Singapore Airlines Continuing Service Improvement

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increasing number of airlines would quickly duplicate causes of SIA’s success. As SIA’s service advantage is normalized by other airlines’ increased service standards, there may be shifts of competitive advantage opportunities from differentiation-based factors to cost-base factors (example of competition killing differentiation), which is unlikely to be achieved by SIA that values its commitment to charge premium to ensure quality service. Secondly, entrance of low-cost carriers competition along with economic recession in various areas of operations as well as changing lifestyle of customers may put pressure on SIA’s differentiation strategy as customers opt for lower-priced options. Evidently, many full-service airlines began charging for on-board services due to these cost-pressures. However, for SIA, compromising on service quality will be a violation of its commitment and branding.

Secondly, standards imposed to SIA are gradually rising not only by its competitors, but also by its customers who have sky-high expectations. Customers’ distinctions for SIA have been on high quality service and innovation of firsts. Evidently, SIA was first to bring various assortments of services like hot meals, free alcoholic and non-alcoholic beverages, hot towels with a unique and patented scent, personal entertainment systems, and video-on-demand in all cabins. Generating good branding is hard, but maintaining it is even harder especially for SIA with one of strongest brand names in airline industry. As the industry matures, opportunities for SIA to innovate and sustain competitive advantage will deplete following diffusion of service excellence, increase in low-cost carrier competitors and high customer expectation.

Thirdly, SIA was facing labor issues such as shortage of labor and rise of so-called “Young-Turks” in its home country, Singapore. First of all, continued labor shortage in Singapore has made it increasingly difficult for SIA to recruit home-grown attendants who had been its main marketing tool for two entire decades: in its advertising, it exclusively used Singaporeans or Malaysians. Moreover, regardless some advantages in heterogeneity, SIA thought it would bring difficulties for the company to instill shared values and dedication to service, which are key to SIA’s competitive advantage. Secondly, as Singapore becomes more affluent, its young generations tend to lack dedication and service spirit as they replace Confucian tradition of respect for authority. They also expected higher standard of living; as a result, unions were becoming more militant, potentially increasing SIA’s costs significantly. All in all, aforementioned labor issues faced by SIA may generate higher cost pressure, lower quality of service and ultimately lower competitive advantage for the company.

Thus, even with SIA’s service innovation culture, sustaining competitive advantage may be difficult especially if it means maintaining high prices. Furthermore, despite SIA’s continuous efforts to re-design and improve their service processes, there will always be space between quality of organizational design and implementing it to actuality. Thus, in my humble opinion, SIA still has to work a long way to be able to maintain its existing position with continuous improvement of processes. As mentioned in the case, “And that every time we reach a goal, we always say that we got to find a new mountain or hill to climb.” SIA’s success in creating strong brand image based on quality, that is core to the company’s competitive advantage, would not be easy to sustain.