Name : Tan Jun Kang Alvin Student No. A sophisticated but clear A discussion of how A statement of how A statement of how Very little relevant data, Almost not relevant data, discussion of what is successful the company is successful the company is successful the company is no attempt at evaluation no evaluation of success. meant by "successful" and consistent with at least consistent with two types consistent with one type of success how this applies to the two types of appropriate of appropriate data but of relevant data. company, supported by a data. Recognises that very little discussion. range of data types. "success" can be difficult to evaluate. 9 An excellent set of key A very good set of reasons A good set of reasons, Acceptable set of reasons Either rather limited or No understanding of the reasons with good, clear with good explanations. some less than key, but but either too few or too else a scattergun list with reasons underpinning explanations. Very good Good research and good explanations. many to be considered a weak explanations. success. Very poor research and demonstration of Reasonable research and set of key reasons. Basic Research very limited - research. demonstration of business knowledge. demonstration of explanation, basic does not demonstrate Fails to demonstrate any business knowledge. business knowledge. research, adequate adequate business significant business business knowledge. knowledge. knowledge. 9 Excellent discussion Very good discussion Good discussion based on Basic discussion based on Poor quality, partial No evidence the student supported by rigorous based on accurate analysis analysis that is generally analysis that is competent analysis that does not understands the topic and detailed analysis. covering most of the good but has gaps or small but no more. support any discussion. area. Analysis of very poor relevant points errors. quality. 26 Excellent evaluation Very good evaluation with Good evaluation based on Basic evaluation based on Inadequate evaluation – No evidence the student supported by rigorous careful analysis based on relevant theory with good relevant theory. Analysis either the theory is not understands any relevant analysis based on relevant relevant theory with well data. competent but no more. relevant or the analysis is of theory. No evaluation. theory. The data has been researched data. poor quality. collected from a wide range of sources. 13 14045526 BadGrade 0 - 2 marks Goal 1 Obj 1 not metGoal 1 Obj 1 not met 3 marks Goal 1 Obj 1 met 4 marks 7 - 10 marks 6 marks 5 marks 4 marks 3 marks 0 - 2 marks 5 marks Inadequate Goal 1 Obj 1 exceeded Goal 1 Obj 1 exceeded Goal 1 Obj 3 exceeded Goal 1 Obj 3 exceeded Goal 1 Obj 3 exceeded 7 - 10 marks 6 marks Excellent Very Good Good Adequate 6 - 7 marks 4.5 - 5.5 marks 0 - 4 marks Successful? Business Reasons Analysis and interpretation of capabilities Goal 1 Obj 3 met Goal 1 Obj 3 not met Goal 1 Obj 3 not met 21 - 30 marks 18 - 20 marks 15 - 17 marks 12 - 14 marks 9 - 11 marks 0 - 8 marks Goal 1 Obj 1 exceeded Leadership 11 - 15 marks 9 - 10 marks 7.5 - 8.5 marks 85 TOTAL SM0374 STRATEGIC MANAGEMENT & LEADERSHIP Excellent discussion Very good discussion based Good discussion based on Basic discussion based on Either the topic area is not No evidence the student supported by rigorous and on accurate analysis analysis that is generally analysis that is competent relevant or the analysis is of understands any relevant detailed analysis good but has gaps or small but no more. poor quality. topic areas. Analysis of very errors. poor quality. 16 More than two good Two good suggestions One relevant suggestion with One relevant suggestion with Suggestions lack relevance No evidence the student suggestions with excellent appropriate to the company good rationale based on a brief rationale based on and a convincing rationale understands much about the rationales based on with very good rationales identified factors OR two identified factors. based on identified factors. company at all. identified factors. based on identified factors relevant suggestions with brief rationales. 