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Singapore Airlines BEING DIFFERENT GROUP 10

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Singapore Airlines

Singapore AirlinesBeing Different Group 10Singapore AirlinesParent Company- Temasek Holdings(56% Share)CEO- Goh Choon PhongHub- Changi Airport,SingaporeAlliance- Star Alliance(since 2000)Employees- 17,000+Fleet Size- 109Destinations- 62Early DaysFounded as Malayan Airways Limited in 1947First commercial flight- Airspeed Consul from Singapore Kallang Airport to Kuala Lampur,Ipoh and PenangLarger capacity DC-3 introduced, providing faster and more comfortable flightsExtension of services to Indonesia, Burma, North Borneo and Sarawak

1950s and 1960s16 Sept.,1963 Federation of Malaysia is born and the Airline changes its name to Malaysian Airways LimitedMay,1966- Malaysian Singapore Airlines(MSA) is coined1968- Annual Revenue touches S$100 million mark3 B707s and 5 B737-100s added to fleet

1970s and 1980s2 June, 1971- MSAs first transcontinental flight took off for London1972- MSA splits into Singapore Airlines and Malaysian Airline SystemFleet expanded to include B747s, B727s and DC-10sSingapore Airport Terminal Services(SATS) set up to provide efficient ground servicesSilkAir(subsidiary of Singapore Airlines) opens up as Tradewinds

1990s22 Nov.,1990- Commenced operations from the New Terminal 2 at Singapore Changi Airport1998- Set new standards in air travel by unveiling a new suite of products and services worth S$500 million1999- Launch of KrisFlyer, its first proprietary frequent flyer programme

2000sSet record for the worlds longest non-stop commercial flight from Singapore to Los Angeles in Feb.,2004 and later bettered it by launching a flight from Singapore to New York15 Oct.,2007- SIA took delivery of worlds first A380May 2008- SIA became first carrier to operate an all-Business Class service between Asia and USA

SIA SubsidiariesThe Singapore Airlines Group has over 20 subsidiaries, covering a range of airline-related services from cargo to engine overhaulSome of the main subsidiaries areSIA StrategyA Great Way to Fly

Porter Competitive ModelIntra-Industry RivalrySBU: Singapore AirlinesRivals: JAPAN AIRLINESMALAYSIAN AIRLINE SYSTEM BERHADCathay Pacific Airways LimitedBargainingPower of Buyers

Bargaining Power of Suppliers

Substitute Products and Services

PotentialNew Entrants

Travel Agents Business TravelersFederal GovernmentPleasure TravelersCharter ServiceU.S. MilitaryCargo and MailAlternate Travel ServicesFast TrainsBoatsPrivate TransportationVideoconferencingGroupwareAircraft ManufacturersAircraft Leasing CompaniesLabor UnionsFood Service CompaniesFuel CompaniesAirportsLocal Transportation Service FAAHotels

Foreign CarriersRegional Carrier Start upsCargo Carrier Business Strategy ChangeEurope North American Pacific Rim MARKETSShort Haul Long HaulROUTES AND ROUTE STRUCTUREHub and SpokePoint to Point FARE STRATEGYLow FarePremium Fare IndependentAlliancesCOMPANY STRUCTURE INFORMATION SYSTEMS FOCUS Latin AmericanBusiness Strategy Model - Airline IndustryPassengers Operations Logistics Business Scheduled PassengersCharter ServicesCargoMail Air ExpressPRODUCT/SERVICESINBOUNDLOGISTICSOPERATIONSOUTBOUNDLOGISTICS MARKETING AND SALES SERVICEPROCUREMENTTECHNOLOGY DEVELOPMENTHUMAN RESOURCE MANAGEMENTFIRM INFRASTRUCTURE-Financial Policy - Accounting -Regulatory Compliance - Legal - Community AffairsPilot TrainingSafety TrainingAgent TrainingIn-flight Training Baggage Tracking SystemPromotionAdvertisingAdvantage ProgramTravel Agent ProgramsGroup SalesTicket Counter OperationsGate OperationsAircraft OperationsOn-board ServiceBaggage HandlingTicket OfficesRoute SelectionPassenger Service SystemYield Management System (Pricing)Fuel Flight SchedulingCrew SchedulingFacilities PlanningAircraft AcquisitionInformation TechnologyCommunicationsProduct DevelopmentMarket ResearchLost Baggage ServiceComplaint Follow-up

