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Singapore Airlines

While world airlines have faced many difficulties, Singapore Airlines (SIA) has weathered the storms better than others. Many airlines, since 1990 have suffered extensive losses. American airlines have lost about US$6.5 billion. Pan Am folded and several carriers filed for bankruptcy protection. While Asian airlines have been more successful (i.e. Cathay Pacific and China Airlines), SIA had been the more successful than the competition in many cases. While Cathay Pacific and China Airlines earned US$813 million in 1991 with seventy-three planes, Singapore Airlines earned US$912.8 million with fifty planes.

Reasons for Singapore Airlines’ success

Certainly part of the SIA success story might be attributed to the government's seed money, policies which encouraged growth and the development of Changi Airport (one of the world's best). However, the government is not involved in the airline's policy making and has made it clear that SIA has been set up to provide services and economic benefits, not for national prestige. It was not to expect government subsidies. So what makes SIA so successful? One of the strongest features of SIA's success is that its fleet of aircraft is very new, with an average aircraft age of five years. But aside from prudent fixed asset investments, its overall investment strategy in technology to manage the demand and supply for airline seats surpasses that of its competition.

Managing booking information

This web of managing customers’ demand for seats is helped along by technology such as the PROS Revenue Management system which in 2000 supplied SIA with a SD$20 million advanced systems capable of forecasting and optimizing the allocation of airline seats more effectively. Dubbed Krismax II, the technology was developed to cater to SIA's specific sales and marketing needs.

Eng Huang Cheng, SIA's Senior Vice President of Marketing Planning, in a recent interview commented that:

Seats on any given flight can be sold in many different markets. The idea of investing in state-of-the-art technology is to better match supply with demand and ensure that each market is allocated an appropriate number of seats, especially when traffic mix and seasonal travel have to be factored in. Ultimately, we want to minimize seat wastage.

Krismax II helps overcome the complexities of matching seat capacity with customer demand. By using PROS dynamic modelling and operations research techniques, a forecast demand based on historical travel patterns and current booking trends can be developed.

Engaging in e-business – flying high on customer information

Singapore Airlines has also long been known for their excellent levels of customer service, served through the legendary ‘SIA Girl’. However, the ‘SIA Girl’ too requires help when it comes to gaining and maintaining a competitive advantage, maintaining and reinforcing service leadership, and providing significant benefits such as fostering stronger ties and reaching out to its customers and business partners. In the last quarter of 2000, SIA and IBM's Business Innovation Services announced that they had developed an e-commerce strategy to provide more service options for their customers, while maintaining service quality. The task force had over a period of four months conducted extensive research with customers, business partners, employees and management of SIA, focusing on areas as diverse as the mobile internet and customer service. The e-commerce strategy also looks at the collection of customer information to be analysed such as industry dynamics, customer preferences which would ultimately determine what business strategy the ‘SIA Girl’ should observe in order to maintain being a global travel leader.

Managing information flow internally

Moving from the technological-aided gathering and transferring of information, SIA communicates information to its staff through more traditional means. With an organization comprising more than 28 000 staff located in cities and subsidiaries throughout the world, linking the people from different cultures and making them work together to produce a seamless and positive customer experience is indeed a challenge that SIA handles well. Internal communication and dissemination of information is done through a variety of regular department newsletters and a monthly company-wide magazine. Regular dialogue sessions are also held between the management and staff to help keep the information flowing. A ‘Staff Ideas Action’ scheme helps ensures that the feedback from their frontline workers are constantly put forward for improvement of service and products delivered.

Listening to ‘knowledgeable’ customers

Singapore Airlines’ managers know the best sources for improving their competitiveness is to maintain a constant feedback from customers. This open line of communication with their customers, listening to customers wants and needs is a priceless culture not easily replicated. Singapore Airlines makes a concerted effort to stay in touch with customers through in-flight surveys, customer focus groups and rapidly replying to every complaint or compliment they receive. Consolidating these inputs with other key figures, a quarterly ‘Service Performance Index’ is developed and closely watched throughout the airline.

External gathering of information is also done, based on an environmental scan to keep track of its competitor's progress. In the true spirit of benchmarking, SIA even monitors outside the airline industry, keeping a close eye on the new services offered by banks, hotels, retail outlets and other service industries, always looking to improve its amenities and comfort of air travel either through modifications or through product or service innovation.

From its early days, SIA has built a reputation for taking the lead and doing things differently, e.g. serving free drinks on flights and providing free headsets. Airlines now have made it the norm for long-haul flights to provide these two services at no extra charge. Singapore Airlines’ upgraded economy class has even added a personal telephone, adjustable ‘ears’ in the headrests (to provide neck support), footrests, plus a choice of meals including local and ethnic dishes. The leading edge gaming and in-flight entertainment system has yet to be adopted as an industry norm, and certainly its free flow of Charles Heidsieck champagne service in coach class is unprecedented. Meals come at the customer's request and at their pace, as in a premium restaurant, with dishes straight from the aircraft galley rather than from a trolley, complemented by a wine list that won first-place honours from Decanter Magazine in 1999. Passengers arriving in Singapore can even book at the time of reservation for the complimentary use of a cellular phone which can be collected at the arrival hall at Changi Airport. Plans for the near future include the introduction of a cyber-cabin which, in line with the knowledge economy, will allow passengers to keep in touch with their ground contacts through e-mails as well as to surf the web and engage in e-shopping.

These innovative services have been a result of translating customer knowledge into services now often expected right from when a passenger purchases a ticket to when he or she arrives at the destination (and currently schemes cater to beyond arrival).

Culture of continuous improvement

This commitment to continuous improvement is coupled with a cultural determination to try it out, make it work and see it through. Not every innovation succeeds, and some are eventually removed from service (the fax machines are long gone), but SIA makes every possible effort to find the key to success, or to create it.