Sia and Garuda Case

Topics: Singapore Airlines, Economics, Low-cost carrier Pages: 3 (841 words) Published: February 5, 2013
Melissa Gilbert 1240000474
Individual Assignment

1. What is the SIA business model in terms of revenue?

In terms of revenue, the business model that SIA adopted is the Sales Revenue model. SIA gets the revenue by providing the best service to the customer. Profit = Revenue – Cost
To calculate with the formula above, if a company want to get (a higher) profit, the revenue has to be increase of maximized when the cost (fixed and/or variable, or both) should be minimized.

SIA invests significant percent in its human and capital resources because they want to give the best performance by providing the best service. Constant upgrading and retraining ensure that service quality of staffs does not drop and continue to provide friendly service to its customer. This makes the customers want to “come back for more” the next time they travel and higher revenue ensues. In the 90’s, SIA management foresees that in the 21st century, air travel would be an important mode of transports and demand would be strong. Hence it planned to build a third terminal. Nowadays, the terminal is ready to use, not to mention the budget terminal. Changi Airport is able to handle more passengers. In addition, SIA is also planning to buy more airplanes like A380 Airbus. This increases its capability to expand its operation by traveling to more destinations and more frequently, hence increasing revenue. The great economy growth in Singapore (8.2% in the second quarter of this year) and optimistic prospects of the world economies make more people have more disposable income on hand and able to afford to travel. Active promotion by SIA and Singapore Tourism Board (STB) promise more people to travel with SIA, leading to higher revenue.

2. What do you think of this model considering Low Cost Carrier concept and Premium Class Concept?

SIA adopted Sales Revenue Model by providing the best service to its customer to increase the sales. The different with Low Cost Carrier...
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