Singapore Airlines, Case Study

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  • Topic: Airline, Business class, Travel class
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CASE EXAM
This case exam for the module ‘Principles of Marketing’ accounts for 70% of the final grade for this module (IBMMK108R1). The two multiple choice tests during the module account for 30% (15% per test).

A CASE STUDY OF SINGAPORE AIRLINES

EXECUTIVE SUMMARY
As a former British Colony that gained full independence in 1965, Singapore was essentially forced to make do with its limited resources. This developed into a national obsession with achieving excellence without compromise and has been responsible for its many successes. This attitude of control and determination was critical in the creation of the culture within Singapore Airlines (SIA). From the first unveiling of its official colours in 1972, SIA's primary objective was that of creating a world Class airline, able to compete against the best in the world, without government subsidy or interference. This international focus, along with its goal of being distinctive, resulted in the creation of a company-wide commitment to the success of the airline.

INTRODUCTION
The single biggest challenge facing Singapore Airlines is that of maintaining its place as the world's best airline as well as the most profitable. Having been recognised and rewarded for its outstanding level of service, whether or not it can hold on to its top position remains to be seen.

PRODUCT CATEGORIES
SIA's product offering is divided into three main lines. The First Class seat represents the ultimate in air-borne luxury with corresponding prices. SIA allocates no more than 5% of its seats to this Class due to its limited market. The next category is the Business Class seat. Passengers in this category enjoy fully reclining and seats, plenty of space and excellent food served on custom designed china. The allocation for this Class makes up approximately 10% of the average load. The most substantial category in the product mix is the Economy (or "Tourist") Class, which accounts for close to 85% of the seat allocation. Even though SIA has one of the most modern fleets in the industry, and has service levels that other airlines can hardly match, the emergence of other regional airlines who aim to displace SIA from its prized leadership position poses some threat to the company.

GOALS
Based on comparisons of SIA's performance with other international airlines, SIA performs well. SIA finished up the year in the sixth position in terms of passenger numbers, tenth in passenger kilometres, and first in absolute profit (See Table 1). This is in line with the unequivocal goal that has driven the company since its inception. Rank | Category | Numbers |

10 | Number of Passengers carried | 7,093,000 |
6 | Scheduled Passenger Kilometres | 31,544,000,000 |
1 | Operating Profits (in US$) | $774,000,000|
Table 1. Performance Indicators
However, with the growing competition in the industry, SIA needs to consider ways to not only protect its penetrated market from competitive erosion, but also to increase it’s market share. Due to the premiums paid by the Business Class passenger, the company has directed its thoughts towards this market to reach it’s goal of staying ahead of competition and increase market share. One important requirement has been set: that there should be "no compromise of commitment to quality . . . .if a trade off is necessary, it should be in favour of the customer." Another additional tool in the arsenal is the fact that SIA is an industry leader in the use of technology as a competitive tool. It is the view of the management that this will have an increased role as a differentiator.

BUSINESS CLASS PASSENGER PREFERENCES
To increase market share and competitive posture in the Business Class customer segment SIA did an extensive market research including a survey. From the results of the surveys conducted, it appears that there are some wants of Business Class travellers that are not currently catered to by the excellent in-flight service...
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