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CASE: IB-34

DATE: 03/08/04

SINGAPORE AIRLINES: GLOBAL CHALLENGES


Our long-term aim is to be a group of airlines linked through common equity holdings. There are
political difficulties, a whole range of difficulties. But it is a necessity because in the long term,
we dont see any alternative for the airline company to grow, unless we reduce our reliance on
revenues derived from operating out of a single base, Singapore. We still think there are lots of
opportunities in the airline and in related businesses and we do not need to get out of this basic
business. But if you stay with the airline business, in order to grow we will have to have
ownership of other carriers, or we have to start airlines in other places.
Dr. Cheong Choong Kong, Deputy Chairman and CEO 1

In March 2002, Singapore Airlines (SIA), recognized internationally for quality, profitability and
management, was faced with the most difficult operating conditions it had ever had to face. Dr.
Cheong Choong Kong, deputy chairman and CEO, gazed out his office window at the activity at
Changi International Airport. He considered how he and his management committee would
respond to the forces of globalization, regulatory adjustment, and the impact of terrorist attacks
in America on the airline and the industry. Dr. Cheongs management committee was made up
of long-time airline people including senior executive vice presidents Mr. Chew Choon Seng
(administration) and Mr. Michael J N Tan (commercial), and relative newcomers: Mr. Bey Soo
Khiang, executive vice president (technical) and Mr. Loh Meng See, senior vice president human
resources. Their challenge: to position the airline for continued growth in a globalizing industry
while maintaining the airlines loss-free record.
SINGAPORE AIRLINES
SIA was distinguished from other international airlines by its local context. Singapores small
population and country size meant that, from the beginning, SIA had had to build a preference
for the airline among foreign travelers over their own national carriers. In 2002, SIA carried
over 15 million passengers on a route network that covered 91 destinations in 40 countries.

All quotations in this case, unless otherwise attributed, are from the authors interviews in March 2002.

Margot Sutherland prepared this case jointly with Professor Bruce McKern as the basis for class discussion rather than to
illustrate either effective or ineffective handling of an administrative situation.
Copyright 2003 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or
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School of Business.

Singapore Airlines IB-34

p. 2

Taking into account its alliance partners, SIAs service extended to 119 destinations in 41
countries (Exhibits 1 and 2).
Since 1972, when the airline became a separate airline from the former Malaysia-Singapore
Airline, SIAs management had successfully differentiated the airline from its competitors
through its focus on top quality service (Exhibit 3). Joseph Pillay, the airline's chairman since its
formation until 1996, described the airlines objective:
SIAs goal from the outset was to offer superior service in every area, at
competitive prices, while yielding a surplus to finance expansion and
modernization, and to provide a satisfactory return to shareholders. All this while
keeping employees satisfied, happy and motivated.2
The airline provided a standard of in-flight service that was admired worldwide. The Singapore
Girl, recognized across the globe as an icon for service excellence, was part and parcel of a
product offering made possible through a long chain of strategies, initiatives, and disciplined
execution. Mr. Pillay:
The SIA Girls high standard of service in the air inspired passengers to believe,
correctly, that the airline excelled in all other departments that supported the
quality cabin service, that is flight-deck competence, fleet maintenance and
ground services.3
In 2002, Dr. Cheong credited SIAs historic focus on consistency for the airlines success:
Through consistency we evolve a culture, and we reinforce that culture of
customer awareness and care for the customer. We are consistent even in the
matter of change we are always introducing new things into our product and
into our service. An example of consistency is our advertising. We havent gone
the way of other airlines in playing around with our logo, our colors, or the Pierre
Balmain uniform.4 It works and its the same consistent message of good service,
quality service, care for the passenger and, from the early 1980s on, technology.
Using technology to serve the passenger. Technology in the form of the most
modern fleet, the youngest fleet. Technology in the use of IT. Technology in the
cabin with our in-flight entertainment system.
Dr. Cheong, Mr. Tan and Mr. Chew were key factors in SIAs consistent approach, having
guided the airline through turbulent times in earlier decades. In 2002, with a solid grounding in
the airlines past, they set their sights on positioning SIA for the future. Mr. Tan:
We are moving towards being, not just an international airline, but a global
airline. Consolidations are taking place in the commercial aviation industry. It is
2

Speech by Mr. J Y Pillay, Chairman of Singapore Exchange Limited, at The Right Angle Seminar Rising above the crowd
Maintaining your presence in a rough marketplace, Friday, March 15, 2002, p. 4.
3
Ibid., p. 6.
4
Pierre Balmain was the French couturier who designed the Singapore Airlines Girl sarong uniform in 1972.

Singapore Airlines IB-34

no longer adequate to be just where you are or what you were in the past. You
have to look to the future. Of course the past is pretty important for us, and we
have kept our focus on how the industry and market are developing. The new
regulatory system is clearly one of liberalization.
Dr. Cheong described SIAs strategy for dealing with the risks of global diversification:
If you want to pursue your long-term objective of diversifying your streams of
revenue and owning other airlines, youve got to take a risk. And if you take
those risks on one or two occasions you are going to get hurt. The most
important thing is that you dont bet the shop. You dont come close to betting
the shop. So that if something happens, we are hurt, but we are never in any
danger.
Newcomers Loh and Bey outlined specific challenges the airline was facing in 2002:
Growth:
We used to grow about 20% a year 20 years ago, and about 15 years ago in the
mid teens. And as we mature, we grow at 6 to 8%. So, how do we continue to
get high growth? Acquisition is one of the strategies. But, we cant expect to get
that kind of high rate of growth by simply acquiring any airline. We must be
looking for airlines that are firstly in the growth stage, as we were, say 20 years
ago. That kind of airline must have a very good product, in terms of
sustainability, and good management. So in a sense we are trying to look for
what we were like 20 years ago, and to invest in that airline so that, with a strong
management, we dont have to be distracted or divert a lot of our managerial
focus and attention on the acquired airline. Then we can focus on our own
organic growth. So in that way we are not compromising or taking away
anything from ourselves. (Bey)
Managing Alliances:
When you get into investment situations with your alliance or equity partners,
how do you deal with partners that are so different from your own company? For
example, Virgin,5 its a totally different relationship that you have to manage.
Its very new. How do you get more people to be familiar with dealing with
alliance and equity partners? Because of growing numbers and working with
people coming from different cultures and backgrounds, we have to find better
ways to manage these relationships. So we have a new division, Alliance and
Partnerships, just to cater to those relationship issues that we want to get involved
with. (Loh)
Product Decisions
[The terrorist attacks of] 9/11 require us to think about our service classes: first
class, business class, two classes, three classes, two-and-one-half classes! What

Virgin Atlantic, in which SIA had acquired a 49% stake for S$1.6 billion in December, 1999.

p. 3

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is it going to be? We still have to think about it. It may not stay three classes
forever. (Loh)
Globalization:
The nature of flying is different now. In some instances, we havent realized that
we are a global airline and we operated as though we were still a regional airline.
Our systems were arranged to support regional operations rather than global ones,
for example. We now realize the need for the company to review all aspects of
operations and for the organizational structure to support a global airline. (Loh)
Managing Discontinuous Change:
The need for us to respond quickly is greater now. Its not what is happening, its
how you respond to what is happening 90% of the time. Your response to it is
going to make the material difference. So we need more agility, greater
flexibility, and yet how do we communicate within the more complex
organization? In the past, we could all go into a room and discuss it and that was
it. So all this has changed and we have to respond to it, because we are an
international company. These things are 24x7. These are the issues that we have
to prepare ourselves for. (Loh)
The International Airline Industry (IAI)6
The IAI was a service industry that provided various classes of passenger travel and freight
transport. The industrys products were perishable and costs varied significantly between
competitors. Counter-intuitively, substantial scale economies did not exist in the IAI (Exhibit
4). While larger aircraft had lower costs per passenger than smaller aircraft at the same load
factor, economies of scale for a given aircraft on city-pair routes were quickly exhausted at
moderate flight frequencies and even economies of scale within a single firm were exhausted
shortly beyond a minimum efficient scale of five aircraft.7 As a result, competitive advantage in
the IAI came from other areas.
The differences between airlines which contributed to cost and profitability included the average
stage length, with longer stages being generally more economical in cost per available tonne
kilometer (ATK, a measure of capacity); the age of the aircraft fleet, with newer aircraft being
more fuel-efficient to operate, but carrying heavier capital charges than older planes; the
configuration of the route structure, including optimum use of hubs to collect passengers
efficiently; the ability to provide passengers with connections to domestic services; access to
low-priced fuel (size conferred bargaining power with suppliers); salary costs and, finally,
distribution expenses.
The quality of an airlines passenger service was a function of many factors, safety being first
and foremost but rarely used for competitive advantage. Instead, quality measures such as
6

This section has been adapted from: R. Bruce McKern, Evolving Strategies in the International Airline Industry, Technical
Report No. 77, Stanford Graduate School of Business, August 1990.
7
L.J. White, Economies of scale and the question of natural monopoly in the airline industry, Journal of Law and Commerce,
pg. 44, 1979 and C.C. Finlay and P.J. Forsyth, Competitiveness in internationally traded services: the case of air transport,
Canberra and Kuala Lumpur, Asean-Australia Working Paper No. 10, Australia National University, 1984.

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food, sleeping accommodations, cleanliness, on-time record, convenience of schedules and


routes, and in-flight and ground service were important differentiators.
Competitive strength in the industry depended on a few major factors. In the long run,
competitive strength was based on control of costs and protection of the revenue stream, which
depended on reputation, load factor and the mix of fare types. Although most carriers in the IAI
provided a full range of fare classes, some degree of differentiation existed, especially in first
and business classes. The choice of strategy was important, but airlines differed greatly in their
ability to execute. The major variables were: personnel cost and efficiency, fuel efficiency and
aircraft of appropriate capacity, yield management, configuration of the international network
and traffic drawing power (benefiting from access to domestic feeder flights).
SIA: Origins and Independence8
In pre-war Asia, Singapore was a critical geographical link in the chain of airports joining
Europe with Australia, New Zealand and the European colonies in Southeast Asia. SIAs origins
date back to 1936, when Malayan Airways (MA) was founded, and to 1947, when MA was
reconstituted after the Japanese occupation. MA was a small regional airline that served
Singapore, Kuala Lumpur, Ipoh and Penang. Initially controlled by the British Overseas
Airways Corporation (BOAC was a predecessor to British Airways) and Qantas Airways, the
airline quickly expanded to serve growing demand for air service within the British colonies as
well as the rest of the region: Thailand, Indonesia, Burma and Indochina. In 1957 the airline
was reorganized to reflect the new independence of its constituents, the governments of
Singapore, Brunei, Malaya, Sarawak and British Borneo (the last three of which formed the
Malaysian Federation).
Following Singapores separation from Malaysia in 1965, the airlines equity and aircraft
registrations were divided equally between the two governments, and it was renamed MalaysiaSingapore Airlines (MSA). Rapid international route expansion then ensued as the company
expanded beyond its previous role as a purely regional carrier. Fourteen new destinations were
added in Europe, the Middle East, and Asia between 1966 and 1969.
The expansion in the route network brought to the fore differences in the national priorities of the
airlines two owners; Singapore pushed for international connections and business while
Malaysia wanted to concentrate primarily on developing domestic service between far flung
members of its political Federation. In 1971, Malaysia and Singapore announced an agreement
to form two separate flag carriers, and this became reality at the end of 1972, giving rise to
Singapore Airlines.
At its launch in 1972, the new national flag carrier had a modest fleet of 10 aircraft, a staff of
6,000, a route network spanning 22 cities in 18 countries and no domestic market to
monopolize for profit. Nor could the fledgling airline rely on government bailouts: SIAs
government shareholder made it clear from the outset that the airline had been set up to provide
services and economic benefits, not prestige. Mr. Pillay credited this policy for SIAs success:

This section has been adapted from Singapore Airlines in the 90s, GSB No. S-IB-8, Rev. 6/92.

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One great advantage that SIA enjoyed was that the authorities were scrupulous in
observing a hands-off policy. They did what every far-sighted government
should do, in the way of creating an efficient infrastructure, negotiating traffic
rights, preserving labor peace, and so forth. But there was no interference with
SIA, and no subsidies. SIAs guiding imperative was that nobody owed us a
living. Call it confidence, pride, hubris or whatever. We were determined to take
on the competition entirely on our own.9
Looking back, Mr. Chew credited the dissolution of the Federation of Malaysia in 1965 and the
withdrawal of British troops in the early 1970s with creating in the airlines employees an
attitude that enabled them to overcome the difficulties of both the region and the airline, since
both SIA and Singapore were left with few resources (Exhibit 5). Mr. Chew believed that the
resilient, self-sufficient attitude engendered in the tiny islands people shaped SIAs culture:
Once the British decided to pull up their roots from Asia, the economic outlook
for Singapore was dire. We benefited from a very far-sighted government and
very visionary political leadership that gave the sense to all that we could pull
ourselves up. Not for Singapore to go to the World Bank or the UN asking for
Third World aid. We were going to find our own place in the sun, and we knew
nobody owed us anything. So that sense of identity and understanding is very
deep rooted here. And gratifyingly, people who join the airline either buy in or
very soon after they quit. I think that most human beings in the world, if they
dont have an easy option, accept that the world doesnt owe them a living. You
make your own living. So, you want to join this business? This business is a
service business. We transport people, we make the travel convenient,
comfortable, reliable and a pleasant experience. For our employees, we ask them
to do so and to smile! When people need help, help them, dont walk away!
At the end of the day, the service culture is very fundamental.
Growth and Privatization
Growth at SIA was rapid. SIAs network of destination cities jumped from 22 destinations in 18
countries in 1972 to 57 cities in 37 countries in 1989 and, in 2001, to 119 cities in 41 countries.
Increases in revenue and profit growth were equally dramatic. From 1972-73 to 1983-84, SIAs
revenue increased eight-fold from S$340 million to S$2.7 billion, an average annual growth rate
of 21%. Revenue growth slowed to 8.5% per annum in the late 1980s.
In 1985, as part of a privatization program to improve the efficiency of profitable state-owned
companies, the Singapore government reduced its holding to 63% through floating shares on the
Singapore stock market, sold stock to employees, and made private share placements overseas.
In the following years the government further reduced its holdings to 56% and increased the
foreign ownership maximum to 27.5%.
Profitability increased in the 1980s from S$96 million in fiscal 1983-84 to almost S$1 billion in
fiscal 1989. Revenue growth slowed again through the 1990s to 7.5% per annum. In the mid9

J Y Pillay, op. cit., p. 4.