12 Other general comments : You started the assignment very well. You have discussed the measurements of success very well. Professionally presented, there were a lot of good data provided to support your observations. A very good discussion on the reasons for business success. The points identified were relevant. I am really impressed by the way you have presented the value chain. The activities were correctly discussed and the use of the VRIN framework to further analyse the sustainability of each activity in creating competitive advantages was excellent. The discussion on leadership was excellent. You have provided a very good understanding of the various leadership theories and traits and these were put into very good use in your discussion on the contribution of leadership.You have identified the right strategies. The discussion on how the strategy could lead to competitive advantages was really good. A good identification of the environmental factor. Clear links between the environmental factor and the sustainability of the company. Good recommendations provided. Grade Excellent Very Good Good Goal 2 Obj 4 not met Goal 2 Obj 4 not metGoal 2 Obj 4 met Adequate Inadequate Bad Analysis and interpretation of other topics 14 - 20 marks 12 - 13 marks 10 - 11 marks 8 - 9 marks 6 - 7 marks 0 - 5 marks 0 - 4 marks Factors & Suggestions Goal 2 Obj 4 exceeded Goal 2 Obj 4 exceeded Goal 2 Obj 4 exceeded 11 - 15 marks 9 - 10 marks 7.5 - 8.5 marks 6 - 7 marks 4.5 - 5.5 marks 1 Introduction 1.1 Overview of Singapore Airlines (SIA) Singapore Airlines (SIA) to date is one of the most successful international carriers around the world. Its mission is to provide the highest quality air-transportation services to customers and maximising returns to employees & shareholders (SIA, 2016). SIA currently holds the highest number of awards and strongest brand in Asia, flying with large aircraft on long-haul routes to a total of more 60 destinations (excluding subsidiaries) as seen from figure 1. Founded in 1972, SIA became a separate airline from the former Malaysia-Singapore Airlines (MSA). SIA then began operations with a workforce of 6200 from Paya-Lebar Airport. Since then, SIA have differentiated itself from its competitors and have grown to become the SIA Group which comprised of subsidiaries namely, Silkair (formerly Tradewinds) and Tigerair flying regionally, Scoot and SIA serving long-haul flights shown in figure 2. According to SIA’s Annual Report and Sustainability Report for year 2014/15, the current fleet of SIA group consists of 170 planes and 22,842 employees as shown in figures 3 & 4. 1.2 Challenges faced by Singapore Airlines (SIA) SIA is extremely successful as a world market leader but however, SIA face challenges from many factors such as brand-contamination from its low-cost carriers (LCC) subsidiaries, volatility in oil prices (Figure 5), economic uncertainty, quality of service from competitors and pricing pressures from competitors that offer value added services. 1.3 Definition of Success According to Fritz (1996), the corporate success of an organisation can be defined as the extent of how far the corporate goals are achieved in terms of its competitiveness, satisfying customers, long-term sustainability and profitability. This definition concur in accordance to Ogden & Watson (1999), describing that the success of an organisation is the successful implementation of stakeholder theory, the ability to balance shareholders’ and stakeholders’ interests simultaneously, which is also in line with SIA’s mission. 2 Measurement of Success The financial health and status of an organisation is the most commonly used indicator to measure its success. However, according to Koch (2007), the success of an organisation can also be measured through other variables namely, profit growth rate, customer loyalty and employee satisfaction. 2.1 Balanced Scorecard The objectives to plan SIA’s balanced scorecard are laid-out in context to its Vision & Strategy as shown in figure 6. SIA strives to deliver excellent services to customers and maximise financial returns for shareholders, concurring to its Mission and Vision. SIA adopts a stakeholder theory approach, striving to create maximum value for customers at affordable prices and at the same time generating healthy financial returns for its shareholders (SIA, 2016). 2.2 Net Profit The Net Profit shows the profitability of an organisation and can be evaluated as a financial indicator for the success in SIA. SIA Group’s Net Profit has been consistent over the last few years amid fluctuating jet fuel prices as shown in figure 7. The stagnated Net Profit suggests that SIA is constantly investing and also renewing its fleet, increasing assets and decreasing liability. From figure 8, SIA’s profit margin is above the industry average of 4.1% suggesting stability (IATA, 2015). 2.3 Customer Satisfaction SIA has the most number of awards to date in the world. As seen from figure 9, data from Skytrax, FlightStats.com and Google flights were compiled by 1843 online-magazine owned by The Economist. Full-service airlines are rated according to Customer satisfaction, Pricing and Service. SIA ranks 1st, tying with ANA with a rating of 4.17 out of 5. 