Baggage SystemFlight ConnectionsRental Car and Hotel Reservation System

Computer Reservation System, In-flight SystemFlight Scheduling System, Yield Management SystemBaggage HandlingTrainingFlight, route andyield analysttrainingAirline Industry Value Chain13StrenghtsOpportunityThreatWeakness

Diversified geographical reach mitigates business risksYoung aircraft fleet decreases the maintenance costs and reduces security issues

Weak financial performance could hamper the market position and future growth perspectivesInvestigations by competition authorities and civil class actions impacts the businessGrowing trends of tourism industry in developed countries helps to boost revenuesGrowth through operational alliances allows serving a large base of travelersStrategic emphasis on cargo operations generates incremental revenuesIntense competition and price discounting pressurizes the operating marginsPrice volatility in petroleum markets impacts the expenses and the overall profitability and marginsStatutory regulations impacts the operating margins

Diversified geographical reach mitigates business risksYoung aircraft fleet decreases the maintenance costs and reduces security issues

Diversified geographical reach mitigates business risksSingapore Airlines has a diversified geographical spread. The group operates across various regions such as East Asia, Europe, South West Pacific, West Asia, Africa, and the Americas. Singapore Airlines operates flights to 63 cities worldwide, while subsidiary SilkAir offers flights to 42 cities in 12 countries. During FY2013, the group carried a total of 18.2 million people across its network. Moreover, it has code share agreements with major international airlines helping it to serve a larger customer base around the globe.The group generates significant revenues from its airline operations across all the geographic regions it operates in. In FY2013, East Asia, the largest geographic segment of the group, accounted for 37% of total airline revenues. This was followed by South West Pacific region, which accounted for12.1%; Europe, which accounted for 10.1%; the Americas region, which accounted for 5.7%; and West Asia and Africa, which accounted for 3.3% of the overall revenues. Non-scheduled services and incidental revenue accounted for 31.8% of the total revenues in FY2013. Thus, the diversified and evenly spread revenue base ensures that the group does not rely on any one geographic market for a majority of its revenues, which substantially reduces it business risks.

Young aircraft fleet decreases the maintenance costs and reduces security issues

The airline operations of the group include passenger and cargo air transportation. Singapore Airlines, along with its wholly-owned subsidiary SilkAir, carries out the passenger air transportation operations. The group's cargo air transportation is carried out by SIA Cargo. In FY2013, the group's operating fleet consisted of 139 aircraft, including 127 passenger aircraft and 12 freighters. The group holds the youngest fleet of aircraft. The passenger fleet operated by Singapore Airlines comprised 101 aircraft, with an average age of 6.8 years. SilkAir's fleet comprised 16 Airbus A320s and six Airbus A319s, with an average age of 6.8 years. The freighter fleet of SIA Cargo comprised 12 B747-400 freighters, with an average age of 11.8 years.In addition, the group continues to take delivery of new Airbus A330 and A380 aircraft, in line with its policy of maintaining a young fleet. These new aircrafts have low fuel burn per-seat-kilometer, and emit lower carbon emissions. Singapore Airlines benefits from a young aircraft fleet as it keeps maintenance costs low, besides reducing security issues related to the performance of the fleet.15Weak financial performance could hamper the market position and future growth perspectivesInvestigations by competition authorities and civil class actions impacts the business

Weak financial performance could hamper the market position and future growth perspectives

