The aim of this analyse report is Singapore Airline comparison to another competitor carriers using the five forces frame work. The airline industries development and innovations are directly effect to economic development of the Mother’s country Singapore. Since 2014, SIA’s core business is the premium, long-haul segment. Singapore airline industry’s innovations is try to be lowest-cost airline with excellent services by highly trained staff among its key competitors in other airlines.
Porter’s Five Forces Analysis
In 1979, Porter’s Five forces developed by Michael E Porter and these framework include three forces from ‘horizontal’ competition, which are threats of new entrants, threats of substitute products or services, and the rivalry among existing competitors and two others from ‘vertical’ competition, which are bargaining power of suppliers and bargaining power of buyers.
Based on these five framework to assessing and employing the competitive strength and position of the Singapore Airlines is as below:
Bargaining power of Customers
Consumers bargaining power is very strong due to they can choose another airline easily because a lot of airlines in the world. Luxury traveller and common traveller are the passengers in the airline industry. Luxury travellers are willing to pay higher prices in return excellent services with comfortable trip is main concern. Common travellers are more demanding about the price than services. But luxury customers ratio always slightly less than common customers. Since Kris flyer program had been promote to retain customer loyalty to add on the addition service like hotel and car rental with SIA’s partner and corporate travel rewards will be more attractive.
Singapore visitor and tourism arrivals are keep increasing year by year and mostly from China and India. They usually buy air ticket from travel agency and should be change the reward incentive instead of a zero commission policy by SIA to travel agency to make it full capacity.
Bargaining power of Suppliers
Singapore Airlines has two major suppliers of aircrafts i.e. Boeing and Air bus which are able to maintain. Currently SIA have 11 aircrafts on order and should be increase to add more aircrafts to reduce the rental of leased aircraft cost. Safety standards, improve services, Advance technologies and fuel costs all assist to create a robust level of Airline Industry’s supplier power.
Fuel cost is steadily 27% of the airline expenditure between 2016-2018 because of fuel hedging gain in financial year 2017/2018. These aircraft leased fee and fuel hedging profit are the major benefit to increase SIA profit.
In 1992, SIA engineering company Division of SIA and became a subsidiary of Singapore Airlines for aircraft safety and servicing and productivity, efficiency, quality and more value-added services for customers.
Singapore Terminal Service for ground handling carrier which are baggage managing and in-flight meal and beverages supply by SAT.
Rivalry in the industry
SIA fleet average age is approximate 7years with diverse plan services, strongly attractive to the customers. The customers always compare the airline companies in term of provided services and prices and are able to have great experience in the Airline industry. SIA major transformation plan “bold radical measures” which was more revenue and more passengers to filling up more seat per aircraft to improve SIA processes more efficiently and positive impact on the bottom line. 26 MAY, 2017, David Leo
Threat of new entrants
The aircraft refurbishing solution mainly in the various parts used for cabin and interior are made from different types of lightweight materials to make it luxury quotient of VIP cabins and commercial cabins. In the other hand, decreases the gross weight of aircraft, which result in fuel savings.
As the airline industry now a days deregulation of Low Cost Carrier (LCC) with lower fares and higher load factors. SIA have strong impact on the customer with their services compare with various existing airlines.
Threat of a substitute products or services
SIA had target particularly on medium and lengthy haul flight luxurious traveller that alleviation and time when touring with less cost.
In same time developed to train talent staffs to become skilled staffs. So that their services are higher among than competitors and do not easily to substitute in the airline industry.
Advancement technology have evolve new treat, Teleconferencing to each other at long distance so that they no need to travel along to another place. This technology has seriously treat as substitute to the whole airline industry. Although this technology is a good substitute for meeting, it is only part of the reason for business travelling, other side still have to discuss on sensitive issue with face to face meeting or signing contracts purpose, still have to travel there personally to be present.