SINGAPORE: While its three-year transformation plan is still in the early stages, plans to make Singapore Airlines (SIA) more nimble in its operations are underway and some results are coming through, its chief executive officer Goh Choon Phong said on Wednesday (Nov 8).
Mr Goh was speaking at a media briefing held a day after the national carrier posted a near tripling in second-quarter net profit.
SIA announced in May that it was embarking on a major business transformation plan to revive earnings following a surprise net loss of S$138 million in the fourth quarter ended March — its first loss in five years. The airline has had to battle intensifying competition from both premium and low-cost carriers in recent years.
Mr Goh reiterated that cost-cutting will not be the focus of the major internal overhaul, and SIA is focused on initiatives to grow revenue, as well as enhancing organisational and operational effectiveness.
More than 60 projects cutting across various aspects of the business are underway, including a review of its network across the group, tapping on data to optimise fuel costs, setting up a new customer service experience division and rolling out a new digital training curriculum for its employees.
The initiatives will be headed by the senior management, with more than 200 employees being involved directly.
Already in place is a new process for approvals to take "no more than three levels to get the final go ahead", said Mr Goh.
This new approval process, which was implemented on Nov 1, will help to shorten decision making time and cut down bureaucratic processes to ensure SIA stays "effective and prompt", the CEO added.
The transformation plan is only “in the beginning," Mr Goh said, while emphasising that the overhaul will not be a "manpower exercise".
"The exercise is about upgrading the organisation to focus on growing revenue, processes… and to go digital," he said.
"I did say that this involves all of us being prepared to do things differently but we are committed to training our staff to do new responsibilities, rather than going without a job."
Mr Goh added that some results are coming through from initial plans, such as the introduction of a new revenue management system, with the company seeing growth in passenger flown revenue for the first time since 2013.
SIA’s latest earnings report showed net profit of S$190 million in the three months ended September, up 192 per cent from S$65 million a year before. Operating profit for the second quarter rose S$123million, or 113 per cent, to S$232 million.
But the airline said that it remained wary of existing headwinds as competitors continue to expand capacity in key markets. Yields also remain under pressure despite some stabilisation in recent months.
Last week, SIA announced a US$850 million makeover for its fleet of A380 jets, which involves halving the number of first class suites and increasing total seats on the aircraft by as much as 24 per cent.
Analysts have said the cabin overhaul was a "necessary step" given that SIA's superjumbos have been in service for 10 years, and that it could augur well for the airline’s passenger load factors and yields.
New medium-haul cabin products for 787-10 Dreamliner and A350-900 jets are also in the pipeline for 2018. Mr Goh declined to reveal details, and would only describe the upcoming cabin facelift as a “significant overhaul” which will include upgrades to business class seats.
SIA CHANGING STRATEGY TO BECOME MORE AGGRESSIVE: ANALYST
The consecutive overhaul plans suggest that SIA wants to be more aggressive in taking on its rivals, Ms Corrine Png, founder of Singapore-based research firm Crucial Perspective, told Channel NewsAsia.
“Unfortunately, they have to run to standstill because not all airlines in the world have an interest to make money, especially if you are a state-owned carrier,” she said.
“There’s been a change in their strategy to become more aggressive in growing bigger, unlike recent years where they’ve been trying to focus more on profitability and margins.”
Apart from revamps to its cabin products, SIA is taking a right step in focusing on customer experience as part of its transformation plan, she added.
While headwinds remain on the horizon, there are bright spots in the airline’s latest quarterly results, such as flattening passenger unit cost, an uptick in its cargo business on the back of robust global trade activities and a cut-back in expansion plans by some Gulf carriers.
“With the new revenue management model, hopefully there’ll be a more efficient cost structure which will help them even if they continue to face new pressure," Ms Png said.
"Having cost that's flat or going down is good and with the new A380s having more seats, it will help to reduce per seat cost as well."