Issues and Key Problems Of Singapore Airline - Get Free Sample Here

Question: Describe about the Strategic Issues and Key Problems of Singapore Airlines? Answer: Current Situation The Singapore Airlines (SIA) is essentially the trend setter of the Airline Industry. SIA has employed various innovative strategies since its beginning. These strategies have supported and strengthened the organization over the years and have helped the organization to reach its goals and succeed in the Airlines industry. However, according to 1QFY 2015, the challenges are continuing grow for Singapore Airlines. The profits of Singapore Airlines have been dropped steadily in the last few years due to rapid changing market conditions and intensifying competitions. In the ending of quarter 30Jun 2014, the airlines recorded a drop of 52% in their operating profits (Centreforaviation.com 2015). In order to understand the present situation, it is important to understand the weaknesses of SIA. As SIA missed the opportunity to set up Tiger Airways as wholly based subsidiary of SIA, it has proven to be unprofitable for SIA group. Further, presently the growth rate of SIAs passengers has also gone down by 2% per annum. Thus, the traffic of SIAs passengers has decreased in 2013, compared to 2008. Further, the organization is also facing disadvantage with its geographic factor. It realized that the long flights are not profitable for the organization. The prospects of such long flights are almost nil (Centreforaviation.com 2015). Also, the joint venture strategies have always been the weakness of SIA, as the organization fears about the dilution of its brand. It generally does not take part in any metal neutral anti-trust joint ventures that are often advantageous for trans-Pacific and trans-Atlantic markets. Strategic Issues And Key Problems There are various external factors that have been affecting the decisions and the performance of Singapore Airline. The Singapore Airlines has been mainly controlled by the policies and agreements of the Government. Thus the airline cannot fly to any country or other destination without proper authorization (Doganis and Doganis 2006). The deregulation of the aviation industry stills opens up door for various new entrants and also increased competition. As the Singapore government owns Singapore Airlines, thus such control still affects the organization. Further, there are some environmental factors that are also influencing the SIA like rising fuel prices. The rising fuel prices are also increasing the cost of running of flights, causing to rise in the prices of tickets. SIA have decided to surcharge US $20 on the prices of ticket in order to manage the rising prices of fuel (Advito.com 2015). The airline industry is also becoming one of the most competitive industries and the rival airlines are trying to take advantage of various opportunities and analyze the need of the customer to sustain in this competitive world. SIA is also concerned with this consolidated key rival like Emirates Airlines and Qantas Airlines in Australian route. Further the rises in the airlines in Gulf countries are remaining to be the aggressive and huge competitors for both economic and premium passengers in the market of SIA (Cento 2009). Another strategic issue of SIA is the overcapacity in the Southeast Asian market. The rise in the SIA competitors including the LCCs, full-service flags has given rise to excess supply. Through the growth of middle and economic class, the demand is still being boosted in Southeast Asia; however the capacity is adding a swift pace in long-term, medium-term and short-term markets. Thus, this is creating pressure on the load and yield factors of Singapore Airlines. SIA has dependably been a pioneer in the premium space yet contenders have contracted the gap impressively as of late (Doganis 2001). SIA still has one of the main premium items in the business yet there are a ton more carriers at or close to the highest point of the class. The business class item on the greater part of the SIA long term armada was presented back in late 2006. At the time it spoke to a jump past contending items. In any case a few aerial transports as of late have presented comparable business class items, sh utting the gap with SIA (Wirtz and Johnston 2003). Indeed some airlines of European and North American, which had been various eras behind, have shut the crevice. Changi is additionally known to be a moderately more extravagant air terminal (when likewise calculating in charges from administration suppliers) putting it at a focused hindrance in Southeast Asia. Changi and the Civil Aviation Authority of Singapore are reacting through an arrangement projects offering different discounts and motivating forces. Anyway it may not be sufficient to stem the tide. SIA's future is interlocked with Changi and Singapore in general, so there is a basic that recommends Singapore won't energetically fall behind (cai.sg 2009). References: Advito.com,. 2015. 'As Oil Prices Fall, The Fuel Surcharge Debate Escalates | Advito'. https://www.advito.com/as-oil-prices-fall-the-fuel-surcharge-debate-escalates/. cai.sg,. 2009. 'CAI Commences Its First Largest Airport Management Contract In Saudi Arabia'. https://www.cai.sg/brochure/newsletter007.pdf. Cento, Alessandro. 2009. The Airline Industry. Heidelberg, Germany: Physica-Verlag. Centreforaviation.com,. 2015. 'Singapore Airlines SWOT: Challenges Continue As Competition Intensifies As Shown By 1QFY2015 Results | CAPA - Centre For Aviation'.https://centreforaviation.com/analysis/singapore-airlines-swot-challenges-continue-as-competition-intensifies-as-shown-by-1qfy2015-results-180289. Doganis, Rigas. 2001. The Airline Business In The Twenty-First Century. London: Routledge. Doganis, Rigas, and Rigas Doganis. 2006. The Airline Business. London: Routledge. Wirtz, Jochen, and Robert Johnston. 2003. 'Singapore Airlines: What It Takes To Sustain Service Excellence A Senior Management Perspective'. Managing Service Quality: An International Journal 13 (1): 10-19. doi:10.1108/09604520310456672