1. Sicharn
Anyapat
Worakorn
Veeranan

3. Strengthening
Change
in
Capitalizing
ISSUES
compe11ve
edge
consumers
lifestyle
on
the
downturn
Company profile
• Best global airline
• Core competency: Service excellence & Product innovation
Competitive Analysis
SIA Air France British Airways Emirates Qantas CEA Cathay Pacific
Service
Competitors are equally able to
Product
innovation developing innovative products
Premium
Pricing and delivering service excellence
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
3

4. ISSUES
Opera1ng
System
Brand
Establishment
3G
Company profile
• Best global airline
• Core competency: Service excellence & Product innovation
Implication: SIA must strengthen its
competitive edge to be number
Competitive Analysis
one in the market. SIA Air France British Airways Emirates Qantas CEA Cathay Pacific
Service
Competitors are equally able to
Product
innovation developing innovative products
Premium
Pricing and delivering service excellence
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
4

5. Strengthening
Change
in
Capitalizing
ISSUES
compe11ve
edge
consumers
lifestyle
on
the
downturn
Customer lifestyle
Customer lifestyle has
changed in the new
landscape of internet
and mobile connectivity
Technology has become more important to people’s lives
• Service Excellence
How can we better serve
• Product innovation customers with the fast-paced
change in technology?
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
5

6. ISSUES
Business
Focus
Geographic
Expansion
Growth
Funding
Customer lifestyle
Customer lifestyle has
Implication: There is a need for SIA to changed in the new
landscape of internet
keep up with the rapid change of and mobile connectivity
technology in order to best satisfy the
customers. has become more important to people’s lives
Technology
• Service Excellence
How can we better serve
• Product innovation customers with the fast pace
change in technology?
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
6

7. Strengthening
Change
in
Capitalizing
ISSUES
compe11ve
edge
consumers
lifestyle
on
the
downturn
Nature of airline industry
Global Economy
Economic Oil
climates prices
• Affect no. of passengers
• Affect price
Disease Natural Decline in revenue
outbreaks disasters
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
7

8. ISSUES
Business
Focus
Growth
Funding
Geographic
Expansion
Nature of airline industry
Global Economy
Implication: SIA must find a strategic
Oil
Economic
way to manage its revenue stream and
climates prices
capitalize on the downturnffect price the
• A given
• Affect no. of passengers
nature of the industry.
Disease Natural Decline in revenue
outbreaks disasters
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
8

9. Where SIA is
ISSUES TO BE SOLVED Where SIA should be in
10 Years
• A world-leading airline • Successfully
which has been known Strengthening strengthen its core
for its service excellence
and product innovation.
competitive edge competencies in
service quality and
position as the airline
• Facing the rapid of choice.
change in technology Change in
and customers lifestyle. • Be known worldwide
consumers lifestyle for its technology and
• Revenue is affected by product innovation
external factorsposing a that maximize the
threat to SIA as a long customer’s values.
term player in the airline Capitalizing
industry. on the downturn • Be able to withstand
the downturn of the
airline industry.
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
9

10. Strengthening Change in Capitalizing on the
Competitive edge consumer lifestyle downturn
Strategy II.
Strategy I. Strategy III.
Digital World
Uniquely Singapore Balancing Strategy
Strategy
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
10

11. I. Uniquely
Singapore
Strategy
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
11

12. To widen the gap from competitors and strengthen No.1 position as the
Objective:
best service airline in the world
Quality Human Resource à Service Quality
Core competencies
of Product Innovation
Singapore Airlines
Being Singapore
• Variety of people & culture
(Mixed Asian)
How can we utilize our core competency to gain a step ahead over the
competition
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
12

13. “Singaporean
Touch”
enlightens
your
journeys
(through
the
6
senses)
The
power
of
fresh
air
&
Showing
Chinese
or
relaxa1on
tradi1onal
arts
Sight
Smell
Most
caring
service
from
the
Feel
Mixed Asian Hear
Tradi1onal
yet
modern
heart
(Heart)
Culture tranquil
sounds
The
most
stunning
blend
of
Taste
Touch
Every
surface
tells
a
story
of
Asian
cuisine
&
organic
the
history
and
heritage
of
flavors
Singapore
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
13

14. •
Refurbish
interior
design
through
Ac1on
the
concept
of
“Singaporean
Touch”
in
order
to
excite
customer
experiences
Criteria
for
•
Suite,
Business,
and
First
Class
Implementa1on
• High
frequency
airplanes
•
Popular
des1na1on
(maximizing
exposure)
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
14

15. II. Digital
World Strategy
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
15

16. Objective:
To capitalize on the IT trend in order to provide better value to customers
PARTNER WITH A TECHNOLOGY COMPANY
ü Increase customers’ satisfaction
ü Enhance Brand Image as being more innovative
ü Ability to charge higher price
Partner Selection
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
16