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90s, SIA was challenged by the Asian economic crisis, along with all the airlines in the Asia
Pacific region. Across Asia, the currency turmoil and business slowdown caused a steep decline
in passenger traffic. Also, tourists were deterred from visiting Southeast Asia by smoke haze
from burning forests in Indonesia. The recession, which coincided with capacity increases by
many airlines in the region, caused air traffic in the Asia Pacific to decline by 7.6% in 1998 from
1997 levels.10 SIA dealt with the impact on yields and capacity by shifting capacity to European,
U.S., Australasian and Indian routes less affected by the crisis and by deferring the delivery of
aircraft to better match capacity with demand. Wages were frozen and rolled back one wage
increment.11 Dr. Cheong described SIAs ability to control staff cost:
Because of the structure of our wages a lot of it is variable, so that if we have
no profits, we have no bonuses we are able to save a lot of money. Now that is
an example of everybody pulling in the same direction. Not only management,
but the workers right down the line. When they see a problem they cooperate.
You can see what is happening in other places where, despite the problems, there
are strikes and disagreements with the unions. Now this is not to say that Ive an
easy time with the unions, but the most important difference is that we have never
gone to a strike. We have bitter disagreements. We even end up in industrial
arbitration court, but a strike, I think to both parties, to management and unions, is
unimaginable. Somehow we know that we will reach resolution.
At the same time that SIA dealt with the problems in Asia, management kept their focus on
positioning the carrier to compete in the future when air traffic resumed projected growth trends
(Figure 1.0).
By 2000, the company had emerged from the Asian economic crisis positioned to reap the
benefits of global scale and scope, having made investments in product upgrades, established
orders for new aircraft and developed several alliances. Having regularly received many awards
for excellence, SIA was ranked as the worlds most admired airline in Fortune magazines
annual survey for the first time in October 2000 (Exhibit 3). The achievement was tarnished
later in the same month when pilot error caused Flight 006 to taxi down a closed runway in
Taipei and collide with construction equipment. The tragedy ended the airlines accident free
record.12
By the end of fiscal year 2000/01, profits had rebounded from the Asian crisis (Exhibits 6 and 7).
SIAs operating profit after tax reached S$1,339 million, but late in the year, the slowdown in the
U.S. economy and a downturn in the global electronics sector dampened demand for air traffic.
For the nine months leading up to September 2001, freight traffic for the Asia Pacific region fell

10

Figure quoted from Boeing 1999 report in Tae Hoon Oum and Chunyan Yu, Shaping Air Transport in Asia Pacific, Ashgate
Publishing Company, Vermont, 2000, p. 201.
11
The rollback was stopped when the airlines situation improved.
12
Taiwans Aviation Safety Council report on the SQ006 accident cited loss of pilot situational awareness. Singapores
Ministry of Transport concluded that the accident was a failure of the aviation system, the result of a combination of
contributory factors, with airport deficiencies playing a sizeable role. Frances Fiorino, SIA Flight 006 Viewed as Aviation
System Failure, Aviation Week & Space Technology, New York, May 6, 2002, vol.156, issue 18, p. 42-43.

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by 8.5% from the previous year. Passenger traffic was slightly more resilient, growing 2.8% for
the first six months of 2001.13
Figure 1.0: SIA Revenue and Expenditure Growth and Increase in Distance Flown and Destination Cities

10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

400
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50

19
8
19 0/8
8 1
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83 3
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84 4
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8 9
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90 0
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91 1
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97 7
19 /9
9 8
19 8/9
9 9
20 9/0
00 0
/0
1

Distance flown (million km)


Total revenue ($ million)

Destination cities (no.)


Total expenditure ($ million)

September 11, 2001


On September 11, 2001, a difficult year turned into a crisis when terrorists hijacked four
American planes and used them as missiles in attacks on the World Trade Center and the
Pentagon. Mr. Bey:
One would not imagine ten years ago that I could be watching the destruction of
the twin towers live, literally as it is happening in New York. And in the
meantime the impact just worked itself overnight into the system. The next day
you see passengers and cargo loads drop across the Pacific and Atlantic. (Exhibit
8)
In the aftermath of 9/11, decisions were reassessed and a plan was developed to ride out the most
difficult times the airline had ever encountered. SIA worked to control costs and maintain
service quality while insurance premiums escalated and load factors fell. In response to falling
load factors, especially on routes to the U.S., services were reduced, or suspended altogether.
SIA suspended services to Pakistan in late September, and services to Kota Kinabalu and
Kuching in Malaysia, as well as services to Macau, in October. In January 2002, SIA suspended
SIAs three-times-weekly Singapore-Amsterdam-Chicago service.
13

Geoffrey Thomas, Wanted: Another Asian miracle, Air Transport World, January 2002, vol. 39, issue 1, p. 35.

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All but the most essential projects were deferred or cancelled. SIA kept the development of new
service amenities, the Raffles Class (Business Class) SpaceBed, an innovative seat which
reclined to become a bed and the installation of a new inflight entertainment system with audio
and video on demand, on track. Delivery dates for ten A340-500, five B777s and one B747-400
freighter aircraft were deferred.
The company credited the efforts put in by SIAs staff for the airlines ability to overcome the
turbulence created by 9/11 as the traveling public opted to reduce air travel. The board and
senior management volunteered a reduction in wages and directors fees. Managers accepted
salary reductions of between 7 and 15 percent. All other staff followed suit, agreeing to wage
cuts of 2.5 to 5 percent. Staff recruitment was put on hold and 114 trainees undergoing cabin
crew training were released.
By March 2002, SIA had restored nearly all of the services it had suspended after 9/11 and had
increased services to points in Australia and China. Dr. Cheongs management team, having
weathered the immediate crisis, was able to focus once again on the long-term strategy, which
was to become a global company.
Related Businesses
Over the years, SIA had broadened the scope of its activities. In 2001, there were 25 subsidiaries
in the SIA Group (Exhibit 9). Primary among them were Singapore Airport Terminal Services
Group (SATS), SIA Engineering Company (SIAEC) and SilkAir (SIAs regional airline) which,
in fiscal year 2001, contributed 10%, 6.6% and 1% respectively to the Groups profit after tax,
while airline operations contributed 81.9% (Exhibits 10 and 11). The airline employed 14,744 in
2000/01, and the subsidiaries employed another 14,370 people.
Singapore Airport Terminal Services Group (SATS)
SATS was an airport ground handling agent with over 50 years of experience. SATS provided
services for 48 scheduled airlines operating through Changi Airport. Services included airport
services, catering, security services, aircraft maintenance services, and flight operations and crew
administration.
SilkAir
SilkAir (originally named Tradewinds) was established by SIA in 1975 as the tour and travel arm
of Singapore Airlines. The regional airline commenced service in 1989, and in 2001 had a fleet
of nine aircraft (five A320-200s and four A319-100s), linking 18 cities in 8 Asian countries
(Exhibit 1).
SIA Engineering Company (SIAEC)
SIAEC was formed in 1992 from the engineering division of SIA. The company, which operated
out of facilities at Changi Airport, provided engineering services to over 60 airlines and 30
aviation companies. In 2001 SIAEC announced a plan to invest S$90 million for two new
hangars at Changi to house the new A380 aircraft, planned to enter service in 2006. Following
SIAs strategy of being in the forefront of new developments and technology, SIAECs objective

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was to reinforce its position as the regions leading maintenance, repair and overhaul facility for
aircraft, using new technologies.
In 2001, the SIA Group made significant steps toward its goal of becoming a global group of
airline and airline-related companies.14 Initial public offerings of SIAEC and SATS were made
and each company listed 13% of its shares on the Singapore Exchange. SIA Cargo was
incorporated as an independent subsidiary in July 2001 and embarked on a new project, New
Global Cargo, with Lufthansa and SAS Cargo in order to provide seamless carriage of airfreight
throughout their combined cargo network. Mr. Bey:
By spinning off the subsidiaries, we want to decentralize the decision-making
process so that the subsidiaries have more autonomy and can maintain
responsiveness. We want them to exploit the use of the assets to third party
customers otherwise, they are comfortable just having the airline as their main
customer.
To date, the subsidiary arrangement has resulted in a more arms-length approach
in the way we deal with each other. There are still transfer pricing issues to be
resolved. It all derives from the way we grew from being a small airline to a
medium-sized airline. When you are small, people work very well together and
colleagues are happy to do things for each other. But a medium-sized company
cant support that. You have to be well-structured and well-organized and meet
all the key performance targets. Thats creating a bit of a problem.
Alliances and Equity Partnerships
Global Excellence Alliance
In 1989, SIA pioneered one of the first alliances in the industry, the Global Excellence Alliance
(GEC), with Delta Airlines of the U.S. and Swissair. Dr. Cheong:
The raison dtre of alliances was to circumvent regulatory barriers. Thats how
alliances really started. Take a European airline, for example. It doesnt have the
pick-up rights to fly a passenger, say from New York to Los Angeles. Thats
called cabotage,15 thats confined, thats reserved for U.S. carriers. So, to
circumvent that we could have an agreement with a U.S. carrier and, through
code sharing, we could have, in a vicarious fashion, access to the whole U.S.
domestic network. It benefits both parties to the alliance because the U.S. partner
can then have access to the European network, through its European partner.
Thats how it started. Of course, it was particularly of interest to SIA.
The alliance bound the three airlines together through small cross-equity stakes of 5% (Delta)
and 2% (Swissair). The airlines planned to benefit from increased sales as a result of
coordinated schedules, savings from coordinated aircraft purchases, additional savings and
increased flexibility from sharing ground-handling facilities and exchanging cabin crews and
14
15

Singapore Airlines Annual Report 99/00, p. 10.


Cabotage: the right to carry traffic between two points in a foreign country (Exhibit 12).

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finally, savings from sharing sales and checking office costs. The alliance was complemented by
a 1991 agreement between Singapore and the U.S. to allow SIA to fly across the Atlantic to four
U.S. destinations, enabling SIA to offer around-the-world service (but not allowing cabotage
inside the U.S.). By 1992, the airlines of the GEC had united their computer systems and
passengers could make, confirm or change reservations at any ticket office run by one of the
three partners.
Passages
To further extend SIAs marketing reach, in 1993 the airline joined with Cathay Pacific and
Malaysia Airlines to launch Passages, a joint frequent flier program for business and first class
passengers. In 1998/99, SIA expanded Passages to customers on all classes and renamed the
program KrisFlyer.
SIA and Australia: Ansett and Qantas
SIA had an interest in obtaining a stake in an Australian airline to extend its reach and garner a
larger share of traffic along the Kangaroo Route, from Australia and New Zealand, through
Singapore and on to Europe. Ansett Airlines was an attractive potential partner, as it shared the
Australian domestic market with Qantas (after Qantas acquired the government-owned domestic
carrier, Australian Airlines in 1992). SIA tried to secure a stake in Ansett in 1991 and Qantas in
1994, without success. Alliance agreements proved to be easier to negotiate and in July of 1997,
Air New Zealand (ANZ), Ansett and SIA signed a tripartite alliance agreement.
In March of 1999, SIA bid US$250 million for a 50 percent stake of Ansett which, at that time,
was owned by News Corp. SIA was unsuccessful in its bid because Air New Zealand, the other
50 percent owner of Ansett, exercised a pre-emptive right to buy the News Corp. stake, blocking
SIAs bid. ANZ bought News Corp.s stake for US$340 million in February 2000.
Investment in Air New Zealand
After ANZ bought News Corp.s stake in Ansett, SIA turned its attention to ANZ and in April
2000, SIA completed the purchase of a 25% stake in ANZ, the maximum percentage that a single
foreign airline could own under the New Zealand governments regulations. In September 2001,
with Ansett seriously failing, ANZ put the carrier in administration.16 In October of 2001, SIAs
stake in ANZ was reduced to 6.47% following a recapitalization package in which the New
Zealand government invested NZ$885 million in ANZ.17
Lufthansa
In November 1997, SIA had announced a new strategic alliance with Lufthansa and the
simultaneous dissolution of the GEC. The GEC alliance was dissolved because the three
partners had different aspirations. Delta had problems with its cost structure and was focused on
growing in the U.S., rather than engaging more deeply with SIA. Swissair was distracted by the
integration process within the EU. The new alliance with Lufthansa was an expansion of a
commercial relationship that began when joint freighter services were introduced in 1989. The
16

For a chronology of the airlines demise, see: Geoffrey Thomas, Recipe for disaster , Air Transport World, November
2001 vol. 38, issue 11, p.50-58.,
17
The investment in ANZ was divided into new ordinary shares and new convertible preference shares. If the new convertible
preference shares were subsequently converted into ordinary shares, SIAs equity interest in ANZ would fall to 4.5%.

Singapore Airlines IB-34

p. 12

agreement included Lufthansas use of Changi Airport as their hub for Southeast Asian and
Australasian traffic and SIAs use of Frankfurt as its hub for continental Europe. Alliances with
SAS, United, Air New Zealand, Ansett and Air Canada followed.
Star Alliance
In 1999, SIA set a new strategic direction: to become a key member of a global group of airline
and airline-related companies. A cornerstone of the strategy was laid in October 1999 when SIA
announced it would join the Star Alliance, founded in 1996 by Lufthansa, United, Thai Airways,
Air Canada and SAS. SIAs objective was to provide customers with a wider range of seamless
travel options on a global scale and the ability to accrue frequent flyer benefits on many more
flights.
Acquisition of Virgin Atlantic
In December 1999, SIA announced the purchase of a 49% stake for S$1.6 billion in Virgin
Atlantic, the holding company of Virgin Atlantic Airways, a private, unallied British airline. The
deal gave Singapore Airlines indirect participation in traffic between London Heathrow airport
and the U.S. Mr. Bey:
We looked for an airline similar to the SIA of the 60s or 70s where
management was strong, the airline had a good product, and there is potential for
high growth. Virgin is one of the airlines that fits this profile, besides Air New
Zealand or Ansett. On top of that, Virgin has a network across the Atlantic that
complements our own network.
The purchase gave SIA a flying start as it seeks to become a global group of airline and airlinerelated businesses in the new century.18 In October 2001, SIA and Virgin launched their first
codeshare service between London and Singapore. (See Table 1.0 for a summary of SIAs
alliance and equity partners.)
In addition to these opportunities, SIA considered equity participation in Air India, Taiwans
China Airlines, South African Airways (SAA), Cambodias Royal Air Cambodge and Thai
Airways International, but later decided against making these investments.
SIA had several criteria that had to be met before it expanded through acquisition. The target
partner had to be a good airline with strong management and a route network that complemented
SIAs route network. In addition, the target needed to be poised to mature at a high growth rate,
if provided with the capital for expansion. Finally, Singapore Airlines had to be well-perceived
in the targets local political environment, which required SIA to have a good understanding of
who the players were and how they were likely react to a bid from SIA. The management
committee needed to ascertain what the targets home governments criteria were likely to be and
whether or not SIA would be able to acquire meaningful management control. Concerns for both
parties included the percent of the domestic market the acquired airline might command, the
optimal degree of foreign ownership the government would allow, the impact of the acquired
carrier on the market share of the countrys national carriers and the growth prospects of the
acquisition target. Dr. Cheong commented on SIAs experience in attempting acquisitions:
18

Singapore Airlines Annual Report 99/00, p. 10.