2.4 Strong Customer retention and growth SIA’s success can be attributed to the rate of growth in terms of total revenue. Based on SIA’s reported total revenue of an estimated SGD16 billion in 2015 shown in figure 10, which could also be attributed to high-retention of customers. According to figure 11, although slow growth in SIA passengers is observed, it can be suggested that SIA is reaching maturity in the global markets, but managed to build strong customer base and retention-rate, which could also be the reason for SIA’s enormous total revenue and low growth-rate previously shown in figure 10. 3 Reasons for Success Safety Safety remains as one of the top concerns of customers in the commercial aviation industry. Being a global leader in the airline sector, SIA puts safety as its top priority in all operations spanning across the entire SIA Group. In order for SIA to ensure consistency in Safety, its fleet are also constantly being renewed throughout SIA group, resulting in lower maintenance costs in the long run. SIA maintains a relatively young fleet with an average age of 7 years shown in figure 12 and its subsidiaries in figure 13 (SIA, 2015). Cost Effective SIA had the ability to operate cost-effectively, at costs which are close to LCCs (Wirtz, Heracleous, & Pangarkar, 2008). SIA’s cost levels can be defined through the “costs per available seat kilometre” (CASK), and is lower than full-service competitors, suggesting that economies of scale was achieved when length of flight increases as shown in figure 14. Service Excellence SIA’s excellent quality service standards were the result of key components related to service are well-implemented, from the right culture in service and strategic focus, to strong service understanding, training, managing people and efficient implementation of processes and systems (Wirtz & Johnston, 2003). To date, SIA is still admired by competitors as a profitable service leader. SIA benchmarks itself against top competitors, committed in delivering promises, surpassing expectations and have standardised systems for customer feedbacks (Chong, 2007). Iconic ‘Singapore Girl’ SIA’s success is perceived to be its excellent service, but in conjunction with this worldrenown reputation, is the iconic ‘Singapore Girl’ wearing a unique Kebaya created by Pierre Balmain (Chan, 2000). This symbol affected most of SIA’s competitors which went viral internationally, creating a deep-impact in international airline advertising and attracted enormous attention and awareness from travellers worldwide (Heracleous, Wirtz & Pangarkar, 2006). Clear Market Positioning, Segmentation and Targeting The differentiated market targeting as defined by Lewison & Hawes (2007), requires an organisation to operate in 2 or more market segments which SIA adopts. SIA’s first and business class are targeted at customers in the high-income market who are least sensitive to price. SIA’s economy class and Silkair targets the middle-income market and lastly its LCC subsidiaries Tigerair and Scoot, targeting the middle-low income market who are most sensitive to price as shown in figure 15. Hub-&-spoke SIA adopted a hub-&-spoke system flying to other major airports in conjunction with a point-to-point system at strategic destinations as shown in figure 16, allowing expansion in its destinations and customers (Doganis, 1991). For example, in a network of 50 destinations, point-to-point system would require 600 round-trips but the hub-&-spoke system only require 48. SIA reduced wastage, diverting extra passenger-capacity into profitable routes, venturing into new markets driving costs down. With Singapore as a hub, SIA gains competitive advantage. 4 Analysis of SIA’s Strategic Capabilities A Value Chain will be constructed for the identification of SIA’s strategic capabilities and subsequently analysed using the VRIN framework (Porter, 1980). 4.1 Value Chain A value chain analysis model as shown in figure 17 has been constructed to illustrate SIA’s activity chain that adds value towards its organisation. Through the value chain model, the activities are then used to identify SIA’s strategic capabilities that create competitive advantage (Borchert, 2008). The primary and support activities have to be value-added, with costs incurred being covered and surpassed to be profitable through a healthy profit margin. 