Singapore Airlines has demonstrated weak financial performance in recent years. The group recorded revenues of S$15,098.2 million ($12,148 million) during the FY2013. In addition, it also recorded an operating profit of S$229.2 million ($184.4 million) in FY2013, a decrease of 19.8% as compared toFY2012.The group operates through four segments and the revenues generated from three segments have decreased from the last fiscal. The cargo operations segment recorded revenues of S$2,415.3 million ($1,943.4 million) in FY2013, a decrease of 9.7% as compared to FY2012. The decline wasdue to the air cargo industrys global issues such as overcapacity amidst weak economic activity in consumer markets. Similarly, the engineering services segment recorded revenues of S$470.9 million ($378.9 million) in FY2013, a decrease of 14.6% as compared to FY2012 and the otherssegment recorded revenues of S$42.7 million ($34.4 million) in FY2013, a decrease of 15.3% as compared to FY2012. Furthermore, the group has also seen a weak performance in various geographic regions. Europe accounted for 10.1% of the total revenues in FY2013. Revenues from Europe reached S$1,352.9million ($1,088.5 million) in FY2013, a decrease of 4.1% as compared to FY2012. Similarly, the revenues generated from West Asia and Non-scheduled services also decreased from FY2012. Therefore, a consistent decline in one or more of the groups business and geographical segmentscould have a major impact on its overall topline growth. This could hamper its market position and future growth perspectives.

Investigations by competition authorities and civil class actions impacts the business and results ofoperations

Singapore Airlines and its subsidiaries are party to various investigations by competition authorities and civil class actions. For instance, several authorities in the US, European Union, Australia, Canada, New Zealand, South Africa, South Korea, and Switzerland conducted an investigation on the group to ensure whether the surcharges, rates or other competitive aspects of air cargo service were lawfully determined. In FY2012, the group agreed to pay the South African Competition Commission an administrative penalty of ZAR25 million ($2.8 million), as part of a settlement. Also in the year, the group accepted a settlement offer from the plaintiffs in the Canadian air cargo class actions to resolve all such actions on an agreed basis for an amount of C$1.04 million ($1 million). Similarly, in 2012, SIA Cargo confirmed its acceptance of settlement agreements with the Australian Competition and Consumer Commission and the New Zealand Commerce Commission, bringing to an end civil penalty proceedings concerning the air cargo issues which had been initiated in 2008. SIA Cargo agreed to pay a penalty and costs amount of A$12.2 million ($12.6 million) in Australia. In New Zealand, SIA Cargo agreed to pay a penalty and costs amount of NZ$4.4 million ($3.6 million).SIA Cargo paid these amounts in December 2012 and January 2013 in accordance with Australian and New Zealand laws respectively.In addition, civil class action lawsuits were filed against the group and SIA Cargo in the US, Canada, Australia and South Korea by external parties. Furthermore, Singapore Airlines was named in civil class action damages lawsuits in the US and Canada alleging an unlawful agreement to fix surchargesand rates on transpacific flights. Thus, legal costs associated with the investigation and the lawsuits and the amount of time required to be spent on these matters would have material adverse impact on the group's business, financial condition and results of operations.16Growing trends of tourism industry in developed countries helps to boost revenuesGrowth through operational alliances allows serving a large base of travelersStrategic emphasis on cargo operations generates incremental revenues

Growing trends of tourism industry in developed countries helps to boost revenues

The tourism industry is booming which would boost the demand for the groups services. The role of airlines in the total tourism business is to provide mass and quick transportation between countries under safe, standardized and economic conditions.The group provides services to passenger carriers through its subsidiaries. According to United Nations World Tourism Organization (UNWTO), the number of international tourists worldwide grew by approximately 5% i.e., 38 million tourist arrivals, reaching 747 million in total in the first eight months of 2013. The destination regions leading the growth include: Asia and the Pacific (6%), Europe is up by 5% and the Americas by 3%. Among the 25 largest international tourism earners, receipts grew by double-digits in Thailand (+27%), Hong Kong (China) (+25%), Turkey (+22%), Japan (+19%), the UK (+18%), Greece (+15%), India (+14%), Malaysia (+12%) and the US (+11%). The growing global tourism coupled with the groups presence in more countries helps it to boost its revenues and margins.