Singapore Airlines IB-34

p. 13

What we have learned is that we should try to ensure that we have as much
influence as possible before we buy in. But that is a hard thing to do. If you are
too dogmatic about that, you will never be able to take an equity stake, because in
many cases you just cant do it. They wont let you in. And therefore its a
matter of risk.
Global Scale and Scope
By March 2002, SIA had emerged from the industry crisis positioned to reap the benefits of
global scale and scope. As the Star Alliances 11th member, SIA offered travelers access to a
global network, more travel options, seamless check-in, joint fare products, harmonized
timetables to minimize inconvenience for connecting flights, access to 894 airports in 119
countries, access to over 500 lounges, frequent flyer miles on any member airline, world-wide
recognition of status priority reservation, standby and priority boarding for Star Alliance Gold
members, priority baggage handling for Gold members and first and business class travelers, and
the most flexible round the world fares.
1.0: SIAs Alliance and Equity Partners
New Alliance Partners

New Equity Partners

91 (119)

Star Alliance:
Air Canada
Air New Zealand Ansett Group
ANA All Nippon Airways
Australian Airlines Group
British Midland
Lufthansa
Mexicana
SAS
Thai
United
Varig

25% Air New Zealand

42 (42)

92 (118)

United Airlines, SAS

49% Virgin Atlantic

98/99

42

110

Lufthansa

97/98

41

77

Tripartite alliance with Air New


Zealand (ANZ) and Ansett,
Dissolution of Global Excellence
Alliance

89/90

37

57

Global Excellence Alliance

Year

Countries served
(Countries
served when
alliance partners
are included)

Cities served
(Cities served
when alliance
partners are
included)

00/01

40 (41)

99/00

5% Delta, 2% Swissair

A central question for SIA was how alliances would evolve in the future. Dr. Cheong and his
management committee questioned the degree to which alliances would remain rooted in

Singapore Airlines IB-34

p. 14

national companies and to what degree there would be cross-equity ownership and cross-border
consolidation of airlines. Industry observers wondered whether alliances represented the
ultimate evolution of the industry or simply a stepping stone to another form of organization.
Fleet Development
Aggressive and continual fleet expansion had been an integral part of SIAs corporate goals since
1972 when the company acquired two Boeing 747s, and became the first Asian airline outside
Japan to operate the long-haul, large-capacity aircraft. By 1977, SIAs fleet had expanded to
seven B747s, three B-727s, ten B-707s and five B-737s, with four DC-10s on order. In 1978,
SIA placed the largest single order ever made by an airline at that date, US$1 billion for a
package of ten new B747s and four B727s. A year later, six Airbus A300s were ordered. Early
expansion weighed heavily on the companys balance sheet. The debt to equity ratio topped 4:1
during the late 1970s, a very risky course if new passengers did not fill the new planes flying on
new routes.
However, SIA management pursued a strategy that filled the planes and generated profits, a
strategy not popular with most airlines in the Asia Pacific region in the 1970s, which were
heavily subsidized by their governments. Mr. Pillay described the competitive environment:
A subsidized entity is, almost by definition, a flaccid, supine organization. SIA,
therefore, did not really have to face severe competition until the authorities in
more and more countries got religion, the religion of the market economy. A
great advantage SIA enjoyed three decades ago was the ability to cock-a-snook19
at the competition. The major carriers in the industry, together with their campfollowers, suffered from a self-imposed constraint, through IATA, the
International Air Transport Association, to offer uniform standards of service and
fixed tariffs.20 Not being a member of IATA, SIA led the way in pioneering
quality innovations in the cabin, allied to flexible pricing in the marketplace.21
In September 2000, SIA was once again poised to extend the airlines reach and capacity and
placed orders for 25 super jumbo A380-800 aircraft (10 firm, 15 on option) for US$8.6 billion.
SIA planned to be the first airline to launch the A380 for travel on high-density routes to
London, Los Angeles, New York, San Francisco and Sydney between 2006 and 2011, replacing
B747-400s. The A380, with a range of 8000 nautical miles, could use the same airport slots as
the B747-400, seat up to 555 passengers (resulting in a 30% increase in capacity) and provide
lower unit costs, as long as the airline had sufficient demand for the aircraft. Mr. Tan described
how SIA planned to take advantage of the larger cabin of the A380: We will create something
special for the passenger, something innovative. SIA planned to have an exceptional first class
on the A380 and business and economy classes, and was considering a super economy class for
the aircraft.

19

Cock-a-snook is a gesture of derision and contempt.


The International Air Transport Association (IATA), founded in 1945, set fares for international routes. IATAs decisions
were subject to government veto.
21
J Y Pillay, op. cit., p.5.
20

Singapore Airlines IB-34

p. 15

In October 2000, SIA placed orders for six B747-400s (seating between 416 and 524
passengers). These planes could be delivered configured as either passenger or freighter aircraft
at SIAs option and had a range of 8,400 miles. In February 2001, the airline placed orders for
twenty B777-200 aircraft (10 firm, 10 on option) to replace the companys A310-300s (seating
220 passengers) that were used on regional routes, and to cater for growth. The B777-200 seated
between 288 (in a three-class configuration) and 323 (in a two-class configuration) passengers
and had a range of 5,210 nautical miles, while the extended range (ER) version of the aircraft
cruised up to 7,730 nautical miles.22
Finally, SIA planned to put the A340-500, which seated up to 250 passengers, into service in late
2003 or early in 2004. With a range of 8,650 nautical miles, the aircraft could fly further than
any other aircraft, enabling non-stop flights from Southeast Asia to the U.S. SIA planned to
introduce the aircraft on the Singapore-Los Angeles route. To create comfort for passengers on
this flight, SIA intended to divide the aircraft into two classes, super-business and supereconomy, reduce the number of economy seats across the aircraft from 8 to 7, and lengthen the
seat pitch from 33 inches to 37 inches. With the more spacious configuration, the aircraft would
accommodate 190 passengers.
Mr. Tan described the rationale behind SIAs adoption of the A340-500:
Right now, we are constrained by other countries withholding fifth freedom
rights.23 We do not want to depend on others giving us traffic rights enroute to
the U.S., so instead, we have decided to offer this point-to-point service. If we
still continue the same way, the traditional way, of one stop to the U.S., then we
will not have provided an improvement in service. Other airlines will still be
operating the traditional way, with one stop, whereas we will open a new market,
and when you open a new market you can also get a more effective way of
marketing traffic beyond Singapore. You will soon have only one stop for going
from North America, beyond Singapore, and onto other southeast Asian cities
and the subcontinent of India.
In March 2002, SIAs operating fleet, excluding freighters, consisted of 93 aircraft with a further
42 on order and 52 on option (Exhibit 13). The average fleet age was 69 months (Exhibit 14).
Yet, the airline had begun to feel pressure from competitors. Mr. Tan:
Our competitors also operate the 747 and the 777. Even the Chinese airlines
have all brand new aircraft. Of course not many airlines will be able to buy the
A380, the next generation super jumbo. I think there are only six airlines so far
that have committed themselves to the A380.
Regular investment in new aircraft provided SIA with both operational and commercial
advantages. New planes were less expensive to maintain and more efficient, resulting in savings
22

SIA also operated the B777-300 which seated 332 passengers in a three-class configuration.
At the Chicago Convention in 1944, world wide agreement on five freedoms of the air, international aviations equivalent to
the rules of the road, was achieved. The fifth freedom is the right to land in another country and deplane or board passengers
going to or coming from a third country (Exhibit 12).
23

Singapore Airlines IB-34

p. 16

in fuel and operating costs. Newer planes with fewer unforeseen maintenance problems had
better records for safety and on-time performance and also provided strong motivation for pilots,
who wanted to fly the latest technology. From a commercial perspective, new generation aircraft
incorporated substantial advances in passenger comfort and safety. These included more
comfortable seats, greater leg room and headroom, advanced audio and video services and better
ventilation and temperature control. Newer aircraft were faster and had longer ranges. Being the
first to place orders for new aircraft ensured that SIA would be among the first to put them into
service, creating a substantial advantage over competitors farther back in the order queue. It also
meant greater negotiating clout with the aircraft vendors. SIA preferred to own aircraft outright,
claiming that excess capacity could be disposed of expeditiously if a rapid downturn occurred
within the economy.24 SIA was active in the used-aircraft market, having sold off over 69 of its
older aircraft for more than US$1.69 billion in the previous two decades.25
Product Innovation
SIA had been a leader from the beginning in providing in-flight service and comfort and strove
to make air travel enjoyable for passengers. The airline had been among the first to provide free
in-flight drinks and entertainment and continually repositioned its first, business and economy
class, setting new standards of comfort, entertainment and food quality for passengers.
In 1998/99, the airline introduced a S$500 million product upgrade across all three classes of
travel. The upgrade was the end result of two years of research and planning and featured new
seats, refurbished cabins and a complete overhaul of in-flight service. In first class, the upgrade
provided travelers with a new seat, the SkySuite, on B747-400s. The seat converted into a fully
reclining bed, complete with duvet. The additional room for the SkySuite was achieved by
reducing seating in the first class cabin from 16 to 12. To allow passengers to have their meals
when they wanted during the flight, SIA created restaurantstyle service in first class. In Raffles
class, SIA introduced the Ultimo seat which offered an extended seat pitch of 52 inches.
Economy class seats included adjustable footrests and head rests. The in-flight entertainment
system, Krisworld, offered all passengers 22 video and 12 audio channels as well as Nintendo
games.
In 1999/00, SIA upgraded the in-flight entertainment system in First and Raffles class. The
upgraded system, dubbed Wisemen, provided audio-video on demand and offered passengers 25
movies, 50 short features, computer games, and 50 audio CD choices. To make check-in simple
for passengers, SIA launched Mobile Services in 2000/01, allowing passengers to obtain flight
information anywhere anytime using WAP phones and personal digital assistants.
SIA considered product innovation extremely important. Mr. Tan:
We are really dedicated to product innovation. We have a department that looks
at nothing but new products, new services, and new types of services. We are
driving towards inculcating a very strong innovation culture throughout the
24
Daniel Chan, The story of Singapore Airlines and the Singapore Girl, Journal of Management Development, Vol. 19 No. 6,
2000, pp. 466.
25
Ibid., p. 467.

Singapore Airlines IB-34

p. 17

company. We have established cross-divisional teams in a program we call


Futureworks. Selected people, people who like to think of things differently,
who are able to think out of the box meet in four or five groups of 15 every
three or four months and spend about three days thinking about and debating
what new things the customer and the market are looking for. And they come up
with specific proposals. Our goal is not just to get results, but to inculcate this
strong innovative culture throughout the company. That is a continuous process.
In 2002, SIA was on the verge of introducing a new business class product for long-haul
operations called the SpaceBed, the biggest business class seat in the world and the result of a
US$100 million development process. The SpaceBed reclined to 8 degrees from horizontal.
Forty-two B747-400 and B777-200ER aircraft serving Europe and on routes from Singapore to
the U.S. were to be outfitted with the SpaceBed in 2002.26 Mr. Tan:
Why do we call it SpaceBed? Space, because in terms of space, it is going to
be very spacious. Space also because it is futuristic. I think it is going to be
more spacious than any business class product today, including the British
Airways product. Branding the product enables SIA to better differentiate it
from other airlines.
SIAs objective in introducing the SpaceBed was to attract new customers to the airline. Yet,
Mr. Tan was aware that some of the airlines first class passengers would find the new business
class product adequate for their needs from the standpoints of both price and comfort.
Route Network and Marketing Initiatives
SIAs route network formed a starburst pattern, with spokes radiating out from Singapore to
global destinations (Exhibit 1). SIA marketed the entire network, including codeshare partners
flights. For example, SIA marketed its own fourteen flights to Frankfurt, as well as seven
Lufthansa flights on the same route.
Although the majority of travel on SIA was purchased in East Asia (56 percent), revenue by
route was divided more evenly across major routes (Exhibit 15). The regional forecast for
growth within the Far East was robust (Exhibit 16), with the annual average growth rate
estimated at 6.9 percent for the period 2000 to 2004. This exceeded estimated growth rates in all
other areas of the globe (Exhibits 17 and 18).
SIA reviewed development of the airlines network continuously, and launched targeted
marketing initiatives in concert with the Singapore Tourism Board and destination tourist offices.
Promotional initiatives included the Singapore Spectacular (1997) to boost traffic from six
European markets, the Singapore Stopover Splendour (1998), and the Bali Spectacular and
Lombok Spectacular (1998) which tapped tourist markets in the U.S., Scandinavia, Spain and the
Philippines.

26

Singapore Airlines Annual Report 00/01, p.14.

Singapore Airlines IB-34

p. 18

In 1999/00 and 2000/01, SIA sponsored events in Singapore to draw traffic to the tiny island
state. These included the Singapore Airlines International Cup and the Singapore International
Jazz Festival. To boost and promote tourist traffic to the Philippines, Australia, Indonesia, and
Macau, SIA signed memoranda of understanding with regional tourist destinations.
Infrastructure Development
From the early days of the airline, SIA benefited from the Singapore governments support for
infrastructure development. Changi International Airport, built in 1975 by the Singapore
government, had become a major hub in the Asia Pacific region (Exhibit 19). In 2001, the
airport served 63 international airlines, handled 28.6 million passengers and provided more than
3,300 flights to and from 145 cities in 50 countries.27
The airport originally cost over S$1 billion, about 25% of which was invested by SIA for its own
facilities. In 1999 an extension of Terminal One was completed to allow the airport to handle
more and bigger aircraft. In 2001, the construction of Terminal Three was under way with a
target completion date of 2006. The third terminal, estimated to cost S$1.5 billion, was planned
to increase Changis handling capacity to 64 million passengers annually and meet the regions
needs until the year 2020, including new gates for the A380.
Yet, in 2001, SIA had to consider how new, longer range aircraft would affect the airports
position in international networks. Dr. Cheong:
Singapore will always be a very important hub for us. But we dont want to put
all our eggs in one basket. Also, as technology improves and as aircraft are able
to fly longer distances without stopping, sixth freedoming28 through Singapore
may become a little more difficult. If you want to persuade somebody to fly from
A to B through Singapore, when he can fly directly on the national airline A to B,
youve got to discount to make it more attractive. We are helped by our
reputation, but theres a limit to that. You still have to sell cheaper yet you
have a higher cost because its much more expensive flying A to B via Singapore
than directly. So in the long run, as the airline gets bigger and bigger, its going
to get more and more difficult. In order to grow we need other operations based
elsewhere. There is no way we can expect to grow even at say 6 to 8% much
less the double digit growth that we have been used to by continuing the way
we have been doing things, basing all our operations on one airline based solely
out of Singapore, with just one hub.
Open Markets and Open Skies
In parallel with Singapores national policy, SIA had been committed to the principles of open
and free markets from the airlines outset, eschewing IATA until 1990 because of IATAs
restrictive practices. SIA advocated the most liberal exchange of traffic rights possible.
27
The figures quoted are from December 2000 from the Ministry of Information Communication and the Arts, Changi Airport,
http://www.mita.gov.sg/bkscga.htm, (June 21, 2002).
28
The right to carry traffic between two foreign countries via the home country (Exhibit 12).

Singapore Airlines IB-34

p. 19

The Singaporean government, along with SIA, welcomed the U.S. effort to promote their open
skies initiative in the early 1990s. The aim of U.S. negotiators was to enable[d] the
competitive U.S. airline industry to meet the growing demand for international air services. 29
U.S. legislators hoped the agreements would result in lower prices and more service options for
consumers worldwide.
In 1997, Singapore entered into the first open skies agreement between the U.S. and an Asian
country. The agreement gave SIA open access to the U.S. market with no limits on the number
of destinations, or the frequency of service. In addition, the agreement provided for unlimited
beyond traffic (fifth freedom rights).30 The agreement restricted cabotage rights, reserving for
domestic carriers the sole right to carry traffic between any two points within the U.S. With the
entry of the A340-500 into SIAs fleet in 2003, SIA would be in a position to benefit from the
open skies agreement for the first time. The long range of the aircraft would enable SIA to offer
direct flights to the U.S. from Singapore. The Los Angeles-Singapore route, for example, would
take 18 hours flying time.
Distribution Channels
In the years leading up to 2001, the Internet was integrated by the airlines into their distribution
channels. The result was the proliferation of means for customers to gather information and
prices and book air travel: through travel agents who connected to a customer reservation system
(CRS), through Internet sites which connected customers directly to a CRS, or through airlinespecific booking sites (Exhibit 20).
Asian Customer Reservation System: ABACUS
In 1988, SIA and Cathay Pacific created ABACUS, an Asian CRS headquartered in Singapore,
to broaden and control its distribution channels. Cathay and SIA were soon joined by 9 other
Asian Pacific airlines in ABACUS International Holdings, which collectively held 65% of the
CRS, and later SABRE, the American Airlines CRS, took a 35% equity stake.
In 1999 ABACUS launched the Alliance Manager product. The product, to be used by both Star
and oneworld, was designed specifically to meet the requirements of airline alliances, and to
provide a service for travel agent subscribers that gave them fast and simple access to
information about routes operated by members of the alliances. The product provided city pair
availability and schedules of all flights operated by alliance carriers. Travel agents keyed in
simple entries into the system to obtain alliance-specific displays. The product ensured that
alliance partners products were easily recognized, booked and serviced as well as differentiated
from others products to promote brand loyalty and maximize their screen presence to travel
agents. Mr. Per Wehlander, Star Alliance CRS Harmonization project manager:

29

Fact Sheet: Multilateral Open Skies Aviation Agreement, Office of the Press Secretary, the White House, Bandar Seri
Bagawan, Brunei, November 15, 2000, http://www.state.gov/www/issues/economic/001115_fswh_apec_skies.html, (June 27,
2002).
30
The right to pick up traffic in a second country and carry it to a third country.