4.1.1 Primary Activities Inbound Logistics SIA’s main inbound logistics processes are as shown in figure 18, and fuel management is selected for evaluation. To date, SIA have more than 9600 suppliers worldwide (SIA, 2015). However, jet-fuel from oil-suppliers accounts for 36.8% of SIA’s total expenditure (excluding Tigerair) shown in figure 19. SIA improves its fuel efficiency and cost-savings by partnering Rolls-Royce (RR) to reduce fuel consumption in SIA’s fleet including its subsidiaries with TotalCare® (Rolls-Royce, 2015). TotalCare® is delivered using RR’s fuel management tool, VisiumFUEL, to reduce fuel consumption, maximising fuel efficiency, and in turn delivering cost-savings to customers. SIA’s fuel is also 40.9% hedged in Singapore Jet Kerosene, and 4.0% hedged in Brent, which allows SIA to be less exposed to fuel-price fluctuation risks (SIA, 2015), providing value down to customers through lower air-fare and fuel-surcharge. Operations SIA’s main operations processes are identified as shown in figure 20, and Aircraft maintenance is selected for evaluation. SIA’s aircraft maintenance is a crucial process due to Safety being their top priority in all operations. SIA diversified and created its own maintenance subsidiary SIA Engineering Company (SIAEC) through a forward integration in order to reduce maintenance costs and to be self-sufficient in order to remove dependence on other organisations for maintenance or spare parts in the long run. Value is thus created for customers through cost-savings from fast turn-around time and reduced delay in flights due high-efficiency and high-quality maintenance expertise from SIAEC. Outbound Logistics SIA’s main outbound logistics processes are identified as shown in figure 21, and Flight Destination is selected for evaluation. The flight destination or route (outbound) is monitored on a regular basis to maintain high load factors and profitability. SIA analyses its capacity and load factors on all routes, terminating worst performing routes and re-allocates its planes to new markets and destinations. Costs per available seat kilometre (CASK) are reduced through maximum utilisation of planes and economies of scale by flying long distances. Hence fast turnaround time, flying long-haul and keeping planes airborne most of the time and maximising passenger load factors, reduces costs, creating value for customers. Marketing & Sales SIA’s main Marketing & Sales processes are identified as shown in figure 22, and Loyalty Programmes & Rewards is selected for evaluation. SIA’s ‘KrisFlyer’ programme is designed with 3 levels of membership namely the ‘KrisFlyer’ ordinary member, ‘Elite-Silver’ and ‘Elite-Gold’ to reward loyal customers who fly frequently with them or their strategic partners with ‘KrisFlyer’ miles. Strategic partners of SIA total up to more than 200 partners, ranging between hotels, car rentals to making phone-calls and customers can still continue to earn ‘KrisFlyer’ miles through SIA’s partners (SIA, 2016). On top of the ‘KrisFlyer’ programme, is the exclusive ‘PPS Club’ membership which is designed with 2 levels of membership namely the ‘PPS Club’ and the ‘Solitaire PPS Club’. This premium membership is targeted at loyal premium-class customers. The ‘PPS Club’ membership rewards premium customers with access to exclusive lounges world-wide, priority at airports, special privileges and personalised services (SIA, 2016). Services SIA’s Services processes are as shown in figure 23, and Complaint Handling is selected for evaluation. Due to SIA’s high reputation in service quality, customers will usually be demanding and have high-expectation. This resulted in pressure on customer-facing employees. According to SIA’s motto ‘If SIA cannot do it for you, no other airline can’. To prevent immense pressure to professionally handle tough and demanding customers, and at the same time, not being taken advantage of, front-line staffs are well-trained to handle complaints in difficult situations as shown in figure 24 (SIA, 2013). 