17. Value
Proposi1on
Increase product exposure & trial (93 destinations in 38 countries)
New product channel (airplane)
No. of customers in our hands that they can tap into
Enhancing brand image
One of the best world’s class airlines
Best in-flight entertainment for 5 consecutive years
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
17

18. III. Balancing
Strategy
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
18

19. To capitalize on the new IT trend in order to provide better value to
Objective:
customers
Macro Economic factors Fluctuation in revenue
4 segments
What is the best segment for SIA
to penetrate into in order to mitigate the risk
Business -
Traveling Studying Visiting
related
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
19

20. Customer
segment
Implementa1on
&
1
selec1on
2
value
proposi1on
Business-
Objective of flying Travelling Studying Visiting
related
Travel frequencies
Need for travelling
Price insensitivity
Insensitivity to macro
factors
Customer relationship
Care for service
quality
Destination
Market Size
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
20

21. Customer
segment
Implementa1on
&
1
selec1on
2
Value
proposi1on
implementation
Value Proposition
Corporate Mileage Program
• Upgrade class
• Earn priority Check-in ü World-­‐class
service
quality
• Access to business ü
Hospitality
of
flight
aXendants
lounge at the Thai airport ü
Des1na1on
Coverage
ü
Direct
Flights
Open more direct flights
ü Support
facili1es
(phones,
internet)
• Growing business centers
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
21

22. 2011
2012
2013
2014
2015
2016
Uniquely Singapore
Plane refurbishment
Digital World
Negotiation Process
Launch product
Balancing
Marketing
Launch the CRM
campaign
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
22

23. 35,000.0
30,000.0
25,000.0
20,000.0
15,000.0
CAGR = 10.1%
10,000.0
5,000.0
-­‐
2011F
2012F
2013F
2014F
2015F
2016F
2017F
2018F
2019F
2020F
In
Singapore
dollars
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
23

24. 1,800.0
1,600.0
1,400.0
1,200.0
1,000.0
800.0
600.0
CAGR = 14%
400.0
200.0
-­‐
2011F
2012F
2013F
2014F
2015F
2016F
2017F
2018F
2019F
2020F
In
Singapore
dollars
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
24

25. Internally
generated
fund
Long
Term
Debt
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
25

26. Efficient
NegoDaDon
refurbish
Skills
schedule
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
26

27. ISSUES
STRATEGIES
Uniquely Singapore
• “Singapore Touch”
Strengthening
Digital World
Change in consumer
• Partner with Apple Inc.
lifestyle
Strategy Name 3
Capitalizing on the
downturn • Corporate mileage
Situation Issues & Financial
Recommendations
Conclusion
Analysis
14/8/11
Objectives
Justification
27

28. THANK YOU
Q&A

29. PRESENTATIO Backups
SWOT
Finance
N
CompeDDve
advantage
Pro
Forma
AssumpDon
SituaDon
1
CompeDtors
Financial
PosiDon
SituaDon
2
Risk
Analysis
RaDo
SituaDon
3
Revenue
1
Breakdown
Issues
&
ObjecDves
Other
Issues
Revenue
1
Breakdown
Cal
RecommendaDon
I
Brand
Image
–
Singapore
Girl
Revenue
2
Breakdown
RecommendaDon
II
Equity
stake
or
form
alliance
party
Revenue
2
Breakdown
Cal
RecommendaDon
III
Service
classes
Revenue
3
Breakdown
Timeline
InnovaDve
product
in
the
next
10
years
Revenue
3
Breakdown
CalculaDon
Revenue
Growth
Equity
stake
or
form
alliance
party
Revenue
3
Breakdown
CalculaDon
Net
Income
Growth
Class
Share
Direct
Flight
Expansion
Cost
&
Funding
Why
Singapore
Airlines?
Key
Success
Factors
Firms
Conclusion
Efficiency
Comparison

30. SWOT
Strength Weakness
Human resource- recruitment and training High overhead cost (industry nature)
Outstanding awards
Brand recognition
Excellent service quality
Network partners and coverage worldwide
Product innovation
Strong management team
Adaptability to external changes
Consistency in strategy
Geographic diversification
Opportunity Threat
Aviation industry is crucial for global economy Macroeconomic factors
(7.5% of world GDP) - oil price, government, economy, natural
Middle East and Asia market disaster, terrorism
Competition
-price war
-catching up
- Low cost carrier
- Other global airlines: British Airways
Over capacity problem
Customer behavior changes

31. Competitive advantage
• Service quality
• Product innovation
• Strong management team and human resource
• Brand recognition
- five star rating by SkyTrax
- 17th most admired companies (Fortune magazine, 2007)
- world’s best international airline for the last 11 years
(Travel+Leisure magazine)
- world’s best international route airline (Conde Nast magazine for 19 years)
- world’s best airline (Business Traveler Asia Pacific for the last 15 years)
- Readers’ Digest Trusted Brand Platinum Award (7th year)
• Ability to charge high price