Singapore Airlines IB-34

p. 20

The Star Alliance exists to make the consumer travel experience seamless to any
of our 720 destinations in more than 112 countries. The ABACUS Alliance
Manager gives us the visibility we need to ensure we meet our goal of delivering
convenient and rewarding global travel access.31
ABACUS provided travel services from 316 airlines, 52,000 hotel properties and 50 car rental
companies. Abacus connected about 10 percent as many computer terminals at travel agencies
as SABRE, the American CRS and customer reservation system pioneer.32
Kriscom and Krismax II
Bookings made by travel agents went through ABACUS, or other CRSs, which in turn, linked up
with Kriscom, SIAs in-house system, which also handled yield management for SIA. In 2001,
SIA invested S$20 million in Krismax II, a new yield management and forecasting system,
planned to go live in 2002. The system was designed to help SIA match seat capacity with
customer demand by waitlisting customers in one market while seats allocated to other markets
remain unsold.
Travel Exchange Asia
In 2000/01, ABACUS introduced a new Internet travel service, Travel Exchange Asia, which
enabled customers to make bookings directly over the Internet, without the assistance of a travel
agent.
SQ-eTravel
SIA took advantage of the Internet to get closer to its web-savvy customers and, in 1999,
developed its own Internet booking site, SQ-eTravel. Passengers could book flights on SIA,
order special meals, view seating plans and book preferred seats. The Internet offered
advantages to both the airline and its customers. For the airline, it offered savings in marketing
and distribution costs, allowing it to make up-to-date information on flights available
electronically. For customers, the Internet facilitated access to information, allowing them to
find the best-priced flights. By 2001, SQ-eTravel had 66 stations around the world and 19,646
bookings were made over the Internet.
A Standard of In-flight Service Even Other Airlines Talk About33
Shortly after the split with MSA in 1972, SIA decided upon a product and service differentiation
strategy based on in-flight service. The strategy built on the Asian tradition of gentle and
courteous service and positioned the airline in the premium service, quality and value market
segment of the international airline industry. At the heart of SIAs service reputation was the
Singapore Girl, the idealized version of the SIA cabin attendant. The icon was recognized
worldwide for delivering a standard of in-flight service even other airlines talk about. The

31

Press release, Abacus International, No. 22: 7 September 1999, http://www.abacus.com.sg/abacus_press_release_no22-99.htm


(March 7, 2002).
32
In 2001, Cheong completed his second year as chairman for ABACUS International, a two-year term beginning 1 July 1999.
Press release, Abacus International, No. 18: 1 July 1999, http://www.abacus.com.sg/abacus_press_release_no18-99.htm, (March
7, 2001).
33
From SIAs advertising campaign.

Singapore Airlines IB-34

p. 21

Singapore Girl was the centerpiece in SIAs marketing strategy. She was the central feature of
advertisements, where she was portrayed in a number of settings (Exhibit 21).
In the air, the cabin crew attended to the small things that most airlines did not emphasize, such
as rapid response to call buttons and frequent cleaning and stocking of the washrooms. High
service quality standards were applied to economy, first and business class passengers. Cabin
service, provided by Singapore Girls and SIA cabin stewards, evolved with customers and their
needs. Mr. Tan:
We have had to adapt to new demands in terms of service, technology, and the
skills of our cabin crew. Todays customer is well-versed in aviation matters,
economics, and IT. Customers are well-traveled, they know what they like.
They know their wines, they know their food. They are very versatile people.
We cant have the same cabin crew that we did 20 years ago now. Today, our
cabin crew are, firstly, better educated. Where in earlier years, our cabin crew
had a junior or middle school education, they now have a diploma or a university
education, or at least a good high school grade.
In response to the changes we have seen in our customers, the Singapore Airlines
Girl, our cabin crew image, has evolved. She is still very young and caring, and
she still possesses that mystical personality that we are able to capture in our
advertising strategy, but we are now looking for a person who can easily mix
with different cultures, different age groups, and a person who is well traveled
and experienced. That is the SIA girl. But, deep in her, the service style, the
caring personality, remain intact.
SIA translated the advertising image of the Singapore Girl into reality through a rigorous process
of recruitment and training. Recruitment of female cabin crew was highly selective. SIA
invested time in selecting, training, supervising and guiding the cabin crew. Female applicants
had to make it through a very selective three-stage interview process that included a social
function. Cabin crew retired after 25 years of service.
The majority of the cabin crew in 2001 were Singaporean or Malaysian, but between 10 and 15
percent of the cabin crew came from Japan, India, Indonesia, Taiwan and the PRC. Mr. Chew:
We have traditionally depended on Singapore and Malaysia as sources for our
crew. And then, very early on, we started recruiting Japanese staff as well for
their linguistic skills in order to cater to the Japanese market, and we developed
from there. As the Korean market grew, we took on Korean women, and for
flights to mainland China, we engaged mainland Chinese to speak authentic
Mandarin and certain dialects. The broadening of our recruitment area to India
and Indonesia was more because of the labor market. As economies boomed, we
were finding it hard to attract the right people from our traditional sources, to get
sufficient numbers of the quality that we needed, so we broadened the catchment
area.

Singapore Airlines IB-34

p. 22

New challenges were experienced by the airline in inculcating international hires with the
Singapore Girl service culture and SIAs corporate culture. Training, a continuous process at
SIA, succeeded in leaving its mark and, within two years, the new hires were well adapted to the
service culture. Training began with four months of focused courses on technical, functional and
soft skills and was continued annually with one to two refresher courses. The goal of SIAs
training program was to enable the cabin crew to provide gracious service reflecting warmth and
friendliness, while maintaining an image of authority and confidence in the passengers minds.
Training encompassed safety, beauty tips, discussions of gourmet food and fine wines and the art
of conversation. Training the cabin crew in the soft skills required for a global customer base
had special subtleties. Mr. Tan:
Our people have to be very adaptive and able to size up a situation, which is why
cross-cultural training is extremely important. It is very challenging to serve the
global customer. What is acceptable to the Japanese is not acceptable to someone
else and vice versa. When our staff are talking to a person, they are servicing the
customer. If they talk to say, an American, they must look straight at him. But if
they talk to a Japanese man, they do not look at him, because the culture requires
more deferential behavior.
Stewards were hired under similarly competitive conditions but as regular, not contract,
employees and retired after 25 years of service. With promotion, the retirement age was 55.
Generally, the cabin crew was two-thirds female. SIAs ratio of cabin crew to seats, 1:22, was
the highest in the world and well above the industry average.34 The high ratio allowed the crew
to give more individual attention to passengers. Cabin crew belonged to the SIA staff union.
Engineers, pilots and other disciplines belonged to their own specific unions.
In discussing the Singapore Girls terms of engagement with SIA, Mr. Chew said:
I think the people who are in the front line with us, by and large, relative to the
rest of the country and to the region, are more than fairly rewarded. So they
value the vocation, they dont see it as demeaning. I guess that the advantage for
us is that we live in a part of the world where you can just stick your head up and
see the less attractive alternatives around you. And accept that, restrictions and
all, this works. Its a place where you can bring up your family, where you can
have a reasonably high standard of living and the security is stable. So our
people respond to it. They dont take things for granted. Even the young ones
with their different values. This is not to say that the lines may not shift. At
some point in time, people may rail against having to wear uniforms and want
more freedom to choose their work styles or other issues. But at this point in
time there is no manifestation of that.
The service standards at SIA went beyond the mechanics of providing high quality service in the
air, permeating the entire organization. On the ground, the airline measured the time between
aircraft landing and the moment the first and last bags were loaded onto the conveyer belt to

34

Daniel Chan, op. cit., p. 464.

Singapore Airlines IB-34

p. 23

monitor performance. At check-in, SIA provided information to passengers on the weather at


their destination and on new SIA products, as well as providing candy for children.
Training, with an emphasis on service, was a top priority for all SIA staff. The company
operated a Management Development Center and offered courses for different divisions of the
airline. Training costs amounted to 10.9% of total payroll costs for the airline in 2000/01.
Customer Feedback
SIA put a great deal of importance on listening to customers needs and asked for regular
feedback in surveys. Dr. Cheong:
We monitor customer feedback numbers of complaints, compliments, all kinds
of ratios and we analyze the different types of complaints. If we see a trend
which is going the wrong way everybody pays attention. A lot of questions are
asked. We act very quickly. So we subscribe not only to industry surveys, we
also conduct our own surveys.
In addition, all communications to the airline, both complimentary and negative, were answered.
Mr. Tan:
And I get to read complaint letters. And I get complaints on the phone and I
answer them. So, I am not sitting in an ivory tower. I must know what is
happening on the ground, what the customer is thinking of us, what the problems
are that we really need to resolve.
There were many channels for SIA customers to provide feedback to the airline. Customers
communicated directly to the airline via letters and faxes sent to the Head Office in Singapore or
to overseas offices; through comment forms distributed by all frontline staff (ground staff and
cabin crew) which were then routed to Customer Affairs; and more and more frequently, through
SAA Feedback, a customer feedback email address on SIAs web site.
SIA ground staff and cabin crew also reported customer feedback through defined channels.
Ground staff prepared telex reports on customer concerns and incidents. The cabin crew
prepared Voyage Reports to communicate the feedback they received from customers regarding
the product and services and customer concerns. Both reports were then sent to the departments
concerned and Customer Affairs for attention or information.
The Customer Affairs department routed feedback to the operating departments and staff
concerned, and sometimes to the training department, depending on the nature of the customers
feedback. Matters pertaining to specific departments were sent to the departmental head to act
upon. If a specific staff member received feedback, inclusive of compliments, the comments
were delivered to the staff member by the department head. If an issue was of interest to an
entire department, it was distributed via a department newsletter, lotus notes, or at a
departmental meeting. If an issue was of interest to all SIA staff members worldwide, it was
highlighted in TCS in Action, which was distributed with Outlook, the company newsletter.

Singapore Airlines IB-34

The airline received both complimentary and critical feedback.


compliments received by the airline:

p. 24

Below are examples of

I would like to bring to your attention the professionalism of a member of your


staff mentioned above (Albert Tiong). Mr Tiong was very helpful in getting my
flight to Sydney from Singapore as my flight from Mumbai was delayed
considerably, and I missed my flight connection from Singapore to Sydney. If it
were not for Mr Tiongs prompt and professional help, you would have had a
passenger whose further trip would not have been as pleasant. Mr Yung showed
true professionalism and good example of representation of a company.

I wish to record my experience on SQ319/25 January, seat 12A. On the flight, I


was looked after perfectly by the cabin crew, in particular Stewardess Chong Le
Sze. After disembarking, I found that I had lost my wallet, containing cash for
stay in Singapore, and more troublesome, my credit cards, etc. Miss Chong
noticed me in distress in the terminal building, and gave me tremendous help and
support at a trying time, even though she was off-duty, and presumably on her
way home. Two of her colleagues, whose names I did not record also stayed on to
help. This incident showed, to me, a friendly, caring attitude far beyond the call
of duty, and did more to raise SIA higher in my esteem than anything I could
imagine.
And, lastly, examples of critical feedback:
In Feb 2002, I had booked myself and my friend Charles Gordon onto flight
SQ319 from London Heathrow to Singapore, departing at 2050 hours on 24
December 2002. On the morning of the flight, I checked on your website to see if
there was any delay on the flight and discovered that the flight had been moved
from 2050 hours to 1825 hours. I quickly contacted one of your offices to confirm
that this was correct and that our names were down as passengers for that
particular flight. I had no communication whatsoever from Singapore Airlines
that this flight had been moved and was annoyed that your company had not done
so. I was very concerned with the consequence that we could have easily missed
the flight.

The standard of care from all the cabin staff has been superb, one could not ask
for more. The choice of wines and the starters have been excellent. It was only
the main course of salmon on the homeward journey and the first meal out of
London on 27 December that was disappointing. Being offered a carefully
prepared whole delicious mango as a fruit choice, was a first in my flying
experience. The seats/beds are comfortable if a little challenging to work.

Singapore Airlines IB-34

p. 25

Empowerment of Customer-facing Personnel


In 2001, SIA began to empower its customer-facing personnel to make more decisions to serve
the customer better. Mr. Tan:
Our people start out, you see, with the attitude I want to provide perfect
service. But you can never provide perfect service, zero defects, because there
are other extenuating circumstances. Sometimes things are outside your control,
weather or aircraft delayed at airports for technical reasons.
So, the cabin crew and front line people at the airport are empowered to make
decisions. You see, mistakes are made, passengers are inconvenienced. I think
the true quality of any company is shown in how you respond to problems.
Things can and will go wrong, but how you respond to them makes the difference
between a good company and one that is not a good company. You say, oh,
nothing I can do, sorry, sorry, sorry. Sorry becomes so common that it is
meaningless. So we empower them.
SIA exercised this policy when it pioneered the introduction of a new in-flight entertainment
system in 1998 and encountered problems operating the system. Mr. Tan:
When the system was not working we gave passengers gift vouchers of $50 on the
spot, in the aircraft, if we couldnt find the passenger an empty seat with a
functional system. We did this because we had offered them a specific service
and it wasnt right for one passenger to be enjoying a movie while another
couldnt because we were still chasing the bugs out of the system. So we
empowered the cabin crew to make that decision.
Compensation and Motivation
Compensation at SIA was made up of a basic salary plus a bonus based on the airlines profit.
Profit thresholds were in place, and if the threshold wasnt met, no bonus was distributed. Dr.
Cheong described the compensation system at SIA:
Last year, for example, our employees got about 6 months of the basic wage as a
bonus. The bonus depends upon profit. So, we have a virtuous circle. If we
make good profits they get good bonuses. They are motivated to do better and the
airline continues to make a profit.
SIAs track record motivated employees to deliver a high standard of performance. Dr. Cheong:
Another motivator for our employees is the airlines reputation. The more awards
we win, the prouder our people are. And if somebody wants to do something that
harms the overall image, they get pounced upon by their peers. This is evident,
for example, in our cabin service and among our cabin crew. Its not just a matter
of the training or the manuals. I dont think we are that different. We spend a bit

Singapore Airlines IB-34

p. 26

more time on training, perhaps. But its more the culture. Over the years, people
are proud of that reputation.
Cost Management
SIA, like Singapore in general, was able during its early years to compete in international
markets in part by capitalizing on the countrys low-cost, high quality labor. Most serious
competitors on international routes were based in OECD countries, so having flight crews and
most operational overhead based in Singapore was a source of significant cost advantage.
However, by the mid-1980s, the countrys economic success and rising standard of living had
eroded much of that advantage.
Rapidly rising wages and a domestic labor shortage forced SIA to focus on productivity
improvements. During the 1980s, revenues increased almost 250 percent, network size doubled,
and passengers carried increased 75 percent. SIA group employment, however, rose only 14
percent.35 This resulted not only in one of the lowest crew-related cost ratios in the international
airline industry, but also one of the highest revenue per employee ratios as well. This advantage
was carried forward into the early 1990s when SIAs position as the lowest cost carrier in the
international airline industry was rivaled only by Korean Air. In order of cost competitiveness,
from best to worst, SIA was followed by Continental, Thai, Northwest, Cathay, United,
American, Delta, and Qantas, with the European and Japanese carriers lagging far behind.
(Exhibit 4).36 In the decade between 1991/92 and 2000/01, SIAs staff productivity continued to
improve: staff strength increased only 25 percent while capacity per employee doubled, revenue
per employee increased by 41% and value added per employee increased by 30% (Exhibits 22
and 23).
While staff costs comprised about 16 percent of SIAs expenditures, fuel made up 21 percent of
costs in 2000/01. The airlines profitability was heavily dependent on fuel price and usage. A
change in fuel productivity of one percent would affect annual fuel costs by S$19 million
(Exhibit 24).
To take advantage of the Internet to reduce aircraft maintenance costs, which constituted 6% of
expenditures in 2000/01, SIA joined with 12 airlines to launch Aeroxchange, a business-tobusiness e-commerce exchange that offered a comprehensive selection of aircraft technical parts
and services over the Internet, in addition to general business supplies.
Finally, to become more cost efficient, increase productivity and improve decision making, SIA
embarked on a multi-million dollar effort to consolidate the Groups disparate computer systems
into one common e-business platform in 2001. Mr. Bey:
The enterprise resource planning system we are implementing now is the result of
the need for a fully integrated, single information system across the whole
network. We want to have information available as quickly and accurately as
35

SIA Annual Report, 1989, p.62.