4.1.2 Support Activities Firm Infrastructure SIA has built itself a sound fixed-cost and financial infrastructure that allow re-investing to support the organisation while competing on costs simultaneously. SIA’s strong cashposition allows SIA to handle recessions better than its competitors and the purchase of new aircraft, keeping interest costs minimal. SIA do not tie itself down into long-term lease, and have ability to accommodate new aircraft or equipment, minimising costs and aircraft down-time. With the age of SIA’s fleet kept low, fuel and maintenance costs are also reduced. This will in turn create value by providing cost-savings to customers. Human Resource Management SIA’s HR strategy consists of 5 components namely, hiring practices, training, creating espirit de corps (team concept), empower employees for quality of service and excellence rewards. Being customer-oriented is still very relevant to date, especially the growing competition in the airline industry. SIA’s effective HRM practices resulted in great service quality which forms its culture, gaining Competitive Advantage that cannot be copied by competitors, providing value to customers (Wirtz, 2015). Technology Development Technology is essential for SIA to enhance efficiency and service-quality. Especially SIA’s webpage, which is highly-advanced and user-friendly, where customers can monitor their Krisflyer accounts, monitor promotions, check flight-schedules, purchase tickets and online check-in. Since SIA pay commissions to traditional agents which usually accounts for 12.9% of operation expenditure (Doganis, 2006), effective use of technology provide costsavings which relates to lower ticket pricing and enhanced service quality, providing value for customers (Heracleous & Wirtz, 2009). Procurement SIA’s procurement is done through traditional Procurement events and mostly through eProcurement online. Suppliers can bid for a tender in Procurement events or through online e-Procurement. The e-Procurement on material cost-reductions can range between 5%-20% whereas transaction cost-reductions can range up to 65% (Presutti, 2003). Therefore SIA leverages on e-procurement to constantly create value added in its supply chain. 4.2 VRIN Framework The VRIN framework is the evaluation of an organisation’s resources to determine its competitive advantage and competitive position (Talaja, 2012). 4.2.1 VRIN Framework Analysis of SIA The resources or core-competencies that met all criterions of the VRIN analysis are identified as SIA’s sustained- advantages. They are namely Operations, Marketing & Sales, Firm Structure and HR Management, areas which give SIA competitive advantage over its competitors. However, according to Gimpel & Westerman (2012), in order to make-up for areas with low-sustainability, SIA could consider shedding these areas and out-source them to strategic partners that can perform better, ultimately gaining competitive advantage. 5 Leadership contribution towards SIA‘s success Defining Leadership The root of SIA’s success can be traced to its leaders and their contributions. According to Cyert (1990), leadership is the ability to get employees in all levels to focus on issues that the leader perceive as crucial to the organisation. However, Hickman (1992) believed that an organisation’s competitive advantage originates from how employees are led. This belief concurs toward current SIA CEO Goh Choon Phong’s management strategy that employee satisfaction and customer satisfaction is mutually inclusive to achieve customer service excellence (Yagil, 2002). Leadership contributions Ever since CEO Mr Goh took over in 2011, change has happened in the top level of management, which was his leadership style. Unlike earlier leaders who led SIA from topdown, Mr Goh adopts a consultative style and is very approachable person, inspiring employees and his followers. This marked the end in SIA's previous traditional top-down management style and structure. Through the decades, SIA has been led by powerful leaders like Mr Chew Choon Seng, and Dr Cheong Choon Kong, veterans in the airline industry (STJobs, 2013). The evolution of SIA under Mr Goh’s leadership is remarkable, evident from his implementation of bold strategic moves to elevate SIA’s position and growth in the long run after years of flat-traffic and profit-declines. What made Mr Goh more remarkable was given that SIA had a reputation for its especially slow and conservative nature. Under Mr Goh’s lead, SIA has made strategic moves and changes more than any full-service airline in Asia and possibly worldwide. Some of the recent strategic moves were the launch and expansion of long-haul LCC, Scoot, increasing the development and proposing the full-takeover of the LCC, Tigerair, the launch of Vistara, joint-venture (JV) in India, the introduction of the new SIA premiumeconomy class, and lastly the investments into Virgin Australia, new JV with Air NewZealand and Lufthansa Air (CAPA, 2015). Mr Goh’s leadership was recognised through earning the top award at the CAPA AsiaPacific Aviation Awards for Excellence 2015. He was also named CAPA Airline CEO of the Year 2015. This award is only presented to executives with the greatest influence in the airline sector 2015, and demonstrated excellent