Singapore Airlines

Singapore Airlines Mission Statement

"Singapore Airlines is a global company dedicated to providing air transportation services of
the highest quality and to maximising returns for the benefit of its shareholders and
employees" 
Value Chain
Michele Porter
Valueis something that customers assign to a
product. It is a function of the attributes of
the product, such as its performance, design,
quality and point-of-sale and after-sale
service. E.g., Toyota, Sony, Audi, BMW.
A Company that strengthens the value of its
products in the eyes of the customers gives it
more pricing options.
A value chain is a chain of activities for a firm
operating in a specific industry.
The business unit is the appropriate level for
construction of a value chain, not the
divisional level or corporate level. Products
pass through all activities of the chain in
order, and at each activity the product gains
some value.
The chain of activities gives the products more
added value than the sum of the independent
activity's value. E.g., Diamond Cutter
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Firm Infrastructure
Human Resource Management M A
Support
ctivities
RG
Technological Development IN

Procurement

Service
Operations
Logistics

Logistics

Marketing
& Sales
Outbound
Inbound

IN
RG
MA
Primary Activities
 Airline Industry Value
Chain
FIRM
INFRASTRUCTURE -Financial Policy - Accounting
-Regulatory Compliance- Legal - Community Affairs

HUMAN Flight, route and Pilot Training Baggage Handling Agent In-flight
RESOURCE yield analyst
MANAGEMENT Safety Training Training Training Training
training
Product Baggage Tracking
TECHNOLOGY Computer Reservation System, In-flight System
DEVELOPMENT Development
Flight Scheduling System, Yield Management System System
Market Research
Information Technology
PROCUREMENT Communications

•Route Selection •Ticket Counter •Baggage System •Promotion •Lost Baggage Service
•Passenger Service Operations •Flight •Advertising •Complaint Follow-up
System •Gate Operations Connections •Advantage
•Yield Management •Aircraft •Rental Car and Program
System (Pricing) Operations Hotel Reservation •Travel Agent
•Fuel •On-board Service System Programs
•Flight Scheduling •Baggage Handling •Group Sales
•Crew Scheduling •Ticket Offices
•Facilities Planning
•Aircraft Acquisition

INBOUND OPERATIONS OUTBOUND MARKETING

LOGISTICS LOGISTICS AND SALES SERVICE

Figure
dapted with the permission of Michael E. Porter from Competitive Advantage: Creating and Sustaining Superior 4-3
erformance, copyright 1985 by Michael E. Porter.
Firm Infrastructure -From the outset, the government
stipulated no financial aid to SIA. Period. Investment for
expansion, yes. But no subsidy, direct or indirect. SIA had
to attain cruising speed on its own, or stall.
 The strong cash position allows Singapore Airlines to
internally fund purchases of new equipment and airplanes,
and limit interest costs. SIA is not locked into long-term
leases, and can easily accommodate newer, more efficient
equipment which minimizes maintenance costs and avoid
aircraft downtime.
 SIA tends to buys new aircrafts during economic downturn,
the advantage is that the aircraft manufacturers are very
willing to provide discretionary rates / discounts to buyers
who are willing to bail them out during recession.


Human Resource Management –Singapore Girl
(Brand) as the tangible embodiment of SIA’s
caring, professional service. Training provided for
4 months wherein industry standard is 2 months.
SIA focused on Human Software, there first way of
differentiating themselves from competition was
to focus on in-flight service. Right from the
process of recruiting in-flight personnel, flight
attendants all the way through specific touch
points during the flight and after the flight they
honed it down to an art.
SIA also has figured it out that to keep customer
loyalty, to take care of people during bad times
when things are hard. These strategies have
worked extremely well for SIA, they have a very
high retention rate relative to there competition.
Technology Development – Singapore Airlines still
maintains the youngest fleet of aircraft amongst
all major air carriers, and keeps to the stringent
policy of replacing older aircrafts for newer,
better models. E.g., Concorde.  It enhances cost
efficiency to use the latest aircrafts and at the
same time, Singapore Airlines uses these events
for marketing purposes.
Procurement - SIA maintains at data base on
frequent flyers and loyal customers.
Provides information to customers on its website
about routes, pricing, etc.,
Inbound Logistics –There were no domestic routes
to serve it was forced to immediately start
competing with international airlines for routes,
getting access to airports, securing flight slots
and landing rights, and attracting a new
customer base.
Fuel - Maintaining the youngest generation of
aircrafts provides SIA with some of the lowest fuel
costs in the industry. This is very significant since
15-20% of an airlines' total costs derive from fuel.
On top of this, SIA carefully hedges up to 20% of
their fuel contracts two years in advance to avoid
cyclical and often large volatility in fuel prices.



Operations - Passengers are willing to pay
more, if they are able to get more.
SIA was the first to introduce hot meals,
free alcoholic and non-alcoholic
beverages, hot towels with a unique and
patented scent, personal entertainment
systems, and video-on-demand in all
cabins. The company keeps driving
innovation as an important part of the
brand, and the cabin ambience and
combined experience are key factors of
their success.
SIA focused on Frills when other
competitors were doing away with it or
charging for the same.
Out Bound Logistics – Customers can track the
progress of their shipments, make e-payments,
plan a whole trip on programs like Singapore
Stopover holiday.
Marketing & Sales -Unlike most state-owned
entities, Singapore Airlines was subject to heavy
competition from the onset and this tough start
created a driving spirit to compete and also a
dedication to branding, especially in the
boardroom.
 SIA works hard to make flying a glamour's and
enjoyable experience.
 SIA treats marketing as an investment and not as
expense.
 SIA concentrates on passengers then on pricing.
Service – For frequent flyers they know the kind of
drink the customers should be served. SIA
maintains a “Compliment to Complaint Ratio”
which is recently 34 Compliments to 1 Complaint
per 10,000 passengers.
Focus is on the customer rather then on the
product or service.
Getting the customer involved in all aspects of
business, like customer helping to solve business
problems.

Benefits of Related
Diversification
Cost Synergies and Control quality & enable
transfer of learning.
Development ground for well-rounded
management skills.
Competitive intensity is lower ( catering,
aircraft maintenance etc.,)

Audience Questions