Tae Hoon Oum and Chunyan Yu, Winning Airlines: Productivity and Cost Competitiveness of the Worlds Major Airlines,
Kluwer Academic Publishers, Massachusetts, 1998, p. 161.

36

Singapore Airlines IB-34

p. 27

possible across the network. This stems really from the reality today of what I
call a shortened decision cycle. In todays world, where changes are very rapid,
when the environment changes, the market changes. How do you respond to
change? If you cannot respond quickly enough, then you are left behind. And
our desire is really to be even better than that to be able to anticipate the
change and to mitigate all the negative effects of change. The only way to do that
is to have information that is accurate, responsive and available. Then you can
make sensible decisions, informed decisions.
Organizational Challenges and Information Technology
Changes to the organizational structure were brought on by advances in information technology
and proceeded the enterprise resource planning implementation. Mr. Bey:
The changes in information technology, in terms of the impact on the way we do
business, have caused us to reassess how we organize ourselves and how we
should do business within the Information Technology (IT) division. We did that
organizational restructuring two years ago. It was a major restructuring the
kinds of people and skills sets we need is a major follow-on issue. Now we are
integrating computer systems across all functions. Its a quantum jump.
We have formed a commercial technology division which plans the airlines IT
architecture, working very closely with the business people. The division
determines what systems we need and works together with the IT division, which
provides the technical expertise. The goal is to have a single view of the
customer throughout the whole organization, so that wherever you are, you have
that information.
The commercial technology division establishes the business needs and
implements the requisite technology on the marketing side. We are in the
process of putting mirror images in place in engineering, in flight operations, in
cabin crew, in all the business units. So that the business people who are up to
date with technology can work out the information technology needs. That way,
the customer needs are clearly articulated in terms of business needs. Then, the
IT division takes the plan and masterminds it in terms of information technology
architecture. The IT people also act as project managers, and bring all the
necessary people together to design and build the systems.
Management Recruitment, Development and Appraisal
SIA had high academic standards for new recruits and looked for the best people, wherever they
could be found. Dr. Cheong:
Ive always said that if we want to be the best in the world, then we have to have
the best people in the world working for us. Its just arrogant to think that the
best people can only be found in Singapore. We are a country of only 4 million.

Singapore Airlines IB-34

p. 28

So in the last few years we recruited, among others, a chief information officer
from Australia, for example. At the lower levels, at the vice president levels and
senior manager levels, we have people working for us from Australia, from
America, from the UK and other parts of Europe.
SIAs training program for developing promising managers from the regional offices required
managers to spend 5 years in the regional office before being moved to Singapore for 3 to 4
years. After working in Singapore, managers were posted internationally.
SIA executives were expected to be versatile and understand the fundamental issues of each area
of the airlines operations. To achieve this, SIA had an active policy of rotating senior
management so that none remained in one area for their whole career. Mr. Chew Choon Seng
was a prime example:
Ive been in this company now for over 30 years, but of those 30 years I have
worked overseas for more than half. Although I have an engineering
background, in most of my stays overseas Ive been doing sales and marketing
and some operations. I did stints in head office doing strategic planning. A few
years back I took over the portfolio for finance. Likewise, many of my
colleagues have rotated throughout the airline.
SIA used a regular and thorough system of appraisal for senior staff. Staff were evaluated on
their intellectual capacity, drive, leadership and relationship skills. The company used 360degree reviews to confirm a managers acceptance by peers and superiors. Reviews focused on a
staff persons results-orientation and achievement. In addition to management, the companys
board of directors took an active interest in the career development of future leaders of the
company and succession planning. Finally, SIA structured careers to ensure mobility across
functional areas to identify people with high potential for developing cross-functional skills.
Mr. Loh Meng See:
To be promoted as a manager you must have gone through a very stringent
process. In fact, when we conduct an exercise to appraise we gather almost all
the senior vice presidents together to give an opinion, to work towards consensus.
Which means that when someone is considered he must be quite an all-rounder.
He must be seen to be someone who is very, very good. That rigor has been
helpful. Its a purely meritocratic, very objective system. Its based only on the
performance of the individual and his or her potential. The other thing is, of
course, the way in which it is done means that there is general acceptance of the
individual. So once hes made it, there is no doubt whatsoever.
Management Systems
Dr. Cheong, Mr. Tan, Mr. Chew, Mr. Loh and Mr. Bey described SIAs management system as
collegial, one where there was a very free flow of ideas and information until a decision was
reached. Dr. Cheong:

Singapore Airlines IB-34

p. 29

There could be a lot of discussion, a lot of debate, but once a decision is made
we move very fast, because everybody is involved in the discussion at the top.
Everybody has bought into it.
Communications at the highest level of the company were facilitated by a shared culture. Mr.
Chew:
We have the advantage that first of all, all of us are in this little piece of the world
called Singapore. We grew up in the same environment. We have the same
value systems in corporate Singapore at large. So there are many things in which
communication is not needed. In Singapore integrity and honesty are givens.
At the same time, the management team recognized the need for change within the culture and
had sought new blood from outside the company. Dr. Cheong:
Until a few years back, ours was quite a monolithic culture. Less diversified.
Promotions were all from within, and it created a very strong culture. Everybody
knew everybody else. Everybody knew what the core values are, what weve got
to do. It has its advantages. In a crisis everybody knows what to do and you
dont have to explain. We recognize that while that kind of culture has strengths
it also has its dangers. You could have blind spots and you need somebody who
is not inbred to be able to see some of these blind spots or, alternatively,
opportunities.
Now over the last few years we have recruited from outside the company at all
levels, even at the most senior levels. Mr. Bey Soo Khiang was chief of the
armed forces. Mr. Loh Meng See was taken from outside. We recruited as the
chief financial officer somebody from outside. He served two years in finance
and is now VP in charge of West Asia and Africa. So weve been doing that over
the last few years. And we will see more of this.
Yet, more cultural change was needed. Mr. Loh:
Of course what we are hoping, what Im hoping, is not just the intellect, but other
qualities become important as well. High risk takers, maybe a few mavericks, a
few prima donnas to upset things a little and add to the color and to the depth and
diversity of the organization. So my job is to create an environment where there
is some tension and some competition and we can get the best ideas out of the
group of people we have. I think one of the dangers with large organizations is
the danger of cloning. To me, that is a weakness. I believe that diversity, in the
new world that we are operating in, is going to make us better because chances
are we will be better able to adapt. In the new operating environment, it is all
about sheer adaptability, and we want people to be able to adapt. We are trying
to find a way to create that capability.

Singapore Airlines IB-34

p. 30

Future Challenges
Mr. Bey:
This is a high growth company wanting to grow. Our organization has grown
organically from small to medium size in terms of scope, and from one that
operated totally as a single company to one that has subsidiaries a different
kind of business to some extent. The subsidiaries were spun off because they are
very different businesses compared to the passenger business.
The other complication we face arises from the global airline business itself,
which involves cross-cultural issues as well as governance issues for many
different countries. Organizationally we have not been set up for that and right
now we are evolving to try to cope with it.
Part of the reason we are changing only now is that we have always wanted to
remain very lean; any fat was considered wastage. When you want to prepare for
the future, you have to invest in a bit of fat. That is kind of taboo around here,
which is a good culture to have. But that leads to these kinds of problems.
In a small company, the decision making process is confined to a few people in a
very flat organizational structure, without much hierarchy. But now, as SIA
grows, we cannot afford to grow that way anymore. The other tension we feel is
to make sure that we do not become too hierarchical, too bureaucratic such
that we cannot respond to changes that are taking place in the outside world.
Changing Pilots: 2003
Dr. Cheong turned away from the window. During his 29 years in the company, the last 19 spent
in the most senior executive positions culminating in managing director and then CEO, he had
been able to draw upon his long experience at the airline to meet new challenges. Looking
forward, he was confident in the abilities of Mr. Bey, Mr. Tan, Mr. Chew and Mr. Loh to
respond to the forces of globalization, regulatory adjustment, and economic shocks:
I have no fear about [management] succession. Certainly for my succession, I
have no fear about that at all. There are enough candidates, and even after that,
we have enough people at the next level.
Dr. Cheong planned to step down as CEO in June of 2003. Until that time, he would be focused
on achieving continued growth in a complex and exciting industry that was facing the challenges
of globalization, before he passed the controls to his successor, Mr. Chew Choon Seng. Under
Mr. Chews direction, the management committee would navigate into the next decade. The
airlines continuing challenges would stretch SIAs people far beyond the demands of its
previous history. Was the companys strategy right for the more turbulent times ahead, and was
the organization durable and flexible enough to ensure its success?

Singapore Airlines IB-34

p. 31

Exhibit 1
Singapore Airlines Route Map*

* March 2002

Singapore Airlines IB-34

p. 32

Exhibit 2
SIA Ten-Year Charts

1800

8,000

8,000

1,500

1500

6,000

6,000

1,200

1200

4,000

4,000

900

900

2,000

2,000

600

600

5,000

40,000

4,000
3,000

20,000

2,000
1,000
2000-01
1999-00
1998-99
1997-98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92

Revenue Passenger-km (million)


Cargo Tonne-km (Million)

1,100
14,000

950
800

12,000

650

10,000

500
8,000

350

6,000

200.

2000-01
1999-00
1998-99
1997-98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92

Passenger Number
(Thousand)

60,000

Cargo Tonne - km
(Million)

Revenue Passenger - km
(Million)

16,000

7,000
6,000

Profit after tax

Passenger and Cargo Carried

Passenger and Cargo Carried


80,000

2000-01
1999-00

Profit before tax

1998-99
1997-98

Total expenditure*

1996-97
1995-96
1994-95
1993-94

1992-93
1991-92

2000-01
1999-00
1998-99
1997-98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92

Total revenue*

Passengers Number

Cargo Tonne

Cargo Tonne (Thousand)

$ Million

$ Million

1,800

$ Million

10,000.

10,000

$ Million

Company Profit Before and After Tax

Company Revenue and Expenditure

Singapore Airlines IB-34

p. 33

Exhibit 3
SIA International Award Winner (2000 - 2002)
April 2000
Asian Wall Street Journal and CNBC Asia (Hong
Kong) Asian Travel Survey Most Preferred Airline

November 2000
Korea Herald (Korea) Readers Best Brands of 2000
Best Brand (Foreign Airline Category)

May 2000
Travel Trade Gazette (Singapore)
TTG Travel Awards 2000 Best Airline (Overall), Best
Asian Airline

Scottish Passenger Agents Association (UK)


Annual Travel Awards 2000 Best Foreign Airline

Air Cargo News International (UK)


Cargo Airline of the Year Awards
Best Airline to Australasia, Best Airline to Far East
August 2000
Travel Bulletin (UK) Travel Bulletin 2000 Awards
Top Asia/Pacific Airline
September 2000
Conde Nast Traveller (UK) 2000 Readers Travel
Awards Worlds Best Long-Haul Airline (Leisure)
DBS/Trade Development Board (Singapore)
DBS-TDB Millennium Trade Award

December 2000
Asia Travel Tips (Thailand)
2000 Premier Travel Award for Excellence
Best Airline in the World
Asiamoney Magazine (Hong Kong)
Best Managed Company of the Decade
Business Traveler International (US)
Best in Business Travel Winners 2000
Best Overall Airline and first in four other categories
Financial Times (UK)
Worlds Most Respected Companies Survey
Winner Transport Company Category

TravelAsia (Singapore) TravelAsia Breakthrough


Awards 2000 Airline of the Year

Reisrevue Magazine (Netherlands)


Dutch Travel Industry Awards
Best Scheduled Airline

Business Traveller Asia/Pacific (Hong Kong)


Business Traveller Asia/Pacific 2000 Annual Travel
Awards - Best International Airline and first in 8 other
categories

January 2001
Business Traveller (Germany)
Travel Awards 2000
Best International Airline and first in two other categories

October 2000
Business Traveller (UK)
Business Traveller Awards 2000
Best Long-Haul Airline

Travel Inside Magazine (Switzerland)


Travel Star Award 2000 Best Airline

Common Wealth Magazine (Taiwan)


The Most Admired Company 2000 Awards
Winner - Airline Industry Category

Travel Weekly Magazine (UK)


Golden Globe Awards 2000 Best Airline to Asia

Conde Nast Traveler (US) 2000 Readers Travel


Awards Worlds Best Airline

February 2001
Official Airline Guide (UK)
OAG Airline of the Year Awards
Best Europe-Far East/Australasia Airline and first in three
other categories

Fortune Magazine (US) List of Worlds Most Admired


Companies Winner - Airline Category

TravelCom Magazine (Taiwan)


Gold List Best Airline

National Travel Industry (Australia) National Travel


Industry Awards Airline of the Year

Singapore Airlines IB-34

p. 34

Exhibit 3 (continued)
March 2001
CargoNews Asia Magazine (Hong Kong)
15th Asian Freight Industry Awards
Best Global Air Cargo Carrier Best Air Cargo Carrier
(Asia)

July 2001
TravelWeekly East Magazine (Singapore)
Innovator Awards 2001 Best Innovator
Worth Magazine (US)
Readers Choice Survey Top Rated Airline

Travel Frontier Magazine (Japan)


Readers Airline Rankings Votes
Best Airline

Travel & Leisure Magazine (US)


Worlds Best Awards Best Foreign Airline

Zagat Survey (US)


5th Survey of International Airlines
Worlds Best International Airline operating to and from
the US

September 2001
Business Traveller (Hong Kong)
Asia-Pacific 2001 Readers Survey
Best Airline in the World and first in 5 other categories

Globo Magazine (Germany)


Travel Awards 2000 Best Scheduled Airline

TIME Inc Asia (Hong Kong)


Readers Travel Choice Awards
Preferred Airline
Most Popular Airline Frequent Flyer Programme

Korea Productivity Center (Korea)


National Consumer Satisfaction Index Survey
Best Service (International Airline Service Category)
May 2001
Business Travel Poll (UK)
Business Travel Poll
Overall Quality of Service
First Class Service
Business Class Service
Short-Haul Flights (Under 4 hours)
Long-Haul Flights (Over 4 hours)