Growth through operational alliances allows serving a large base of travelers Singapore Airlines focuses on operational alliances and joint ventures to increase the opportunities for sales and growth in earnings. During the recent past, the group entered into several collaborative strategic relationships that provide it with market growth opportunities. For instance, in January 2014, Singapore Airlines and Air New Zealand have agreed to form an alliance enabling Air New Zealand to fly the Auckland-Singapore route again and Singapore Airlines to operate the Airbus A380 to New Zealand for the first time. Similarly, in December 2013, the group signed a new codeshare agreement with Star Alliance partner EVA Air. Earlier in November 2013, Singapore Airlines and Ethiopian Airlines expanded their codeshare agreement. Similarly, in August 2013, Singapore Airlines and Scandinavian Airlines expanded their codeshare agreement to cover more destinations in Europe, Southeast Asia, Australia and New Zealand. Similarly in December 2012, Singapore Airlines signed codeshare agreement with Virgin America. Under the agreement, the group will add its 'SQ' code to Virgin America-operated flights serving Chicago, Fort Lauderdale, Las Vegas, Palm Springs, Philadelphia, Portland, San Diego, Seattle and Washington DC, from Singapore Airlines' West Coast gateway points of Los Angeles and San Francisco. Thus, such strategic operational alliances would further strengthen Singapore Airlines market position and strengthen its reach as it would allow the group to cater to a large base of travelers around the globe. Strategic emphasis on cargo operations generates incremental revenuesSIA Cargo continues to adopt a variable frequency approach to better match capacity with demand for its freighter network. On a planned basis, services were reduced during lull periods and additional services were scheduled during periods of stronger demand.The company also channeled resources to operate more short and medium-haul services, with increased frequencies into Indonesia and South West Pacific. In addition, the company also added more destinations to its network through an agreement with Scoot, a new medium and long-haul low-cost airline based in Singapore, to manage its bellyhold capacity. Moreover, SIA Cargo and China Cargo Airlines operate code share services between Singapore, Bangkok and Shanghai, and have a range of agreements allowing both airlines to seamlessly tap into each others network and provide more flexibility to customers. SIA Cargo holds 16% equity interest in China Cargo Airlines. Besides widening its network, SIA Cargo is also strengthening its competencies by pursuing new and high growth business segments such as temperature-sensitive pharmaceutical cargo. Hence, a strategic emphasis for growing the cargo business helps Singapore Airlines to strengthen its cargo operations and generate incremental revenues in the short to long term.17Intense competition and price discounting pressurizes the operating marginsPrice volatility in petroleum markets impacts the expenses and the overall profitability and marginsStatutory regulations impacts the operating margins

Intense competition and price discounting pressurizes the operating marginsThe airline industry is highly competitive. The principal competitive factors in the airline industry are fares, customer service, routes served, flight schedules, types of aircraft, safety record and reputation, code-sharing relationships, capacity, in-flight entertainment systems, and frequent flyer programs. Airline profits are sensitive to even slight changes in average fare levels and passenger demand. Singapore Airlines faces direct competition from other airlines on its routes, as well as from indirect flights, charter services, and from other modes of transport. Some of its competitors are AMR, Cathay Pacific Airways, Delta Air Lines, Japan Airlines System, All Nippon Airways, United Continental, and Korean Air Lines, among others. In addition, price competition between airlines occurs through price discounting, fare matching, increased capacity, targeted sale promotions, and frequent flyer travel initiatives. A relatively small change in pricing or in passenger traffic could have a disproportionate effect on an airline's operating and financial results. Therefore, intense competition could pressurize the operating margins of the group.