strategic-planning and innovation towards growth of the airline industry and organisation. CAPA chose Mr Goh for his bold and success in executing key strategic initiatives which helped to steer and position SIA towards promising growths despite facing growing competition from Gulf-carriers and LCCs (CAPA, 2015). Evident from Mr Goh’s result oriented strategic moves and his approachable & consultative style, his management style can be categorised into the Team Management style as shown in figure 25. Full Range Leadership Model According to Antonakis, Avolio, & Sivasubramaniam (2003), Leadership can be categorised into Transformation, Transactional and Laissez-Faire leadership as shown in figure 25. Mr Goh is a Transformational and inspirational leader for his involvement in SIA and his leadership was proved to be effective and successful, evident from the profitability trend and the best airline CEO award earned. Mr Goh had successfully changed and transformed SIA from its traditional management style and is an inspiration to most employees. Mr Goh was extremely active in the development and expansion of SIA, evident from his strategic initiatives implemented. Some of the characteristics of a transformational leader are skills to take risks and keeps his ego in check. It was evident from the bold decisions he made, taking calculated risks to steer SIA into a better position. Mr Goh also keeps his ego in check, evident from his approachable and consultative personality, where employees could speak to him personally. 6 Strategies that Contributed to SIA’s Success Porter’s Generic Strategies According to Porter (1998), Cost Leadership, Cost & Differentiation Focus and Differentiation are separate strategies to create Competitive Advantage, and a mix of the strategies known as ‘Stuck in the Middle’ as shown in figure 26. The Differentiation strategy requires high-resource investments, gaining Competitive Advantage through a value system created that supports the striving for excellence at a high costs, offering customers maximum value at high prices. However, the Cost Leadership strategy requires intensive cost-cutting measures wherever applicable and still maintains acceptable quality in conjunction with a value system created that supports thrift, gaining Competitive Advantage through low costs, offering low prices for customers. In Porter’s perspective, it is unwise for any organisation to implement more than one generic strategy simultaneously, otherwise organisations will find themselves ‘stuck in the middle’, unable to achieve utilisation in either Cost Leadership or Differentiation, which meant the absence in competitive advantage (Porter, 1985). Therefore in Porter’s logical standpoint, gaining Competitive Advantage through an integration or dual strategy is impossible as organisations would ultimately end up in a dilemma due to the contrasting contradictions between the strategies, having to decide a particular strategy to focus in order to gain Competitive Advantage (Porter, 1980). Integration or Dual Strategies Porter’s perspective aside, an integration or Dual Strategies have already been implemented by SIA in actual practice, and successfully achieved Competitive Advantage through mastery in 4 different paradoxes namely, cost-effective service-excellence, fostering centralised and decentralised innovation simultaneously, being a leader and follower simultaneously and lastly using standardisation for personalisation (Heracleous & Wirtz, 2014). However it was the ‘cost-effective service-excellence’ paradox which gained worldwide reputation for SIA as a Cost-Leader and service-quality-leader. The key components of how SIA effectively implement integration are shown in figure 27. The success of SIA’s Dual strategies is evident from its world-renown reputation in service quality, airline with highest number of awards and never reported losses for almost half a century since its inception. This however also challenged the logic behind Porter’s Generic Strategies (Porter, 1998) disputing his perspective that gaining Competitive Advantage through integration of strategies (stuck in the middle) is not achievable. In conclusion, Porter’s Generic Strategies are sound and logical but whether his strategies may work for all organisations is questionable, given that the global environment is changing faster in the current technology age as we know it. Hence it is logical for SIA to strive for low costs, and when pricing is set high for customers, a high profit margin in relation to profits can be expected. Therefore, with higher revenues, SIA utilised