Wanderlust Magazine (UK)


Travel Awards Winner of the Top Airline Category
Australian National Travel Industry Awards (Australia)
Airline of the Year Award
October 2001
Conde Nast Traveler (US)
Business Travel Awards Best Transpacific Carrier
Derniere Heure (Belgium) Best Airline

June 2001
Aviation Week and Space Technology (US)
Best Managed Companies Awards
Best Managed Global Carrier
Investor Relations Magazine (Hong Kong)
Asia Awards
Best Investor Relations, Best Corporate Governance
Best Crisis Management
FinanceAsia Magazine (Hong Kong)
Best Managed Company, Most Committed to
Shareholder Value, Best in Investor Relations

Nouvelle Gazette (Belgium) Most Appreciated Airline


Business Traveller (UK) Readers Poll Awards
Best Long Haul Airline
November 2001
Business Traveler International (US)
Travel Awards Best Overall Airline and first in three
other categories
Scottish Passenger Agents Association Awards (UK)
Best Foreign Airline

Motor Show Magazine (Italy)


Miligore Compagnia Aerea Per Lestremo Oriente
(Best Airline Company for Far East for 2001)

Travel Magazine (Belgium) Best Long Haul Airline

Guardian/Observer Travel (UK)


Guardian/Observer Travel Awards
Best Leisure Airline

The Korea Herald


Survey of favourite products and services
Top in Airline Category

Altroconsumo (Italy) Top Airline

Singapore Airlines IB-34

p. 35

Exhibit 3 (continued)
December 2001
Far Eastern Economic Review (Hong Kong)
Review 2001 Number One Singapore-based Company
Financial Times (UK) Survey of Worlds Most
Respected Companies Top 50 List
Philippines Department of Tourism 2001 Kalakbay
Award for International Airline of the Year
Conde Nast Traveler (US) 2001 Readers Choice
Awards Best International Airline
Institute of Customer Service (UK)
Voted number one for customer service
January 2002
Travel Weekly (UK)
2002 Travel Weekly Globe Awards Best Airline to Asia
Irish Travel Trade News Annual Awards
Best Airline to Asia/Pacific Rim

Recommend Magazine (US)


2001 Readers Choice Awards
Hottest Selling Airline - Asia/Pacific
Travel Com Magazine (Taiwan)
Gold List Awards 2002
Best Airline
February 2002
Business Traveller (Germany)
Travel Awards
Best Airline on Intercontinental Routes
Best in Friendliness
Best in Cabin Outfit
Best in Service
CIO Asia Magazine (Singapore)
CIO Award Winner
March 2002
Fortune Magazine (US)
List of Global Most Admired Companies
Top 50 List
Winner - Airline Category

2.55 Total operating expenses

0.01

0.8858 USD/ATK

1 Euro = 0.88580 USD

$0.45 1 GBP = 1.45100 USD

Available Tonne Kilometers (ATK) in millions

0.51 Total operating expenses


6,683
12,978

100

0.02

0.01

0.04

4.6

costs and currency differences


0.02 Engineering and other aircraft costs

0.02

0.04 Accommodation, ground equipment

0.04 Landing fees and en route charges

0.02 Handling charges, catering and other operating costs

0.05 Selling costs

0.01 Aircraft operating lease costs

0.03 Depreciation and amortization

0.13 Employee costs

0.08 Fuel and oil costs

8.0

Available Tonne Kilometers (ATK) in millions

Work by third parties

2.0

2.3

3.2

3.2

7.7

7.0

3.3

8.9

2.8

6.4

25.1

15.5

Euros/ATK British Airways (Group) ) Expenditures

$0.33 1 SGD = 0.54028 USD

Available Tonne Kilometers (ATK)

0.15 Other costs

0.27 Aircraft maintenance and overhaul costs

0.43 Landing, parking and overflying charges

1.45100

25,196

8,898

662

739

645

1,303

1,135

221

715

2,376

1,102

0

0.54028

18,034

8,246

470

483

498

520

891

0.00 Handling charges


0.13 Inflight meal and other passenger costs

926

289

1,055

1,347

1,767

$M

0.05 Sales costs

0.08 Rentals on lease of aircraft

0.34 Depreciation charges

0.65 Staff costs

5.9

Total operating expenses

309
535

Other operating expenses

214

Commercial cooperation
153

211

Cost of housing, vehicles and inventories

137

515

Landing fees and navigation charges

Hired personnel

465

Materials and consumables

Ad hoc and short-term aircraft/truck rentals

593
222

Third party-handling costs

187

Operational aircraft lease expenses

Commercial costs

429

1,675

Staff

Depreciation

1,038

SIA (Company) Expenditures

0.45 Fuel costs

HK$/ATK

100

10.7

16.9

5.3

1.8

3.2

13.2

25.3

17.6

0.12824 USD/ATK
Euros M

Fuel

KLM (Group) ) Expenditures

1 HKD = 0.12824 USD

11,827

Available Tonne Kilometers (ATK)

1794

Other
30,175

3,234

Total operating expenses

5,112

539

Commissions

Aircraft maintenance

975

Other depreciation and operating leases

Landing, parking and route expenses

3,993

Aircraft depreciation and operating leases

1,586

7,629

Inflight service and passenger expences

5,313

Staff

HK$M

Exhibit 4: Composition of Operating Costs, Selected Carriers, 2001

Fuel

Cathay (Group) Expenditures

Singapore Airlines IB-34

100

7.44

8.31

0.00

7.25

14.64

12.76

2.48

8.04

26.70

12.38

USD/ATK

USD/ATK

100

5.7

5.9

6.0

6.3

10.8

11.2

3.5

12.8

16.3

21.4

$0.53

0.37

0.03

0.03

0.00

0.03

0.05

0.05

0.01

0.03

0.09

0.05

$7.

$0.25

0.454*

0.03

0.03

0.03

0.03

0.05

0.05

0.02

0.06

0.07

0.10

SG$/ATK

p. 36

14,273
1,737

Passenger services

Marketing

Administration and general

2,508

Other activities

0.02263 USD/ATK

8,490

100.0

2.1

1.5

6.9

10.0

0.0

1.5

12.2

12.8

15.8

11.9

25.3

Source: Compiled from annual reports.

* Due to adjustments for airline expenditure due to internal accounting.

1 Thai Baht = 0.02263 USD

Available Tonne Kilometers (ATK) in millions

116,945

Depreciation of other fixed assets

Total operating expenses

8,069
1,701

Depreciation of aircraft

11,646

Lease of aircraft and spare parts

14,996

Ground operations

Remuneration to board of directors

13,894
18,534

Maintenance and overhaul

$0.31 Operating Expense per Total ASM


**Excludes cargo ton miles

Available Seat Miles (ASM)** in millions

13.77 Total operating expenses

0.30

0.20

0.95

1.37 Other

0.00 Aircraft rentals

0.20 Commissions

1.68 Other rentals and leanding fees

1.77 Aircraft maintenance materials and repairs

2.18 Depreciation and amortization

1.64 Aircraft fuel and taxes

3.48 Salaries, wages and benefits

Baht/ATK

Expenditures

29,583

Baht M

Expenditures

Flight operations

Northwest (Airline)

98,356

10,773

2,244

447

500

533

669

690

1,727

3,963

US$ M

Exhibit 4: Composition of Operating Costs, Selected Carriers, 2001 (continued)

Thai (Group)

Singapore Airlines IB-34

20.83

4.15

4.64

4.95

6.21

6.40

16.03

36.79

USD/ASM

100.00

$0.98

0.98

0.02

0.00

0.00

0.01

0.01

0.01

0.02

0.04

$/ASM

p. 37

Singapore Airlines IB-34

p. 38

Exhibit 5
Singapore: Key Economic Indicators
1965

1990

1995

1996

1997

1998

1999

2000

1.9

3.05

3.53

3.67

3.79

3.92

3.95

4.02

GNP (S$ millions)

3,266

68,288

121,351

130,232

149,827

146,043

153,469

169,597

GDP (S$ millions)

3,043

66,464

102,859

110,699

120,140

120,207

127,250

139,840

Population (MM)
Domestic Economy

GDP by Sector (S$ millions)


Manufacturing

29,215

30,637

32,339

32,532

35,623

42,122

Financial services

15,507

14,905

18,113

18,459

19,868

20,314

Business services

15,901

18,332

19,911

18,806

18,358

20,901

Transport and communications

14,233

14,768

15,804

15,733

16,651

17,986

Construction

8,863

11,304

13,382

12,886

11,198

9,684

Utilities

1,958

2,373

2,960

2,698

2,406

2,715

1990

1995

1996

1997

1998

1999

2000

85.2

96.7

98.0

100.0

99.7

99.8

101.1

Consumer Price Index


(Nov.97-Oct.98=100)
Balance of Payments
Exports of goods fob (US$ millions)

126,010

125,746

110,591

115,639

138,930

(US$ m)

123,786

124,628

95,780

104,337

127,531

Current-account balance (US$ millions(US$ m)

13,898

16,912

21,025

21,254

21,821

76.8

71.3

74.9

76.8

80.1

Imports of goods fob (US$ millions)

Foreign-exchange reserves excl gold (US$ bn)


Domestic Exports (S$ millions)

62,754

98,473

103,589

107,535

105,918

116,325

135,938

Re-exports (S$ millions)

32,452

69,042

72,683

78,077

77,846

77,965

101,888

95,206

167,515

176,272

185,613

183,763

194,290

237,826

109,806

176,314

185,183

196,605

169,864

188,142

232,175

1.41

1.49

1.67

1.70

1.72

Total Exports (S$ millions)


Imports (S$ millions)
S$:U.S.$ Exchange Rate
Tourism

1965

1990

1995

1996

1997

1998

1999

2000

Arrivals (Thousands)

0.316

5,322.90

7,136.50

7,292.40

7,197.90

6,242.20

6,958.20

7,691.30

Hotel Rooms (Number)

1,134

22,408

26,322

27,604

27,313

27,412

27,542

28,212

75%

83%**

% of population aged 15+ who were literate

92%

93%

% of persons aged 18+ who were university graduates

22%

22%

% of persons aged 18+ who were polytechnic graduates

35%

36%

Hotel Occupancy Rate (%)


Education

Comparative Per Capita GDP


(2000, $U.S. at PPP))

Singapore

Hong Kong

Thailand

Philippines

Malaysia

Australia

Switzerland

27,347

27,814

7,273

3,770

7,945

25,900

29,876

*Re-exports: All goods which are exported in the same form as they have been imported without any transformation. Repacking,
sorting or grading, marking and the like are not considered as undergoing the process of transformation.
** Preliminary
Compiled from: Statistics Singapore, June 2001. http://www.singstat.gov.sg/STATS/yoslist.html, October 2001, Country Report,
Economist Intelligence Unit, Datastream, Ministry of Trade and Industry, Singapore, "Singapore in Brief 2001," Singapore Department
of Statistics, http://www.singstat.gov.sg, and Singapore Airlines in the 90s, GSB No. S-IB-8, Rev. 6/92.

Singapore Airlines IB-34

p. 39

Exhibit 6
SIA Profit and Loss Accounts
For Financial Years Ended 31, March 2000, 2001 (in S$ million)

REVENUE
Other income
TOTAL REVENUE
EXPENDITURE
Staff costs
Fuel costs
Depreciation
Rentals on lease of aircraft
Commission and incentives
Crew expenses
Handling charges
Aircraft maintenance and overhaul costs
In-flight meals
Landing, parking and overflying charges
Material costs
Advertising and sales costs
Other passenger costs
Company accommodation and utilities
Other operating expenses

The Group
2000-2001
1999-2000
9,823.0
8,834.1
128.3
184.7
9,951.3
9,018.8

The Company
2000-2001 1999-2000
9,116.7
8,200.7
113.0
140.6
9,229.7
8,341.3

2,093.4
1,790.9
1,145.1
289.1
698.6
102.1
455.0
304.9
235.1
507.7
231.4
174.1
116.1
132.3
328.8
8,604.6

1,853.5
1,229.4
1,205.3
242.1
649.6
99.8
465.0
409.9
224.0
494.6
198.2
175.3
135.6
121.9
345.8
7,850.0

1,347.0
1,766.5
1,054.8
289.0
694.4
102.6
891.0
483.0
404.9
497.5
231.1
114.6
88.8
281.1
8,246.3

1,201.9
1.210.0
1,117.9
228.6
645.3
99.8
838.5
521.3
384.8
484.2
220.1
134.3
84.3
314.9
7,485.9

OPERATING PROFIT
Interest on borrowings
Surplus on disposal of aircraft, spares and spare
engines
Dividends from subsidiary and associated
companies, gross
Share of profits of joint venture companies
Share of profits of associated companies

1,346.7
(37.5)

1,168.8
(28.8)

983.4
(44.4)

855.4
(38.0)

181.3

98.4

165.6

85.8

27.0
81.7

21.0
33.2

59.8
-

198.4
-

PROFIT BEFORE EXCEPTIONAL ITEMS


Exceptional items

1,599.2
305.5

1,292.6
171.3

1,164.4
442.8

1,101.6
539.9

PROFIT BEFORE TAXATION


Provision for taxation

1,904.7
(317.4)

1,463.9
(296.5)

1,607.2
(267.5)

1,641.5
(374.4)

PROFIT AFTER TAXATION


Minority interests

1,587.3
(38.0)

1,167.4
(3.6)

1,339.7
-

1,267.1
-

PROFIT ATTRIBUTABLE TO
SHAREHOLDERS

1,549.3

1,163.8

1,339.7

1,267.1

BASIC EARNINGS PER SHARE (CENTS)

126.5

91.4

109.4

99.5

DILUTED EARNINGS PER SHARE


(CENTS)

126.5

91.4

109.3

99.5

Source: SIA Annual Report

Singapore Airlines IB-34

p. 40

Exhibit 7
SIA Balance Sheets at 31 March 2000, 2001 (in S$ million)
The Group
2001
SHARE CAPITAL
Authorized
Issued and fully paid
RESERVES
Distributable
General reserve
Foreign currency translation reserve
Non-distributable
Share premium
Capital redemption reserve
Capital reserve
Special non-distributable reserve

SHARE CAPTIAL AND RESERVES


MINORITY INTERESTS
DEFERRED ACCOUNTS
LONG-TERM LIABILITIES

Represented by:
FIXED ASSETS
Aircraft, spares and spare engines
Land and buildings
Others
SUBSIDIARY COMPANIES
Investment in subsidiary companies
Amount owing by subsidiary companies

ASSOCIATED COMPANIES
JOINT VENTURE COMPANEIS
LONG-TERM INVESTMENTS
CURRENT ASSETS
Trade debtors
Stocks
Investments
Section 44 tax prepayments
Cash and bank balances
Less:
CURRENT LIABILITIES
Loans repayable within one year
Bank overdrafts unsecured
Trade creditors
Sales in advance of carriage
Provision for taxation
Proposed final dividend, less tax
NET CURRENT LIABILITIES
Source: SIA Annual Report FY 00/01

2000

The Company
2001
2000

6.000.0
1,220.2

6,000.0
1,250.5

6,000.0
1,220.2

6,000.0
1,250.5

8,031.0
40.8

7,390.6
30.3

8,477.4
-

7,931.0
-

447.2
62.3
6.9
1,800.0
10,388.2

447.2
32.0
6.9
1,800.0
9,707.0

447.2
62.3
1,800.0
10,786.9

447.2
32.0
1,800.0
10,210.2

11,608.4
186.1
1,357.4
795.5
13,947.4

10,957.5
19.6
1,167.0
566.5
12,710.6

12,007.1
1,050.6
592.1
13,649.8

11,460.7
872.5
561.8
12,895.0

8,938.8
942.6
2,981.6
12,863.0

9,279.5
854.0
1,748.5
11,882.0

8,582.8
401.1
2,477.8
11,461.7

8,995.6
423.0
1,204.3
10,622.9

307.2
159.9
467.1

307.2
551.9
859.1

715.4
239.0
556.0

305.7
188.2
537.8

2,099.4
107.9
467.3

1,668.1
107.9
463.1

1,244.8
54.4
511.4
455.6
1,272.3
3,538.5

1,178.1
56.7
711.6
415.7
1,142.1
3,504.2

1,082.4
26.5
455.6
867.0
2,431.5

1,054.2
28.4
415.7
944.2
2,442.5

0.6
27.4
2,622.6
853.7
276.0
184.2
3,964.5
(426.0)
13,947.4

15.6
49.2
2,293.5
786.1
376.6
186.3
3,707.3
(203.1)
12,710.6

25.9
2,093.4
840.5
241.1
184.2
3,385.1
(953.6)
13,649.8

43.7
1,937.3
775.0
326.3
186.3
3,268.6
(826.1)
12,895.0

Singapore Airlines IB-34

p. 41

Exhibit 8
Impact of Terrorist Attacks on Load Factors for Passengers and Cargo at SIA

Passenger Load Factor


85

80.7

80

2000/01

76.3

75
70

75

2001
73.1

73.2

65
60

Apr May Jun

Jul Aug Sep Oct Nov Dec Jan Feb Mar

Cargo Load Factor


74
72
70
68
66
64
62
60
58

72.1
68.7

2000/01
68.3

67.8
63.9

2001

Apr May Jun

Jul

Aug Sep Oct Nov Dec Jan Feb Mar

Singapore
Airlines Limited

49% Fuel Accessory Service


Technologies Pte Ltd

100%Singapore Airlines (Mauritius) Ltd.

