Singapore Airlines, a world-class airline that is in a difficult situation, what are their options or ways to survive amidst the problems of the airline business? But first, let’s take a look at the overall picture of the airline business or the aviation industry.
Will the airline business or aviation industry remain sluggish for a long time?
This is a difficult question to answer, even though today we have heard news that there will be a COVID vaccine coming out. Because both Moderna and Pfizer vaccines are still in the process of requesting approval from the FDA (US Food and Drug Administration) and the effectiveness of both drugs is not 100% in preventing COVID-19. So let’s just wait and see if the vaccines will actually work and when will they be available for use?
Due to the time frame factor, we ourselves do not know when, so there is no clear answer as to how the airline business or aviation industry will cope with this situation.
Looking back, at the beginning of 2020, the number of daily commercial flights was at its lowest in early April 2020 because of the situation at that time. Many countries banned both domestic and international flights. In our country, we have only recently allowed domestic flights. International flights were not yet fully operational. Only inbound tourist flights were allowed (special tourists).
However, the number of daily commercial flights has been steadily increasing due to the progress of health measures and the arrival of vaccines, but it has not recovered as quickly as desired.
With the cost problems that must be borne, the income that used to be has shrunk. If the situation continues like this, what should the airline business or the aviation industry do?
Reducing expenses, reducing employee salaries, laying off employees, or selling company assets are just measures that help extend the period or extend the time for the company to continue. But if there is no income, in the end, the money will run out anyway. It is inevitable that the company will go bankrupt and close down.
Alternatives for survival: Singapore Airlines’ new mindset and business
On November 3, Singapore Airlines (SIA) officially announced the launch of a new business called “ Singapore Airlines Academy (SAA) ”, a training service for organizations or companies interested in Customer Service and Cricis Management.
The starting point of SIA’s new business was based on customer demand and the use of its own resources.
Vanessa Ng , Senior Vice President of Human Resources, said, “ SIA has received many contacts from many organizations. Many of them want to learn from us about how we have become a leader in the hospitality industry. They want to know what SIA’s operational excellence is, as well as Organizational Innovation and Digital Transformation. How has SIA achieved success? ”
The airline business is already a highly competitive business, which requires employees of all departments to have excellent skills and experience. Otherwise, SIA would certainly not have been able to lead it to become a world-class airline in many aspects for many years in a row.
And with the accumulated and existing capabilities and skills within the organization, as well as many world-class awards as proof, this is an opportunity for SAA, which will be another business that can generate income for SIA from next year onwards.
SAA offers both consulting program and training program in two categories: Service Excellence Program and Innovation and Digital Program.
- Under the Service Excellence Program, there will be effective communication, mindfulness, handling challenging customers, or other related matters. The goal of this program is to improve service and create service strategies for the organization.
- For the Innovation and Digital Program, the focus will be on creating innovation within the organization, including finding various solutions to enhance the organization’s operational excellence.
All instructors for both programs are SIA staff who are certified instructors and facilitators and have real-world experience.
Singapore Airlines’ ongoing problems
As we all know, international travel is now almost paralyzed. If any airline can fly domestically, they can still make some money. But for Singapore Airlines, it’s even worse. SIA is one of the few airlines that only provides international flights (Singapore is an island, so it doesn’t need a domestic airline. Just the Skytrain can take you all over the island). The main source of income comes from international flights. When there are no flights, there is no income. As a result, the company suffered a loss for the first year in its history.
Although in the past, unnecessary cost-cutting measures were implemented, it was not enough. Or, to earn income from using A380 aircraft as a plane restaurant, even though many people are interested, it still cannot compensate for the huge amount of lost income.
Diversification is a choice for survival.
Do or Die … Fight or give up, this is a business game. This impact is a big warning sign that is telling us that if businesses, or even at the level of employees themselves, can no longer rely on a single source of income from a single thing, the matter of uncertainty is real.
Diversification is an option to find a way out because doing this is spreading the risk of the organization or oneself to open up opportunities to generate income from new channels. A clear example is the case of Singapore Airlines.
- SIA uses its Core Competencies. They already have people, expertise, and knowledge as capital. Everyone is capable, experienced, and works in an industry with high competition and change.
- SIA brings those people (experts, trainers or facilitators) to support the new business model, which is Singapore Airlines Academy (SAA). In this case, the people are already there, the knowledge is already there, no need to invest more.
What about SAA’s opportunities and income?
Originally, SIA taught each other or taught the aviation business group. It was not difficult to expand the customer group to teach organizations and companies. Since SIA has a reputation and awards to prove it, it is certain that many organizations or companies would definitely want to come and study with them.
Regarding income, there is no estimated income data for SAA, but if we look at the market value of the training market, from data from Training Industry, it is stated that the estimated budget spent by organizations and companies on training in 2019 worldwide is $370.3B, divided into North America $169.4B and the remaining $200.9B. It is unbelievable that the training market, just the remaining $200.9B, excluding the market in North America, is already enormous. (This figure only presents the budget paid by companies and organizations.)
If compared to the total market value of commercial airlines in 2019, it was also worth $801.73B. In 2019, Singapore Airlines had revenue of around $11.92B. In terms of market share, it was only around 1.5%.
Will SAA do well in the $200.9B training market?
Although the market is very big, it does not mean that it is easy to get there. However, do not forget that SAA has an advantage: it can teach and lecture in many languages, such as English and Chinese. Therefore, language is another advantage that will make the SSA business grow easily.
In terms of location, Singapore, once COVID is over, is convenient and easy to travel to, plus it is very safe. It can become a training hub in the future.
In terms of competition, it is certain that companies in the training service industry will certainly have their worries. SAA may seem like a new player, but it is not an inexperienced player. SAA’s entry into this market will certainly create changes in the training industry. It is possible that many companies in the same situation as SIA will turn to play in the training market.
We will have to wait and see how much revenue this strategic move of SAA’s business diversification amidst the many problems will generate for Singapore Airlines. Will it become a successful business? We will have to wait and see.
The conclusion of this story
We must accept the vision of SIA’s executives and their courage to adapt and change this time. The important thing is that SIA has used its existing resources and capabilities, coupled with the channels and opportunities they have encountered, to create another new business.
For working people, this is another example that shows the change to spread risk. Because if you rely on only one source of income or rely on the same skills anymore, it will definitely not happen.
It’s time for us to re-evaluate ourselves, both employees and organizations, and look for new businesses that can use our or our organization’s resources to further develop into new businesses or new jobs, etc.
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