and allocate additional resources earned from high profit margin to create new values, gaining Competitive Advantage. Strategic Alliances A Strategic Alliance can be defined as collaboration between organisations which include but not limited to exchange of products, co-developing and sharing to achieve similar interests (Gulati, 1999). SIA gained access to new markets through strategic alliances like the Star-Alliance and Code-sharing, improving brand awareness and market base. The Star-Alliance currently faces competition from 2 major airline alliances namely, SkyTeam and Oneworld. Star-Alliance members share airport-terminals (co-location), privileges, connecting-flight services and code-sharing agreements to share same flights, allowing airlines to market tickets on one-another's flights and offering services to more destinations (Star Alliance, 2016). The star-alliance members as shown in figure 28 also allow SIA to harness some of the capabilities and core-competencies of other airlines, achieving both economies of scope and scale, gaining Competitive Advantage. 7 External Factors affecting the Sustainability of SIA Even with the success of SIA, there will always be factors that will affect the sustainability of SIA internally and externally in the ever-changing global environment. A brief PEST analysis will be constructed to clearly identify and determine external factors that affect the sustainability of SIA (Kotler, 1997), and subsequently to analyse SIA’s preparedness to handle these factors. SIA’s PEST analysis and factors are as shown in figure 29. The Political and Economic factors are chosen to be evaluated in terms of its impact towards the sustainability of SIA, and how prepared is SIA to handle these factors. Political SIA’s sustainability is heavily impacted by barriers, restrictions and regulations from governments in different countries. This industry can also be impacted by war issues, terrorism, political instability issues. These issues are political and would require government intervention most of the time. As such, most airlines will face difficulty in penetrating markets beyond their regional markets unless there are good relationships formed between governments worldwide. Hence, SIA may be adversely affected as an international airline, in terms of limited markets to operate, inhibiting sustainability. But however, with Singapore’s current neutral and stable political status (Hui & Wan, 2003), Singapore have built itself strong political relationships with many countries worldwide, directly making it an advantage for SIA to leverage on. SIA is then able to gain access and compete in new markets through ‘Open Sky’ agreements worldwide, granting SIA up to the 7th air-freedom rights as shown in figure 30. In conclusion, as Singapore is politically stable and has strong political relationships with countries worldwide, SIA is well-prepared to take-on the challenges and leverage on this advantage, always trying to venture into new markets, and gaining competitive advantage and long-term sustainability over its competitors. Economic The rampant emergence and growth in the number of LCCs have directly impacted fullfledge international carriers similar to SIA. LCCs are now able to achieve economies of scale by ‘cream skimming’ from competitive routes with their small fleets, providing no-frills concept to customers. The global market-share is also shifting towards LCCs, and this trend is further supported by the drop in business travellers and other high-paying customers (Aydin & Morefield, 2010). This trend will affect SIA and other full-fledge airlines in terms of customer retention, costs, pricing and convenience, starving SIA from customers, affecting sustainability. However, SIA currently owns 2 LCCs as shown in figure 31, namely Tigerair and Scoot. SIA has also invested into other LCCs worldwide to leverage on the shifting global marketshare trend towards the LCCs. Tigerair and Scoot currently competes on the LCC level in terms of short-haul and long-haul flights respectively. Overall, SIA is well-prepared to compete head-on with other LCCs by leveraging on its subsidiaries. SIA is also successful to prevent brand-contamination from its LCCs, and also prevented compromising on its service-quality together with other reputable traits in order to compete on the LCC level. Hence SIA is able to maintain its positioning in markets while leveraging on its LCCs to compete in areas where SIA is disadvantaged as a fullservice airline, achieving sustainability and competitive advantage in the present, and ready for the future.