Abstract: In the business world, aviation could be one of industries leveraging the power of digital information system (IT) most. IT has become recognized as a major enabler for airlines to work effectively and safely, while achieving substantial cost savings. Singapore Airlines (SIA) is no exception. Employing thoroughly IT for its daily operations, SIA reaps much success. The purpose of this study is to analyze Singapore Airlines by Porter’s Competitive Force Models and assess the role of Internet in conquering these forces.

Organization background: Singapore Airlines was created in 1972 and fully state owned. It began with three flights per week and an unpresuming fleet of 10 aircraft to just 22 cities in 18 countries, most of which were in Asia. With a view to positioning itself as a world-class carrier, the Airlines is dedicated to providing its passengers with the best flying experience, through innovative product and service offerings, high technologies, as well as fleet modernization. Throughout the course of their 37-year history, Singapore Airlines has rapidly expanded into one of the world’s leading carriers, with the reputation of a trendsetter, industry challenger, and widely known as a symbol of service excellence. Today, SIA operates the world’s youngest, safest, most fuel efficient and technologically advanced planes in the skies flying its top-ranked gateway spanning five continents, 66 cities in 36 countries with 16 million passengers per year. In 2004, Singapore Airlines launched the world’s longest non-stop commercial flight between Singapore and New York using the A340-500 aircraft. In October 2007, Singapore Airlines went down aviation history once again as the first to fly the world’s largest passenger aircraft, the Airbus A380. This is synonymous with the carrier’s efforts to be a leader in civil aviation. Besides, as consistently one of the most profitable airlines globally since the beginning, SIA has never posted a full-year loss in its history. From year to year, SIA frequently wins many international awards for top flight quality and service such as “best airline”, “best business class”, “best cabin crew service”, “best in-flight food”, “best for punctuality and safety”, even “Asia’s most admired company”.

Products and Services: SIA’s major product is air travel. Since it has no domestic routes to monopolize, SIA had to target the global market and compete with more experienced players. SIA’s products are divided into 2 types: travel and services. Apart from operating Singapore Airlines that offers flights with 3 kinds of class seat: first class, business class, and economic class,

Business Class

First class

Economic Class

SIA also operates subsidiaries: Silk Air which offers flights to 30 Asian-only fascinating, exotic destinations. Another SIA subsidiary – Trade winds – offers a broad choice of tour and travel packages to numerous global destinations. SIA Engineering Company provides top-notch engineering services to over 85 air carriers and aerospace equipment manufacturers from all over the world. Finally, SIA Cargo operates to destinations around the world with its large fleet and most technologically advanced commercial freighters – the B747-400.

Competitive advantages: SIA has consistently outperformed its competitors throughout its three and more than a half decade history. Innovation, operational effectiveness, excellent customer service have become the major drivers of the brand.

Cost advantages: Having strong financial position, SIA is not locked into long-term leases, and can easily purchase newer, more efficient equipments and planes that minimize maintenance costs and avoid aircraft downtime. Besides, maintaining the youngest generation of aircrafts helps SIA be the lowest fuel costs in the industry. This is very significant since 15-20% of an airline’s total costs derive from fuel. On top of this, SIA carefully hedges up to 50% of their fuel contracts two years in advance to avoid cyclical and often large volatility in fuel prices. Therefore, even though the price of fuel has been rising steadily and been eating into the profits of most airlines, SIA appears to be resilient and doing very well.

Premier innovations: keep Singapore Airlines on top of the game with their main competitors. They have pioneered numerous in-flight experiential and entertainment innovations, and strived to be best-in-class. Moreover, SIA uses information technology as an essential enabler of its innovation strategy. For instance, in 2001 the airline became the first to introduce a global in-flight e-mail system to all passengers. Especially, Singapore airline is the earliest and sole airline to install Sun’s Star Office 8 (a proprietary version of OpenOffice.org run on aircraft’s Linux-based server) at each passenger’s seat-back terminals to power the first productivity suite in the skies that benefits passengers who can now continue to work after boarding the plane without having to power up their laptops. Furthermore, SIA make aviation history as the first offering iPod, iPhone connectivity in economy class. In April 2009, the airline began to apply the latest technological innovation: the mobile phone check-in service which lets passengers check-in for their flights anywhere in the world using their mobile phones. With these continuous innovations, Singapore Airlines has become a powerful company, while the competitors are still trying to match their competitive advantage.

Highly effective operation: By forming many good partnerships to outsource those services that are not a core competency to professional organizations, SIA obtains excellent work processes and systems enhancing not only customer service but also communication within the company. For example, the partnership with Goodrich for the component and system maintenance in 2007 and the seven year agreement with IBM for IT services since 2004. In addition, since beginning of 2009, SIA has employed SITA’s new generation communications platform to manage its increasing demand for more bandwidth system-wide; hence in turn make application performance and content performance of the network faster and more effective than ever.