32. Competitors
Name Coverage Product Innovation Revenue Source
British Airways 150 destinations (2000) – innovative seat beds in 72% sales in Europe
75 countries its business class
Emirates Over 100 destinations A380s First Class Private Suites, 27.9% East Asia and Australasia
60 countries Shower spas and Onboard 27.3% Europe
Lounge, In-flight entertainment
Qantas First of 50 Boeing 787 $9,760million Australia
Dreamliners in mid-2012 $1,102 UK and Europe
Launch of new in-flight
entertainment system
China Eastern 9 domestic branches Compete with SIA in Asia 72% of total sales in 2008 – Hong
80 international and market in the area of passenger Kong, Japan and China
regional routes service and cargo
Over 330 domestic routes
Cathay Pacific Main market: Hong Kong,
mainland China
Singapore Airline 93 destinations Own private cabin (A380 28.9% East Asia
38 countries aircrafts), First class luxury 21.8% Europe
design, innovative design in 18.7% Americas
economy class, wider seat, 18.3% South West Pacific
meals, entertainment, toiletries 12.3% West Asia and Africa

33. Brand Image – Singapore Girl
Pros Cons
Well-established identity Critique on Asian girl image
Has been successful Does not suit new IT era
Asian charm

34. Ground handling and catering
• Critical to success
• Enhance service quality
• Better control of what we serve to our customers

35. Efficiency Comparison
Revenue
per
Revenue
per
Airlines
kilometer
Load
factor
employee
(Singapore
$)
(Singapore
$)
Cathay
2,142.87
77.8%
535,695.65
Thai
2,024.83
68.9%
219,836.49
Singapore
3,041.04
74.0%
101,723.79

36. Divesting SATS
- Divesting SATS was beneficial to company
- focus more on SIA group business

37. Innovative product in the next 10 years
- Personal IPAD for first and business class passengers
- In-flight VDO conference via laptops, I-phones

38. MNC Firms
Investments
- more than 7,000 multinational corporations from the United States, Japan, and
Europe.
-1,500 companies from China
-1,500 from India.
Foreign firms are found in almost all sectors of the economy.
(source: http://www.state.gov/r/pa/ei/bgn/2798.htm)

39. Business Unit Analysis (SIA Group)
SIA Engineering SIA Cargo Silk Air Tradewinds Tours and
Travels
Characteristics a major provider of World’s third largest SIA subsidiary airline Tour operating arm of SIA
aircraft cargo airline focusing on regional and SilkAir
maintenance, repair locations
and overhaul (MRO)
services in the Asia-
Pacific
Profitability Positive net profit Net loss of S Growing net profit Information N/A
$145.1million
(2009/10)
Contribution to SIA Yes Currently loss but Yes Revenues from tours
Group revenue should gain net Contribution to Silk Air
profit in next years and SIA’s revenue as the
travelers buy the tour

40. Service classes
In long term, the company should maintain the number of service classes, which
are First, Business, Suite and Economy

41. Equity stake or form alliance party
- co-sharing flights
- Continuous benefits
Full members 28
Pending members 2
Destination airports 1,077
Destination countries 181
Annual passengers (M) 623.53
Annual RPK (G) 990.24
Fleet size 4,022

42. Risk Analysis
- Customer fails to recognize the service enhancement
- Economic condition
- Rejected by partner
- Oil price fluctuations
- Aviation regulations in different countries
How to mitigate?
- Continuous development in service and product quality
- Focus on business travelers who are less sensitive to recession
- Find new potential partner
- Fuel price hedging
- Extensive route expansion

43. Why Singapore Airlines?
• Recognized as the world best airline industry
• Corporate mileage program
• Member of Star Alliance, with large global network coverage
• Best Business class seat (March 2010)

44. Direct Flight Expansion
Criteria
• GDP per capita
• GDP growth
• No. of passenger arrivals
• No. of business centers

45. Firms
- 7000 firms from US, Europe and Japan
- 1500 firms from China
- 1500 firms from India
Foreign companies are in every sector of Singapore economy.
Example:
Banks

46. • Sales à see sales forecast
• Operating expense, A/R, A/P, Inventory assume to grow with sales
• Depreciation years in 15

47. • Strong liquidity
• Healthy Leverage, ability to incur debt if needed
• Profit fluctuates due to industry nature

49. • Use past year revenue and grows CAGR at 7.4% annually
• Assumes additional growth rate due to refurbishment to be at the
rate of 0.5% in the first year, 1% in the second, 1.5% in the third, and 2%
for the rest of the time

51. Separate the portion of the revenue share
• Begins first launching the partner product to first class (2012),
business class, and economy class one by one per year.
• With the market demanding innovation technology, sales will be
able to grow at 5%, 10%, and 15% each year before leveling out.

55. Each
plane
makes
2
trips
a
day,
runs
365
flights
per
year
and
carries
400
passengers
total

56. Typically,
if
all
seats
are
sold,
the
airline
would
be
grossing
$196,000
from
first
class
Dcket
sales,
$553,000
from
business
class,
and
$198,750
from
coach
class.
hdp://thetravelinsider.info/airlines/flyingfirstclass.htm