Case no. 1HRM 380Group D Problem no. 5 SIA is facing great competitions from some low-cost carriersin Asia.

These low c ost carriers can ta e away a big amount of mar et share from SIA. Recommendation no. 5 SIA should introduce some new low-cost flights under a new sub-brand to overta e 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 toremove the low cost carriers threat completely from theregion. How it would be implemented? Typical low-cost carrier should include: a single passenger class a single type of aero plane(commonly the Airbus A319 or Boeing737),reducing trai ning and servicing costs a minimum set of optional equipment on the aeroplane, oftenexcluding convenience s such as ACARS, further reducing costs of acquisition and maintenance a simple fare scheme, such as charging one-way tic ets half that of round-trips, typically fares increase as the plane fills up, whichrewards early reservations. unreserved seating(encouraging passengers to board early andquic ly) flying to cheaper, less congested secondary airports and flyingearly in the morn ing or late in the evening to avoid air traffic delaysand ta e advantage of lowe r landing fees fast turnaround times(allowing maximum use of aircraft) simplified routes, emphasizing point-to-point transit instead of transfers at hu bs(again enhancing aircraft use and eliminatingdisruption due to delayed passeng ers or luggage missingconnecting flights) Encourage the use of direct flights. Luggage is not automaticallytransferred fro m one flight to another, even if both flights are withthe same company. generation of ancillary revenue from a variety of activities, such asa la carte features and commission-based products Page no. 74 Case no. 1HRM 380Group D emphasis on direct sales of tic ets, especially over the Internet(avoiding fees and commissions paid to travel agents andcomputer reservations systems) employees wor ing in multiple roles, for instance flight attendantsalso cleaning the aircraft or wor ing as gate agents (limitingpersonnel costs) a disinclination to handle Special Service passengers, for instanceby placing a higher age limit on unaccompanied minors than fullservice carriers Aggressive fuel hedging programs Not every low-cost carrier implements all of the above points. For example, some try to differentiate themselves with allocatedseating, while others operate mor e than one aircraft type, stillothers will have relatively high operating costs but lower fares.

 The price policy of the low cost carriers is usually very dynamic,with discounts and tic ets in promotion. Even if the advertised pricemay be very low, sometime s it does not include charges & taxes. Who would implement it? Cost reduction is a part of the operations issues, thus would be implementedby t he operations department itself. We all now that for implementing anyplan into the reality the person plays the vital role for its success. No plan canbe succe ssful if it is not implemented in proper manner by the right person. Itwill be b est implemented by the CEO as per the authorization of the directors. Where it would be implemented? Place is particularly very important factor for the SIA as they operate beyondit s own country border. We strongly recommend the company to develop thisstrategy in Singapore at their company main office at first as soon as possible. When it would be implemented? Time is another crucial factor in the implementation process. Implementingany pl an without proper timing has no value. So the SIA must implement theplan within a specific time. They must target a date within which they willoperate. We sugge st that it is done as soon as possible. They need it for their survival and good image. Page no. 75 Case no. 1HRM 380Group D Appendix Page no. 76