comparison
compensation is properly justified among both the parties and no discrimination is doing on
mutually base pay and benefits.
The compensation package for pilots with the differentiated issue played a large part in the
Human resource management as it is the core issue related in terms of retaining the most
important employees in the job. This might create a differential impact on the mind of local
pilots that they are being underpaid than the pilots who are being foreigner working among them
from different place. Though in a case the benefits remain close to similar in a package of
compensation and benefits given to them both but the differentiation needed to be clear among
the pilots as it might make a proper problem among them .So keeping them in the job by
providing the right terms of salary is also the very jobs of Human resource management.
Recommendations

After analyzing the case and identifying the Human Resource issues effectively in the previous
part, it is now time for recommendation to Singapore International Airlines (SIA) to focus on
some specific areas to retain their existing employees and diversified customers, to capture new
market in new or innovative ways and also to make profit by increasing their operational
efficiency for financial viability. We already knew from the case that SIA has already established
itself as one of the worlds most admired airlines. It has a superior strategy of differentiation but
recently its trimming its operating cost by downsizing its employees. They already started to
have problem with their operational management system otherwise downsizing wont took place.
So there must be some areas that should be focused by them to sustain in the airlines market for
longer period. By focusing on Human Resource related issues we have identified in the previous
part, now we are going to recommend some solutions that will support the efforts of quality
enhancement of customer service at Singapore International Airlines. By adopting our suggested
plans we believe that it can overcome from its operational problem and by taking the full
advantage of its facilities to earn a higher profit to operate their business successfully and also to
expand its operation throughout the world. In the following one by one, at first we will mention
what are the specific problems we have identified, what is our recommendation to solve these
current problems, and why those are essential to the company.
Restructure the compensation philosophy:
SIA should develop or restructure a new compensation policy which will motivate the employees
more than now. They also have to survey the whole SARS and Iraq war situation about how
much it actually harmed the performance of the company. Even if it harmed the performance,
then closing several flights in the affected area, and replacing those flights with some new
locations could be a good solution.
PROBLEM 5
SIA is facing great competitions from some low-cost carriers in Asia. These low cost carriers can
take away a big amount of market share from SIA.
SIA is currently facing competitions from some low cost airlines like Air Asia, and Virgin Blue.
They are planning to use Singapore as a base to conduct their operations in Asia. Though they
have a very small fleet, due to their attractive fares almost all of their flights become full. They
are offering very low price to their customers, only USD$10 for a flight from Kuala Lumpur to
Penang. Where as same flight may cost 10 times more for airlines like SIA. So, people started to
rush on those low cost airlines, and the market positioning of SIA starts to decline.
Recommendation 5
SIA should introduce some new low-cost flights under a new sub-brand to overtake the threat of
low-cost airlines. By doing this SIA will be able to uplift their image as a more superior airlines

than that of their new sub-brand, and will be able to remove the low cost carriers threat
completely from the region.
Since low-cost carriers are targeting some top airlines like SIA, now its time for SIA to take a
sweet revenge against them. SIA shall not lower its cost to fight back these low cost carriers.
Instead under a new sub-brand SIA it will introduce some new flights to those destinations where
the low cost carriers are targeting. As a result SIA will be completely out of the competition, and
their new sub brand will compete with those low cost carriers. Since SIA has a vast experience in
the region their new sub brand will be also doing because of this experience. Whereas, new
comer low cost carriers will struggle a lot to cope-up with the new sub brand of SIA.
Future Opportunities
The last three years has seen a dramatic shift in the airline industry. There have been major
shakeouts and loose consolidation amongst premium, full-service players and a wide expansion
in the low-cost carrier market - also in the closely regulated Asian airspace. Air travel has
become a commodity and most major routes are saturated with fierce competition. The low-cost
carriers have significantly influenced consumer behavior for cheap price bargains among leisure
travelers and increasingly among business travelers.
Singapore Airlines has already jumped ahead, launching their own carrier for local and shorthaul routes, Tiger Airways, to stay at the forefront of competition. The aim is to avoid dilution of
the core premium brand, Singapore Airlines.
Singapore Airlines strongly embedded positioning and commitment to the brand has positioned it
well to compete in the new landscape. The challenge is to stay true to the brand and keep
delivering on the fairly high-cost promise of quality, innovation and service. This requires heavy,
on-going investments and healthy cash-flows which can only be achieved though a continuous
price-premium strategy and satisfactory passenger load factors. In other words, customers'
perception of the price/value equation, their future buying behavior (partly to be influenced by
the low-cost carriers) and loyalty among other factors are crucial for the future.
In most industries, there are always segments willing to pay for quality brands. Therefore, the
question is not whether there are customers in the market, but rather the ability for Singapore
Airlines to constantly nurture the brand promise, keep innovating and capture the overall value
of the brand in the minds of the customers.
The strong brand equity of Singapore Airlines is one of the most valuable assets for the company
and its cash-rich balance sheet. Singapore Airlines is a leading business case from Asia
demonstrating the importance of strategic branding, and they should serve as great inspiration for
other Asian boardrooms trying to build and manage their own brands.