Price volatility in petroleum markets impacts the expenses and the overall profitability and marginsJet fuel forms the main raw material used in the airline industry. The demand for petroleum and related products has historically been cyclical and sensitive to the availability and prices of oil and related feedstock. Historically, international prices of crude oil and refined products have fluctuated widely due to many factors that are beyond the control of companies like Singapore Airlines. Hence, with an increase in the jet fuel prices, the operating costs of the group also increases which can have an adverse impact on the total profitability. According to the group, an increase in price of $1 per barrel of jet fuel impacted the group's annual fuel costs by S$45.6 million ($36.7 million) in FY2013 and S$44.1 million ($35.5 million) in FY2012. Although, the group uses hedging to overcome fuel price risk, they may not be completely effective. Hence, a drastic change in the prices of the fuel can have a serious impact on the group's expenses which may in turn impact the overall profitability and margins.

Statutory regulations impacts the operating marginsAs an airline operator, the group undertakes operations based on the stipulations of statutory regulations relating to airline operations. Singapore Airlines is required to conduct passenger operations and cargo operations on international routes in accordance with the stipulations of international agreements. These stipulations include treaties, bilateral agreements, and the decisions of the International Air Transport Association (IATA). A violation of specific laws and regulations by the group could result in the imposition of fines and penalties.The group is also subject to numerous statutory environmental protection regulations. These regulations are imposed on airline companies with regard to issues such as aircraft emissions of greenhouse gases, use of environmentally polluting substances and their disposal, and energy usage at major offices. Singapore Airlines shoulders a considerable cost burden in order to adhere to such statutory regulations. If the current regulations are strengthened or if new regulations, such as environmental taxes, are introduced, the group has to incur large additional costs, which would impact the Singapore Airlines' operating margins.18

Dual Strategy of Singapore AirlinesCost LeadershipDifferentiation

It is relatively easy to copy individual elements of the system, but incredibly difficult to duplicate the whole system, which has evolved historically and is held together not only by formal processes but also by intangible elements such as organization culture

Pillars of Organizational ActivityRigorous Service Design and DevelopmentSIA views product design and development as a serious, structured effortDevelopment department that hones and thoroughly tests any change before it is introducedMaintain continuous improvement, and dispose off programs or services that no longer provide competitive differentiation or that could be offered in a different wayTreats its customers high expectations as a fundamental resource for innovation ideasInstead of aiming to be the best airline its intention is to be the best service organization2. This department undertakes research, trials, time and motion studies, mockups, assessing customer reaction; to ensure that a service innovation is supported by the appropriate procedures. Underpinning the continuous innovation is a corporate culture that accepts change and development as not just inevitable, but as a way of life; a cultural element that is also inculcated at the national level by Singapores government. A trial that fails or an implemented innovation that is removed after a few months is acceptable, and damages no-ones reputation.

3. At SIA it is expected that any innovation may have a limited shelf life. According to SIAs senior management, It is getting more and more difficult to differentiate ourselves because every airline is doing the same thing . the crucial fact is that we continue to say that we want to improve. That we have the will to do so. And that every time we reach a goal, we always say that we got to find a new mountain or hill to climb.you must be able to give up what you love (Yap Kim Wah).

4. Weak signals are amplified; every customer letter, be it complaint or compliment, creates a reaction within the airline. There is also a program called SIA, for staff ideas in action, where staff can propose any ideas they have that would improve service or cut costs. Additional sources of intelligence are the IATA, Global Airline Performance (GAP) survey, and SIAs spy flights, where individuals travel with competitors and report detailed intelligence on competitive offerings.

5. To achieve that, SIA employs broad benchmarking not just against its main competitors, but against the best-in-class service companies.23Total InnovationContinuous incremental developmentOutstanding Service On The Ground, Transforming Customer Service and Soar, for Service above all the restCustomers lifestyle based innovationsBeing a leader and follower at the same time

Continuous incremental development comes at a lower cost than radical innovation, but delivers that necessary margin of value to the customer: It is the totality that counts. This also means that it does not need to be too expensive. If you want to provide the best food you might decide to serve lobster on short haul flights between Singapore and Bangkok for example, however you might go bankrupt. The point is that, on that route, we just have to be better than our competitors in everything we do. Just a little bit better in everything. This allows us to make a small profit from the flight to enable us to innovate without pricing ourselves out of the market. (Yap Kim Wah).