Superior and sincere Customer Service: the key factor for the company’s success is the fact that they are always surprising their customers with new features. For instance, on flight SQ21, the flights attendants are encouraged to call the passengers by their names just to try to make the flight more pleasant and personalized. Another thing that makes SIA’s customer services different from other airlines is the impeccable in-flight entertainment system ( KrisWorld on eX2 system) offering an 1000 selection of quality entertainment options, including international movies, TV programs, music CD albums and audio books, video games, popular interactive learning programs as well as PC applications such as office software, Media Player. Furthermore, SIA also offers enviable and personalized cuisine with the formation of its International Culinary Panel and World Gourmet Cuisine and “book the cook” service. Especially, fly attendances being featured by “Singapore Girl” icon international recognized by consideration, warmth, gentleness, elegance and serenity.

Target Market: With premium fares for premium services, target market of SIA is business man, middle to upper class who can afford to pay a premium price for enjoying exceptional quality services to which they aspire.

Analysis using Porter’s Competitive Forces Model:

Threat of Substitutes: Within Porter’s model substitute services come into play when demand exceeds supply, or vice versa. In the airline industry the excess supply has been attacked by low-fare carriers who have continually gained market share. Railways and road travel too is also increasing its supply.

The bargaining power of buyer: is high in aviation industry. There is hundreds of Airline Company including numerous discount airlines operate in Asian region, in this fact individual buyers has so many option to choose which airline he wants to fly. Internet also make customers become more sophisticated in terms of their purchasing decisions related to travel because they can easily and rapidly access to airlines’ websites for comparing about ticket’s price, flight service among them.

The bargaining power of Suppliers: Suppliers power is very high in airline industry. In terms of this category, fuel is the single largest airline cost expenditure item which affects all firms equally while oil price is sensitive issue worldwide and day by day it’s in receipts of more unstable. Singapore airline also concern about this factors. For example, if the jet fuel price increases, the airline company has no choose.

Threat of Entry: Traditionally, the high cost of entry in the airline industry reduced the threat of entry by competitive companies. However the business model offered by low fare carriers exploited the lower end segment of the market via price and provided a foundation for the entry of new discount airlines such as Tiger Airway, Air Asia X, Firefly.

Competitive Rivalry and New Entry: Air travel has become a commodity and most major routes are saturated with fierce competition. Growth of global megacarriers, as U.S and European airlines merge or form alliances to cut costs, the emergence of low cost carriers in Asia will also intensify competition for Singapore Airlines. In addition, Internet applications on the Web shorten SIA’s innovation life span. As the result, to keep innovation strategy for competitive advantage of the brand alive, it has to constantly adjust in order to sustain its differentiation and maintain continuous improvement.

The role played by Internet in helping this organization to overcome these forces:

Internet support SIA to conduct these strategies:

SIA’s WebsiteCustomer-orientation strategy: Web-base system creates an online experience that will both strengthen its customer-centric focus and become a key sales channel for the future. Employing XNL-based and Java-enabled middleware to integrate their different country websites, Singapore Airlines’ Website http://www.singaporeair.com become a global one that is the single sign on, a personalized website done centrally while the contents are fully localized according to the country, together with country-specific promotion, information, pricing, and end-to-end digital commerce. This Website won CIO Awards (a prestige award for organizations that have made the best use of technology to derive strategic value and maximum returns for their businesses) for providing better customer service. One of variety benefits customers can get from this website is to conduct online booking from all stations worldwide through the Internet. After the booking process is completed, customers will receive an E-Ticket, which has all passengers’ booking details on it, through their preferred email address. When the passengers arrive at the airport, simply present their passports and the payment cards they used to purchase the E-Ticket at the check-in counter for the boarding pass. Or the passengers may check-in online, up to 48 hours in advance, and print their own boarding passes in their own convenience. With the streamlining of automated check-in processes and the use of e-tickets, passengers will spend less time standing in line at the airport, and more time relaxing before their journey. Specifically, since September 2009, due to the aid of Sapient, one of the largest and most innovative interactive marketing and technology services firms in the world, the shopping process has been streamlined so that customers can book tickets and other travel-related products in a single interaction. In addition, a core focus of the new site provides a differentiated online customer experience through a comprehensive suite of self-service features and functionality designed for both new visitors as well as members of KrisFlyer, Singapore Airlines’ frequent flyer program. Beside, The Service Oriented Architecture-based technology solution will provide Singapore Airlines with the long-term flexibility to dynamically scale in response to changing business needs.

Operation effectiveness strategy: Due to e-commerce through the Internet, Singapore Airlines can reduce much distribution costs which have the following components: reservation system cost, sales offices (stations) cost, advertising and sales promotion cost, agent fees and commissions, ticketing fees, limit the number of their sales offices and reduce their dependency on computer reservation systems and sales agents. Besides, Website and email help connection to a wealth of information on corporate intranets and communication between SIA and its subsidiaries, its partners, customers become easier, speedier, and more accurate.

Conclusion:

In the airline industry, the pressure to provide better customer service and reduce operational cost has never been greater. IT is a powerful medium to attain these goals. It can be asserted that airlines which adopt and manage IT better would outperform their competitors.

Word Count: 1990 words.