24.5% Turbine Coating Services Pte Ltd

20% Ritz-Carlton, Millenia Singapore Properties


Private Limited

20% Evergreen Air Cargo Services Corporation

21% Asia Leasing Limited

25% Air New Zealand Limited

35.5% Singapore Aircraft Leasing Enterprise Pte


Ltd

49% Virgin Atlantic Limited

50%Service Quality (SQ) Centre Pte Ltd

29% .Asian Surface Technologies Pte Ltd

51%Cargo Community Network Pte Ltd

24.5% Asian Compressor Technology Services


Company Ltd

30% Rohr Aero-Services Asia Pte Ltd

76%Singapore Airport Duty-Free


Emporium (Private) Limited

51%Aviation Software Development Consultancy


India Ltd.

40% Messier Services Asia Pte Ltd

100%Singapore Aviation and General Insurance


Company (Pte) Ltd

47.1% Pan Asia Pacific Aviation Services


Limited

49% PWA International Ltd

100%Auspice Limited

100%SIA Mauritius Ltd

49% Combustor Airmotive


Services Pte Ltd

100%Sing-Bi Funds Private Limited

50% International Engine


Component Overhaul Pte Ltd

51% Singapore Jamco Private Ltd

50% Singapore Aero Engine Services Pte


Ltd.

20% PT Pantai Indah Tateli

100%Star Kingdom Investment Limited

20% PT Purosani Sri Persada

100% SIA Properties (Pte) Ltd

48% Eagle Services Asia Private Limited

100% Singapore Airlines Cargo


Private Limited

100% Singapore Flying College Pte Ltd

100% SIAEC Services Pte Ltd

87% SIA Engineering Company Limited

1%

Eagle Services Asia


Private Limited

Maldives Inflight Catering Private


Limited

Beijing Aviation Ground Services


Company Ltd

Beijing Airport Inflight Kitchen Limited

Aviserv Ltd

Servair SATS Holding Company Pte.


Ltd

Asia-Pacific Star Pte Ltd.

Aero Laundry & Linen Services Private


Limited

SATSSecurity Services
Private Limtied

SATS Airport Services Pte Ltd

SATS Catering Pte Ltd

p. 42

20% MacroAsia-Eurest Catering Services

24% Singapore Airport Duty-Free Emporium


(Private) Limited

24.5% Asia Airfreight Terminal Company Ltd

30% Taj-Madras Flight Kitchen Private


Limited

30% Tan Son Nhat Cargo Services Ltd

35%

40%

40%

49%

49%

100%

100%

100%

100% SH Tours Ltd.


5% Abacus Travel Systems Pte Ltd

100%

100% Tradewinds Tours & Travel


Private Limited

100% SilkAir (Singapore)


Private Limited

56% Abacus Travel Systems Pte Ltd

100%

Exhibit 9
Singapore Airlines Group Corporate Structure at March 2001

87% Singapore Airport Terminal Services Limited

Singapore Airlines IB-34

Singapore Airlines IB-34

p. 43

Exhibit 10
Singapore Airlines Group Profit after Tax
2000/01
($ millions)
Airline operations
Airport terminal services
Engineering services
SilkAir and Other
Less inter-segment transactions

1434
175
116
26
1751
164

Group Profit After Tax

1587

%
81.9%
10.0%
6.6%
1.5%

Source: SIA Annual Report

Exhibit 11
SIA Company Revenue Composition
2000/01

1999/00

Cargo (22.5%)
Cargo (22.9%)
Mail (0.4%)
Mail (0.5%)
Excess baggage (0.4%)

Excess baggage (0.3%)


Non-scheduled service
and incidental (4.5%)

Non-scheduled service
and incidental (4.8%)

Passenger (72.3%)
Passenger (71.4%)

Passenger
Cargo
Mail
Excess baggage

Non-scheduled service and incidental


Total revenue
Source: SIA Annual Report

2000/01
$M
%
6.672
72.3
2.079
22.5
36
0.4
29
0.3
8,816
95.5

1999/00
Change
$M
%
%
5.957
71.4 +12.0
1.909
22.9 + 8.9
41
0.5
-11.4
35
0.4
-18.5
7,942
95.2 + 11.0

414
9.230

399
8,341

4.5
100.0

4.8
100.0

+ 3.5
+10.7

Singapore Airlines IB-34

p. 44

Exhibit 12
The Five Freedoms of the Air
and Additional Freedoms

Additional Freedoms:
6.
7.
8.

The right to carry traffic between two foreign countries via home country.
The right to carry traffic from one country to another country without going through the
home country.
Cabotage: The right to carry traffic between two points within a foreign country.

Adapted from: R. Bruce McKern, Evolving Strategies in the International Airline Industry, Technical Report No.
77, Stanford Graduate School of Business, August 1990.

Singapore Airlines IB-34

p. 45

Exhibit 13: SIAs Fleet: Composition (March 2002)


Passenger
Seats

A380-800
B747-400

B777-200

B777-200ER
A340-300

A340-500

A310-300

Range (nautical miles)

Aircraft

In
Operation
39

Range
(nautical miles)
7260

On Firm Order
0

On
Option
9

B747-400
Freighter

11

7260

B777-200

33

5210

*25

**23

A310-300

12

5200

A340-300

7400

A340-500

8650

B747-400

To enter service 2002

A380-800

8000

10

15

To enter service Q1 2006

Total

92

42

(excluding
freighters)

(excluding
freighters)

* Excludes 2 aircraft assigned to Singapore Aircraft Leasing Enterprise.


** Excludes 10 aircraft assigned to Singapore Aircraft Leasing Enterprise.
Compiled from company reports.

52

Singapore Airlines IB-34

p. 46

Age (Months)

Exhibit 14
SIAs Fleet Age
200

200

160

160

120

120

80

80

40

40

0
92

93

94

95

96

97

98

31 March
SIA

Industry Wide

99

00

01

Singapore Airlines IB-34

p. 47

Exhibit 15
SIA Company Route Performance
Revenue by Area
of Original Sale
(Note 1)
$ million)

East Asia
Americas
Europe
South West Pacific
West Asia and Africa
System wide
Non-scheduled services
and incidental revenue

Revenue
(Note 2)
$ million

By Route Region
Overall Load
Factor
%

2000-01

1999-00

2000-01

1999-00

2000-01

1999-00

4,927
844
1,503
842
700
8,816

4,449
761
1,334
766
632
7,942

2,784
2,079
1,871
1,175
907
8,816

2,453
1,903
1,674
1,090
822
7,942

65.7
71.7
78.2
70.7
70.0
72.0

65.2
72.6
75.3
70.6
67.8
71.2

Passenger
Seat Factor
%
2000-01

72.8
79.4
78.8
77.0
74.7
76.8

1999-00

71.2
79.1
74.7
75.6
72.4
74.9

399
414
9,230
8,341
Note 1: Revenue by area of original sale is defined as revenue originating in the area in which the sale is made
Note 2: Revenue by route region is defined as revenue derived from a route originating from Singapore with its
final destination in countries covered by the region and vice versa. For example, revenue from SIN-HKGSFO-HKG-SIN route is classified under Americas region.
Source: SIA Annual Report

Singapore Airlines IB-34

p. 48

Exhibit 16
Regional Outlook 2000-2004
Passenger Forecast Within the Far East
1999 2000(f) 2001(f) 2002(f) 2003(f) 2004(f) AAGR
(Actual)
Forecast Annual Growth Rate (%)
North East Asia-North East Asia

6.8

7.5

7.6

6.9

6.6

7.1

North East Asia-South East Asia

7.8

7.2

7.3

6.0

5.8

6.8

North East Asia-South Asia

5.2

7.4

7.3

6.5

7.1

6.7

South East Asia-South East Asia

7.8

6.8

6.1

6.1

5.9

6.5

South East Asia-South Asia

8.5

7.6

7.4

6.8

6.3

7.3

South Asia-South Asia

5.4

5.1

5.3

5.1

5.4

5.2

7.3

7.2

7.2

6.4

6.2

6.9

TOTAL

9.6

Source: IATAs October 2000 Passenger Forecast

Exhibit 17
Major Inter/Intra-Regional Growth Rates
Forecast Annual Average Growth Rates 2000-2004

Source: IATA Passenger Forecast 2000-2004

Notes: The bold figure in the box represents the forecast AAGR on the specified route area for the period 2000-2004

Singapore Airlines IB-34

p. 49

Singapore Airlines IB-34

p. 50

Exhibit 18
Forecast International and Domestic
Passengers Numbers for Scheduled Air Travel
489

1999

1,069

521

2000

1,124

550

2001

1,168

581

2002

1,214
1,262

611

2003

643

2004
0

200

400

1,308

600

800
1,000
1,200
Passengers (Millions)

International
Source: IATAs October 2000 Passenger Forecast

Domestic

1,400

1,600

1,800 2,000

Singapore Airlines IB-34

p. 51

Exhibit 19
Top Six Asia Pacific Airports
January to March 2001

In passengers
World Ranking
6
14
18
20
24
27

Airport
Tokyo (Haneda)
Seoul
Bangkok
Hong Kong
Singapore
Tokyo (Narita)

In cargo
World Ranking
3
4
6
10
16
20

Airport
Hong Kong
Tokyo (Narita)
Seoul
Singapore
Taipei
Osaka

Source: Airports Council International

Passengers (000,000)
13.75
8.61
8.13
7.99
7.04
6.74

% change
1.90
0.50
7.20
6.50
3.90
5.10

Metric Tonnes
(000,000)
0.489
0.427
0.412
0.382
0.293
0.219

% change
2.00
7.10
3.10
-3.40
6.20
2.80

Singapore Airlines IB-34

p. 52

Exhibit 20
Selected Travel Distribution Systems in 2001
C

ABACUS
x Offered travel services
from 316 airlines, 52,000
hotel properties and 50
car rental companies

C
C

C
C

SQ-e Travel
SIA

x Linked 23,300 terminals at

x 65% owned by Abacus

TA

9000 subscribers in 20
countries across the Asia- C
C
Pacific region

TA

Airlines

C
TA

Hotel
&
Leisure

International Holdings*,
35% owned by SABRE

Car

C
TA

x Strategic alliance with

SABRE (1998) and with


INFINI (1990)

TA

x Established 1988

C
C

TA

Strategic
Alliance

C
C

messages/second

TA

TA

TA
C

Airlines
C
C TA

x Established 1955 as

American Airlines
Customer Reservation
System
x Internet site

Hotels

Rail

Cruise
Lines

Tour
Operators

TA

Car
Rental

C
C

TA

INFINI
x Offered travel services to
the Japanese market
x Linked over 10,000
terminals
x Booked $45 million in
travel in 2000
x 60% owned by ANA,
40% owned by Abacas
x Established 1990

x Booked $75 billion in

travel/year

C
C

x Linked 210,000 computer

x Processed 8544

TA

from 440 airlines, 47,000


hotel properties, 50 car
rental companies, tour
operators, rails and ferry
companies

messages/day to a data
center in Tulsa, OK

TA

x Offered travel services

x Sent 270 million

TA

Infini

SABRE System

terminals at travel
agencies in 112 countries
and in airports

SIAs Booking Web


Site: SQ-eTravel
x Passengers could
C
book flights and
order special
C meals, view realtime seating plans,
book preferred
C
seating
x 66 stations around
the world
x 19,646 bookings
made in 00/01 over
the Internet.

TA

C
C

C
C

TA

C
C

C
C

Travelocity.com
connected directly to
customers
(business and consumer)
*Abacus International Holdings:
All Nippon Airways
Garuda Indonesia
Royal Brunei Airlines

Cathay Pacific Airways


Hong Kong Dragon Airlines
SilkAir

Adapted from Speeding Tickets: Internet Distribution and the


Travel Industry, GSB No. EC-34.

