Singapore Airlines plans wide-ranging initiatives to 'reclaim market leadership'

Singapore Airlines plans wide-ranging initiatives to 'reclaim market leadership'

Flag carrier Singapore Airlines (SIA) is pursuing a three-year plan of wide-ranging initiatives aimed at helping it reclaim market leadership, a recent circular showed.

SINGAPORE: Flag carrier Singapore Airlines (SIA) is pursuing a three-year plan of wide-ranging initiatives aimed at helping it reclaim market leadership, a recent circular showed. 

This phase of the airline's "transformation" is meant to ensure it "continues to be a leader in customer service, and to claim market and financial leadership once again", said CEO Goh Choon Pong in a September staff newsletter seen by Channel NewsAsia. 

The plan "encompasses initiatives to grow revenue, re-base cost structure and enhance organisational effectiveness" he added. 

There are a total of 56 initiatives including identifying new ways to reduce fuel burn, introducing more self-service options which "benefit customers and can help ease call centre volumes" and reducing in-flight food and beverage wastage. 

Both SIA and Hong Kong-based rival Cathay Pacific Airways have come under pressure due to growing competition from Chinese and Middle Eastern rivals. Both also lack domestic flight markets to help offset the international competition.

SIA set up a dedicated transformation office to review its strategy in May after a surprise fourth-quarter loss although it did not release a cost-cutting target.

"The team has since been working all across the organisation, aided by 12 work stream coordinators and over 100 staff from various departments and divisions," said Mr Goh. 

He added: "While it is early days in the three-year programme, I am pleased to report that it has been going very well, and I am confident we are on track to meet our objectives."

Since the review was launched, SIA has handed two of regional arm SilkAir's routes to budget carrier Scoot, merged part of SilkAir's finance team with its parent and offered unpaid leave to cabin crew.

MORE RADICAL CHANGES NEEDED: ANALYST

CAPA Centre for Aviation chief analyst Brendan Sobie said Singapore Airlines should consider the more radical move of merging SilkAir with its parent as part of the review.

"It would generate efficiencies and ensure a consistent product at the full-service end of the market," he said.

The carrier has already merged budget arms Scoot and Tigerair Singapore and folded its cargo arm back into Singapore Airlines.

SilkAir CEO Foo Chai Woo said in an interview on Wednesday that the company planned to keep the carriers separate for now but declined to comment on whether a future merger could be ruled out.

Cathay has been more aggressive in its restructuring efforts as it tries to rebound after reporting its worst first-half loss in more than 20 years. It has cut 600 jobs as part of a review aimed at reducing HK$4 billion (S$700 million) in costs over three years.

"SIA has in the past been shown to be able to be a cost leader in the full-service airline business, but that leadership has been eroded over the past few years," said NUS Business School's Professor Jochen Wirtz. 

"Given its culture of being highly cost-effective, this initiative is timely and can potentially squeeze out the extra costs that can make all the difference," he added. 

Source: CNA/Reuters/hs

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