Customers lifestyle based innovationsKrisworld on-demand entertainment system for all classes, Internet and phone check-in for all classes, the full-size space-bed. SIAwas the first airline to fly the A380 jet (when it was finally delivered after long delays), and has been working on developing the in-flight offerings in that aircraft. These include suites, or a class beyond first in SIAs words that have helped to perpetuate its differentiated positioning. Another investment in innovation included a $1m simulator that mimics the air pressure and humidity in the air, so that food can be tasted under these conditions, which affect taste buds. One decision was to reduce spices in its food.

Leader and follower at same timeIt is a pioneer on innovations that have high impact on customer service (for example in-flight entertainment, gourmet cuisine that includes fine wines, the ability to order ones choice of dishes in advance by internet, beds in the air). However, it is at the same time a fast follower in areas that are less visible from the customers point of view, such as revenue management or CRM systems. In doing so, SIA relies on proven technology that can be implemented swiftly and cost-effectively; this reduces the implementation risk while delivering the necessary functionality. 24Profit Consciousness Ingrained in All EmployeesVision StatementProfit-linked salariesBuilding high performing teamsMeasurement of employee productivity

Vision statement: visionary statement that We dont want to be the largest company. We want to be the most profitable.It is due to this policy of pursuing profitability, rather than size, that SIA has the second highest market capitalization in the airline industry globally (after Southwest), even though its revenues are relatively modest compared to competitors such as the Air FranceKLM Group, British Airways, or the Lufthansa Group.

Profit-linked salariesSIA has a rewards system that pays bonuses according to the profitability of the company; the same percentage for everyone the same formula is used throughout the SIA Group. As a result there is a lot of informal peer pressure from individuals within the organisation, and staff and managers can challenge decisions and actions if they see resources being wasted.

Building High performing TeamsSIA builds team spirit within its 6600 crew members through its team concept, where small teams of 13 crew members are formed and then fly together as far as possible for at least two years. This leads to the development of social bonds within the team that reinforce the culture of cost-effective service excellence and the peer pressure to deliver SIAs promise to customers. Based on both cabin crew feedback and efficiency issues, this team concept has recently been under consideration for further refinement.Measurement of employee productivitySupported by this mindset and organizational practices, the productivity of SIA employees is one of the highest in the global airlines industry (second only to Korean Airlines), at 1028 thousand available tonneKms per employee. For comparison, the figure for budget airlines such as easy Jet is 494 thousand, Jetblue is 522 thousand, and Southwest is 410 thousand. Calculated per $1000 of labor cost, SIA is at20,768 available tonneKms as compared to easy Jet at 14,629, Jet blueat 12,799 and South west at 9348.25Achieving Strategic SynergiesAchieving excellence through subsidiariesDoesnt readily outsourceCreates subsidiaries Compares cost per seatAchieving excellence through subsidiariesSIAs Singapore Airport Terminal Services subsidiary for example provides several ground services at Changi Airport, which is regularly voted to be among the best airports in the world. This excellent airport management and infrastructure entices passengers who are traveling on to Australia, New Zealand or other countries in the region, to pass through Changi and to choose SIA as their carrier. Changi Airport is also one of the most cost-efficient major airports; for example landing charges for a 747 are $2000, as opposed to $3500 in Hong Kong and $7500 at Narita (Doebele, 2005). SIAs subsidiaries operate under the same management philosophy and culture that emphasizes cost-effective service excellence.

Why outsourcing at SIA does'nt readily apply External suppliers might find it difficult to offer the value offered by SIAs own subsidiaries.