China Airlines
Malaysia Airlines
Singapore Airlines
Legend:
TA: Travel Agent

EVA Airways
Philippine Airlines

C: Customer

Singapore Airlines IB-34

Exhibit 21
The Singapore Girl

p. 53

Singapore Airlines IB-34

p. 54

Exhibit 21
The Singapore Girl (continued)

(cts/ltk)
(cts/ctk)
(%)

(no.)
(months)

(no.)
(million km)
(hours)
(million tonne-km)
(million seat-km)
(million tonne-km)

(000)
(million pax-km)
(%)
(million kg)
(million tonne-km)
(%)
(million tonne-km)
(million tonne-km)
(%)

(tonne-km)
(tonne-km)
($)
($)

Yield
Unit cost
Breakeven load factor

Fleet
Aircraft
Average age

Production
Destination cities
Distance flown
Time flown

Overall capacity
Passenger capacity
Cargo capacity

Traffic
Passengers carried
Passengers carried
Passenger seat factor

Cargo carried
Cargo carried
Cargo load factor
Mail carried

Overall load carried


Overall load factor

Staff
Average strength
Capacity per employee
Load carried per employee
Revenue per employee
Value added per employee
14,254
1,265,189
910,993
647,516
284,369

12,985.3
72.0

975.4
6,075.2
68.4
92.4

15,002
71,118.4
76.8

18,034.0
92,648.0
8,876.1

119
334.8
414,232

93
70

67.9
45.4
66.9

9,229.7
8,246.3
983.4
1,607.2
1,339.7
2,968.2
2,777.7

2000-01

13,720
1,233,032
877,434
607,966
291,494

12,038.4
71.2

905.1
5,668.2
68.8
107.2

13,782
65,718.4
74.9

16,917.2
87,728.3
8,244.4

118
317.7
394,224

92
62

66.0
43.7
66.2

8,341.3
7,485.9
855.4
1,641.5
1,267.1
2,816.5
3,303.7

1999-00

13,690
1,143,302
786,377
526,859
228,254

10,765.5
68.6

768.5
4,919.1
66.4
106.6

12,777
60,299.9
72.5

15,651.8
83,191.7
7,403.6

110
298.4
371,181

89
57

63.7
42.6
66.9

7,212.7
6,616.5
596.2
882.3
813.7
2,859.1
1,850.4

1998-99

13,506
1,076,107
743,196
524,012
236,828

10,037.6
69.1

735.9
4,760.9
68.9
98.2

11,957
54,441.2
70.5

14,533.9
77,219.3
6,908.6

77
274.2
345,715

86
62

67.2
43.8
65.2

7,077.3
6,284.0
793.3
1,032.3
919.5
2,846.8
1,934.0

1997-98

Exhibit 22
SIA Ten-Year Statistical Record

13,258
1,018,336
717,454
500,649
221,044

9,512.0
70.5

674.2
4,249.4
68.5
99.2

12,022
54,692.5
74.4

13,501.1
73,507.3
6,203.9

77
251.8
325,085

80
63

66.5
43.8
65.9

6,637.6
5,953.8
683.8
933.8
901.8
2,163.8
2,365.9

1996-97

12,966
962,618
668,055
490,591
210,319

8,662.0
69.4

603.8
3,820.1
68.4
89.4

11,057
50,045.4
73.0

12,481.3
68,529.4
5,585.1

77
228.5
294,880

71
68

69.7
43.6
62.6

6,361.0
5,575.6
785.4
903.3
875.9
1,779.2
1,395.1

1995-96

12,557
889,329
620,315
481,365
215,091

7,789.3
69.8

550.5
3,389.4
71.0
72.7

10,082
45,414.2
70.9

11,167.3
64,074.0
4,773.6

75
205.9
264,096

66
60

73.6
46.0
62.5

6,044.5
5,205.5
839.0
950.5
939.0
1,942.3
1,790.7

1994-95

12,363
821,451
570,962
457,462
195,276

7,058.8
69.5

483.4
2,973.4
70.3
64.3

9,468
42,328.3
71.4

10,155.6
59,290.4
4,231.3

73
188.8
241,346

64
60

76.0
49.8
65.5

5,655.6
5,111.3
544.3
733.0
722.6
1,695.5
1,835.4

1993-94

11,990
749,149
507,615
440,317
187,690

6,086.3
67.8

399.1
2,411.5
66.4
55.2

8,640
37,860.6
71.3

8,982.3
53,077.6
3,630.0

70
165.0
211,435

57
61

81.3
50.6
62.2

5,279.4
4,602.3
677.1
794.2
741.1
1,366.4
1,619.0

1992-93

11,418
667,753
466,912
457,952
218,199

5,331.2
69.6

342.8
1,954.8
67.4
55.0

8,131
34,893.5
73.5

7,624.4
47,454.3
2,898.3

67
142.3
180,744

48
61

90.8
54.9
60.5

5,228.9
4,318.0
910.9
1,085.2
920.7
1,604.7
1,620.2

1991-92

p. 55

* Total revenue and expenditure were restated for 1999-00 and prior years to comply with Statement of Accounting standard (SAS) 1 [Presentation of Financial Statements] which became effective for
financial year commencing on or after 1 January 2000. Accordingly, total revenue now includes interest income (which was previously shown in expenditure as an offset against interest expense),
and total expenditure has been adjusted to exclude interest income, and interest on borrowings which is disclosed separately after operating profit.
+
Internally generated cash flow comprises cash generated from operations, dividends from subsidiaries and associated companies, and proceeds from sale of aircraft and other fixed assets.

($ million)
($ million)
($ million)
($ million)
($ million)
($ million)
($ million)

Financial
Total revenue*
Total expenditure*
Operating profit
Profit before tax
Profit after tax
Internally generated cash flow+
Capital disbursement

Singapore Airlines IB-34

Singapore Airlines IB-34

p. 56

Exhibit 23
SIA Staff Strength and Productivity

Category
Senior staff (administrative and higher
ranking officers)
Technical crew
Cabin crew
Other ground staff
Location
Singapore
Africa and rest of Asia
Europe
South West Pacific
Americas

Source: SIA Annual Reports

2000-01

1999-00

% Change

1,304
1,589
6,436
4,925
14,254

1,247
1,504
6,075
4,894
13,720

+ 4.6
+ 5.7
+ 5.9
+ 0.7
+ 3.9

11,282
1,618
603
419
332
14,254

10,081
1,594
585
408
332
13,720

+ 4.5
+ 1.5
+ 3.0
+ 2.6
+ 3.9

$M
% $/ATK $M
change
1,767 21.4 0.10 1,210 16.2
46
1,347 16.3 0.07 1,202 16.1 12.1
1,055 12.8 0.06 1,118 14.9 -5.6
289
3.5 0.02
229 3.1 26.4
926 11.2 0.05
866 11.5
6.9
891 10.8 0.05
839 11.2
6.3
520
6.3 0.03
519 6.9
0.1
498
6.0 0.03
484 6.5
2.7
483
5.9 0.03
521 7.0 -7.3
470
5.8 0.03
498 6.6 -5.3
8,246 100.1 0.454* 7,486 99.9 10.2
%
14.6
17.4
16.6
11.8
12.0
7.5
6.8
7.8
5.6
100.0

$M
953
1,134
1,082
767
785
488
443
511
363
6,526

26.9
7.8
3.3
37.3
12.8
6.8
6.4
9.3
2.0
92.5
13.2

change

Exhibit 24
SIA (Airline) Expenditure Composition

722 11.6
716 11.5
445
7.2
404
6.5
472
7.6
243
3.9
6,214 100

6.2
9.7
9.6
9.8
8.3
49.2
5.0

$M
% change
1,065 17.1 -10.5
1,174 18.9 -3.5
973 15.7 11.2
665
678
448
365
483
233
5,866

$M
1,005
1,091
898

Note 1: Sales costs include commission and incentives payable, frequent flyer programme costs and advertising expenses.
Note 2: Other costs include departmental expenses, crew expenses, aircraft license insurance, hire of aircraft and equipment,
company accommodation costs, communication expenses, provisions for dimunition in value of investments, net interst receiveable and
loss on exchange.
Note 3: Values in Singapore dollars.
* Due to adjustments for airline expenditure due to internal accounting.

Expenditures
Fuel Costs
Staff Costs
Depreciation charges
Rentals on lease of aircraft
Sales costs
Handling charges
Inflight meal and other passenger c
Landing, parking and overflying cha
Aircraft maintenance and overhaul c
Other costs

Singapore Airlines IB-34

%
17.1
18.6
15.3
0.0
11.3
11.6
7.6
6.2
8.2
4.0
100

p. 57

Singapore Airlines IB-34

p. 58

Appendix A
The Worlds Top 25 Airlines
In RPKs
Rank

Airline

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

United
American
Delta
Northwest
British Airways
Continental
Air France
Japan Airlines
Lufthansa
US Airways
Singapore
Southwest
Qantas
All Nippon
KLM
Cathay Pacific
Air Canada
TWA
Thai Intl
Alitalia
Korean Air
Iberia
Malaysia
Swissair

25

America West

In operating revenue
No. of RPKs
(000,000) Rank

Rank

Airline

Airline

204,235
187,600
173, 486
127, 317
118,890
103,235
91,801
88,999
88,606
75,728
70,795
67,924
67,486
62,592
60,327
47,153
57,374
43,791
42,395
41,433
40,532
40,049
37,939
34,246

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

AMR Corp.
UAL Corp.
Delta
FedEx
JAL Group
Lufthansa Group
British Airways
Northwest
Air France Group
All Nippon Group
Swissair Group
Continental
US Airways
Air Canada
KLM
Southwest
Qantas
Alitalia Group
Singapore
SAS Group
Cathay Pacific
Iberia
TWA
Airborne Express

30,753

25

Korean Air

In passengers

$19,703,000
19,352,000
16,741,000
15,596,508
13,487,000
13,356,240
13,230,428
11,415,000
10,790,000
10,129,000
10,076,424
9,899,000
9,248,000
6,197,795
6,115,752
5,649,560
5,486,847
5,146,000
5,113,254
5,054,000
4,426,194
3,793,348
3,584,638
3,275,950

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

3,089,272

25

In FTKs
Pass.
(000)

Rank

Airline

105,723
86,280
84,521

1
2
3

FedEx
Lufthansa Cargo
Korean Air

63,678
60,636
58,722
49,887
46,896
41,300
39,204
38,261
33,857
26,697
26,392
24,543

4
5
6
7
8
9
10
11
12
13
14
15

20,836

17 America West
18 Thai Intl

In operating profit

Op. revenue
(000)
Rank

Airline

In net profit
Op. profit
(000)
Rank

Delta
$1,637,000
AMR Corp.
1,381,000
Southwest
1,021,145
FedEx
999,353
Lufthansa Group
914,727
Continental
684,000
Cathay Pacific
678,103
UAL Corp.
654,000
All Nippon Group
651,000
JAL Group
622,500
Northwest
569,000
Singapore
544,804
British Airways
541,880
Qantas
491,761
Swissair Group
374,397
SAS Group
325,000
Air France Group
307,000
KLM
243,400
Atlas
232, 704
Air Canada
176,260
China Airlines
144,914
China Southern
142,810
Emirates
121,488
Varig
116,964
Atlantic
Southeast
116,570

In employees
FTKs
(000)

Net profit
(000)

Airline

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Delta
AMR Corp.
Singapore
Cathay Pacific
Southwest
Lufthansa Group
FedEx
Air France Group
Continental
JAL Group
All Nippon
Qantas
SAS Group
Northwest
British Airways
Lufthansa Cargo
Iberia
Emirates
Thai Intl
China Airlines
Atlas
Finnair*
Atlantic Southeast
KLM

25

China Southern

60,647

In fleet size
No. of
employees Rank Airline

No. of
air craft

Rank

Airline

11,388,657
7,666,000
6,573,000

1
2
3

101,814
101,199
80,390

1
2
3

American
FedEx
Delta

717
662
605

UPS
Singapore
Air France
Japan Airlines
British Airways
China Airlines
Cathay Pacific
KLM
Cargolux
United
Northwest
EVA

6,336,400
6,020,319
4,979,630
4,607,013
4,563,970
4,133,557
4,108,239
3,964,270
3,812,837
3,693,774
3,651,460
3,558,248

4
5
6
7
8
9
10
11
12
13
14
15

United
American
Delta
Lufthansa
Group
Air France
British Airways
Northwest
Continental
US Airways
Air Canada
KLM
Qantas
Southwest
Iberia
Thai Intl

69,523
59,000
54,030
53,889
53,400
45,833
45,000
30,159
30,000
29,274
26,814
24,148

4
5
6
7
8
9
10
11
12
13
14
15

United
Northwest
US Airways
Continental
Southwest
British Airways
American Eagle
Lufthansa
Air Canada
UPS
Air France
TWA

604
429
418
372
344
288
261
243
242
239
231
186

16

American

3,328,800

16

24,000

16

17
18

2,673,260
2,598,273

17
18

21,687
20,800

17
18

166
164

19 Air Canada
20 China Southern

17,655
16,800

19
20

Delta
Asiana
Malaysia
Airlines
Martinair

Japan Airlines
Continental
Express
America West

171

19,954
18,038

Saudi Arabian
Malaysia
Airlines
Pakistan

2,559,164
2,355,500

19
20

Alitalia
Indian

20,770
20,607

19
20

Iberia
SAS

159
155

Malaysia
Airlines
KLM
Singapore
Swissair
Alaska

16,561
16,234
14,874
14,238
13,525

21
22
23
24
25

Nippon Cargo*
Swissair
Thai Intl
Polar
Air China

2,162,895
1,935,610
1,714,488
1,658,572
1,650,883

21
22
23
24
25

TWA
SAS
Swissair
EgyptAir
Japan Airlines

20,136
20,000
19,100
18,000
17,793

21
22
23
24
25
25

Alitalia
All Nippon
Saudi Arabian
Comair
Aeroflot Russian
Atlantic Southeast

146
140
126
121
112
112

1
2
3

Delta
American
United

4
5
6
7
8
9
10
11
12
13
14
15

Southwest
US Airways
Northwest
All Nippon
Continental
Lufthansa
Air France
British Airways
Japan Airlines
Alitalia
TWA
Iberia
Japan Air
System*

16

21
22
23
24
25

$828,000
813,000
742,221
641,691
625,224
605,424
519,322
369,933
342,000
324,722
318,000
312,035
295,000
256,000
213,900
200,256
157,287
114,736
113,656
89,205
85,259
77,941
74,806
67,660

Source: Adapted from The World Airline Report, Air Transport World, July 2001, p.54. Note: ATWs source: direct airline reports. Financial
data are for carriers most recent financial year as of 2001. *Partial.

Singapore Airlines IB-34

p. 59

Appendix B: Terminology of the Airline Business


Revenue Passenger Kilometers (RPK):
The way passenger traffic is measured: one passenger carried one kilometer. Traffic and RPKs are synonymous and
the terms are used interchangeably. The presumption is that the passenger paid for the trip, thus the use of the word
"Revenue". Some passengers dont pay, such as those using frequent flier miles, but they are counted the same way.
Available Seat Kilometers (ASK):
This is the definition of passenger capacity, and it is one seat flown one kilometer, whether or not it is occupied by a
passenger. Computed as the product of seat capacity times distance flown.
Available Tonne Kilometers (ATK):
Overall capacity measured in tonnes available for the carriage of passengers, cargo and mail on route stage
multiplied by the route distance.
Revenue Tonne Kilometers (RTK)
Traffic volume measured in load tonnes from the carriage of passengers, cargo and mail on route stages multiplied
by route distance.
Load Factor:
Load factor is the percentage of RPKs to ASKs and is a key measurement of how efficiently the airline is utilizing
its capacity. In general, higher is better but there is a limit beyond which the airline will turn away, or spill,
passengers to its competitors and not have seats available for last minute business travelers who are prepared to pay
the highest fares for that seat. Since the real objective is to maximize revenue, not seat occupancy, the optimum load
factor becomes the highest that can be obtained while spilling as few passengers as possible. Once an airplane leaves
the airport gate, empty seats represent inventory lost forever so the art of inventory management is one of balancing
the perishable nature of the seat against the desire to have last minute product available for the premium buyer.
Sophisticated yield-management software is used to optimize the load factor .
Yield:
The amount of passenger revenue received for each RPK. It is a weighted average price and is expressed in cents.
Yield does not represent the price paid by anyone, just the average amount paid by all passengers and measures only
passenger revenue, not cargo revenue.
Unit Cost or Cost per ASK (CASK):
The cost of producing one ASK, expressed in cents. It is derived by dividing total operating expenses by total ASKs.
Breakeven Load Factor:
Determined by dividing total operating costs by total revenue and multiplying the load factor required for revenue to
equal costs by the quotient. For example, if revenue is $100 and costs are $90 the quotient is 0.9. Assuming the load
factor is 60%, the breakeven is 54% (60 times 0.9). A short form of this is to multiply the load factor by the
operating ratio.
Operating Ratio:
Most industries describe earnings before such non-operating factors as interest on debt, currency gains or losses and
income taxes, as the operating profit margin. Airlines use 1 minus this ratio and call it the operating ratio; thus a
10% operating profit margin becomes, in airline terms, a 90% operating ratio.
Freight Tonne Kilometer (FTK):
The way cargo traffic is measured: one tonne flown one kilometer.
Compiled from Edmund S. Greenslet, The Airline Monitor Group, Airlines 101- A Brief History of the Airline and
Commercial Aircraft Industries, http://www.airlinemonitor.com/ (November 6, 2002) and R. Bruce McKern,
Evolving Strategies in the International Airline Industry, Technical Report No. 77, Stanford Graduate School of
Business, August 1990.

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