Singapore Airlines Continuing Service Improvement

Briefly discuss the basis of SIA's competitive advantage.

SIA’s competitive advantage, that has generated strong profitable track record in context of an unforgiving industry environment, focused on differentiation strategy through service excellence and decentralized innovation. In achieving service excellence, SIA imposed three-pillar strategy: (1) superior in-flight service, (2) outstanding ground service and (3) most modern fleet.

On the board, SIA had various differentiating inflight services that rooted from their resources:

• SIA’s flight attendants are fairly confident and are unique in Asia, in that they are not suffering from language barrier when talking with international travelers. This is possible since English is Singapore’s official language. Moreover, during recruitment process, applicants had to be fewer than 25 and were screened for positive attitude toward work, good appearance and posture, and language skills.

• To ensure quality, SIA flight attendants had to retire before they turned 35 unless they were promoted to higher position; this wouldn’t be possible in many Western countries because of age-discrimination laws. Furthermore, female flight attendants were given a maximum of three five-years contracts and were not taken back as cabin crew after they had given birth.

• All these factors, coupled with service personalization as discussed later, contributed to the success of ‘Singapore Girl’ strong brand attribute by SIA, which turned its flight attendants into symbol of Asian charm, grace, and hospitality. It has been strongly nurtured over the years to be the most recognized brand and icon in the airline industry.

On the ground, SIA imposed “Outstanding Service on the Ground” (OSG) campaign that focused on improving service at reservation desks, ticket offices, and, most importantly, at each airport SIA flew to. This was the most ambitious pillar of SIA’s strategy as “handling agents” mainly provided ground service across 70 stations around the world (with some being direct competitors). Furthermore, this was likely to be overlooked by other airlines as passengers typically interacted with sales or check-in staff for only few seconds, making service efforts seems negligible unless something went wrong.

Aside from human touch, SIA had also been committed to provide most modern fleets for its passengers. Evidently, average age of its aircraft was five years and four months because SIA frequently brought in latest models to take advantage of new technologies; their fleet remained one of the industry’s youngest. By having new fleets, SIA would be able to increase efficiency with regards to fuel economy, maintenance, and reduce downtime. Furthermore, in 2007, SIA was the world’s largest operator of Boeing 777 planes, with 58 in operation and another 31 either on option or firm order. With its solid capital, SIA probably was able to purchase aircrafts and equipment internally without the need for leases and interests. Another benefit of owning aircrafts is flexibility gained in case of dramatic decline in the economy. On such case, SIA would then have freedom to dispose its aircrafts than being locked up in long leases.

Mere service excellence leads to customer satisfaction, but it can’t deliver a “wow” experience partly because once customers have experienced something, they tend to discount its value. That’s why SIA institutionalizes personalization by creating service culture that sustains through recruitment, training, and rewards; forming something I call decentralized innovation. Especially through “Transforming Customer Service (TCS)”, SIA has tried to empower employees to give them more flexibility and creativity. This involves not just cabin crew, but also engineering, flight operations, and sales support staff. There are also programs called “S-I-A”, for “staff ideas in action”, where staff can propose any ideas that they have that would improve service or cut costs; this is just small portion of SIA’s extensive feedback mechanisms. In SIA, even weak signals are amplified; every customer letter, be it complaint or compliment, creates a reaction within the airline. Furthermore, additional sources of intelligence are benchmarking surveys, SIA’s “spy flights”, where individuals travel with competitors and report detailed intelligence on competitive offerings, and comments from the front-line staff. All in all, SIA is able to continuously deliver premium service (competitive advantage) to very demanding customers by empowering their employees to be more creative and responsive when serving customers, and treating its customer’s high expectations as fundamental resource for innovation ideas.

Is SIA' competitive advantage sustainable? Why/why not?

Financial conditions of SIA have been outstanding while consistently maintaining and developing its high quality customer service. This is attributed to the company’s policy of steady organic growth, strong organizational culture, effective HR function, and overall strategy and commitment of management towards quality service. However, in my opinion, despite its current successes, SIA’s service competitive advantage would face problems and challenges, and is potentially unsustainable as the industry matures.

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