Why SIA creates subsiadiariesSIAs related diversification leads to strategic synergy benefits in terms of reliability of key inputs, high quality, transfer of learning, and at the same time cost-effectiveness.

Comparing costs per seatA common metric of airline costs is cents per available seat kilometer,2 where flag carriers tend to have costs of US 914 cents, and budget carriers US 4.57.5 cents (Binggeli and Pompeo, 2002). Singapore Airlines costs per ASK were $ 5.2 cents in 20062007, up from 4.5 cents in 20052006, 4.2 cents in 20042005 and 3.9 cents in 20032004. By comparison, easyJet had costs of 6.9 cents per ASK in 20032004, Rynair 4.8, British Airways 12.5, and Lufthansa 14.6. 26Developing Staff HolisticallyTraining at every levelRecruitmentRegular monitoring of staffTrainingtraining in SIA is almost next to Godliness. Everyone, no matter how senior, has a training and development plan with clear goals. The famous Singapore Girl undergoes training for 15 weeks, longer than any other airline and almost twice as long as the industry average of 2 months. This training includes not only functional skills such as food and beverage serving and safety training, but also soft skills of personal interaction, personal poise, grooming and deportment, and emotional skills of dealing with the consequences of serving very demanding passengers.Their training of a SIA girl is likenend to a "finishing school. Crew have created groups such as the Performing Arts Circle, staging full-length plays and musicals, the Wine Appreciation Group and the Gourmet Circle. These activities help to develop camaraderie and team spirit. to help them develop mpathy for the less fortunate the employees are also made to spend time at welfare homes. this helps them be empathatic to the passengers - SIA girls are taught in languages, wine and cheese.

RecruitmentEven before development starts, there is substantial effort to ensure that the company hires the right staff. For example, entry qualifications for cabin crew applicants are both academic (at least polytechnic diploma, meaning that they have spent 13 years in school), as well as physical attributes. The recruitment process is extensive, involving 3 rounds of interviews, a uniform test, a water confidence test, psychometric tests, and a tea-party. Over 16,000 applications are received every year, and the company hires.

MonitoringAfter the Singapore Girls start flying, they are carefully monitored for the first 6 months, through a monthly report by the in-flight supervisor. At the end of the probationary period, 75% get confirmed, around 20% get an extension of probation, and 5% leave.

27Other strategiesIT

IT- both differentiation and cost leadership- enhancing customer service as well as increasing efficiency. SIAs web site is one of the most advanced and userfriendly in the industry, where customers can check schedules, buy tickets, check into a flight, manage their Krisflyer (frequent flyer) account, find out about promotions, and even choose their meal for their next flight. Given that agents commissions can be up to 7.5% of total operating costs (and reservations/ticketing a further 5.4%) (Doganis, 2006), effective use of IT can significantly reduce costs and enhance service levels. When the current CEO, Chew Choon Seng took over in mid-2003, cost cutting was on the top of his agenda with particular emphasis on cutting non-fuel costs by 20% within 3 years, and outsourcing IT functions to IBM. The sustained drive for efficiency as well as quality has enabled SIA to increase the spread between breakeven load factor and actual load factor to 6.7% by 2006.

28Statistical HighlightsComparison with Jet Airways and EmiratesStatistical Highlights (Profit)Jet Airways : 2821 million $Jet Airways : Loss 584 million $Jet Airways Operates around 116 Planes

SIA also have around 100 planes30Statistical Highlights (Load Factor)Passenger Load Factor :Allegiant 87.4 Spirit Airlines 86.9Alaska Airlines 85.431Statistical HighlightsJet Airways : ASK 38064 million kmSIA : ASK 120502 million KmAvailable Seat Km32Emirates have Revenue per Employee of 508,000 $Statistical Highlights (Employee Data)Emirates have 41,471 employeesStatistical HighlightsJet Airways : 6 cents/askJet Airways : 6 cents/pkmASK : Available Seat KmPSK : Passenger Seat Km34ThankyouStatistical Highlights (Employee Data)