Many will be watching the outcomes of Singapore Airlines' three-year turnaround plan to address the fierce competition that has eroded profits. As an icon of the country's global reach, SIA is more than an airline. It is a showpiece of how Singapore at large is meeting the headwinds created by disruptions within a rapidly changing global economy. Thus, it is essential for SIA to demonstrate that it is capable of staying on top of its game. This is easier said than done, of course, as many legacy airlines are also facing challenging times.
To review work processes and operations company-wide, SIA has put more than 100 staff to work on 56 projects. These include studies on how to reduce fuel burn further and cut in-flight food waste. But more than specific measures whose cumulative effect should make a difference, the transformation - the biggest internal overhaul on which SIA has ever embarked - encompasses initiatives to increase revenue and enhance organisational and operational effectiveness. Naturally, cost-cutting measures, the low-hanging fruit often favoured by industry consultants, cannot secure the future on their own. Merely going on the economic defensive would run counter to the vision displayed during its heyday, when it invested boldly to be not only the best but to also evoke the romance of flight conjured by the Singapore Girl. Continuing its strategy of investing in new planes and products reveals confidence in its long-term prospects.
The problems faced by Cathay Pacific and Emirates reveal that airlines are feeling the pressure all the way from North-east Asia to the Middle East. Hence the need for a comprehensive look at all internal processes, external pressure from costs and competition, and new opportunities on the horizon. All three players are "city" airlines - identified with Singapore, Hong Kong and Dubai - which have to survive without the substantial domestic markets that sustain national airlines in China and India, for example. However, Cathay with its Hong Kong hub is better located to tap into China's growth than is SIA, which has no comparable single economic hinterland. Emirates, too, is a regional airline buffered by the strength of the Gulf market along with being an international carrier. Changi's hub position in South-east Asia does give SIA an advantage. Hence Changi must maintain that position to avoid what an industry watcher warned of several years ago: the possibility of Asia's aviation axis shifting away from SIA to Cathay.
Some believe the airline industry will be rocked by the rise of disruptors using big data to "overwhelm the airlines' control of distribution", and will also be "swamped" by changing cross-border airline ownership structures and cross-border joint ventures. SIA's response to such challenges must once again be global in nature.
