The Singaporization of the International Airlines’ Hospitality: The Case of Singapore International Airlines’ Spirit of Service Excellence Nour Eddine Chiadmi Associate Professor in Services Marketing Tourism Management Groupe Sup de Co La Rochelle 102, rue des coureilles 17000 La Rochelle [email protected] om Jun 2011 Abstract – CEREGE In a rough-and-tumble world of fierce airline competition, where multiple factors such the perishability of seats, seasonality of demand, combined with uncontrollable kerosene prices as well as unforeseen political and natural disasters inject additional evels of complexity, one company managed to make healthy profits year in year out while major conventional airlines leaders failed to avoid loss for almost a decade. Welcome aboard Singapore International Airlines, where brand name is associated primarily with service excellence and deep customer focus.
Singapore (the country) and Singapore Airlines as its flagship have banded together to form what is commonly called “singaporization”, characterized by a strategic flexibility which leads to service innovation and creativity. Branding and service will be key competitive dvantages for differentiating airlines in the future. The aim of our research is to attempt to explore how this world-class service organization translates a complex multi-faceted strategy into a clear, effective, and sustainable success story.
Why did SIA succeed where other aviation world giants failed? This study will also attempt to determine whether SIA’s service excellence system can be transferable to other airlines companies and identify the conditions and boundaries of such a practices assessment. In addition, an in-depth interview with a SIA’s senior executive was conducted. Recommendations were made to assist for an understanding of the secrets of SIA’s success. Hopefully, some useful lessons can be adopted from this study.
Finally, this case study examined the extent to which some key elements from SIA’s successful services’ culture might not be transferable to other international airlines. Keywords: Singaporization, Asianess, Airlines’ Hospitality, Service Excellence, Human Capital, Co-creation Travel Experience, Airlines Strategies, Service Innovation, Strategic Flexibility, Transferability, Case Study Table of Contents Introduction 4 The International Air Transport industrys context 5
Singapore international Airlines’ spirit of hospitality 7 Background of Singapore International Airlines History 7 The Singapore Girl brand 8 An interview with Mr Harry Chu 9 The transferability of Singapore International Airlines’ service excellence Conclusion 12 References 15 Introduction 11 Service quality is the core of the airline business, hospitality and tourism industries. If we deliver a high quality service by high trained professionals employees, we respond to the evolving latent customer needs.
Many successful Asia-based hospitality businesses have succeeded to build an Asianess brand, which has been ifficult to define in a unified and simple way; however, some hospitality businesses have attracted attention to their strong sense of Asianess and features. Singapore as a country along with Singapore Airlines’ model has formed what is commonly called “singaporization”. This research, therefore, aims to explore what aspects are viewed as being the most successful in Singapore Airlines’ model, having established itself as a world-wide recognized institution and having been awarded for years for its service excellence.
The term ‘Singaporization’ stands for, first and foremost, the improvement f its people’s living standards. It’s a life style which is wished by many societies that dream to implement it in their own countries. It is a component of the Asianess paradigm; Singapore International Airlines is the flagship of this Singaporization, which, in turn, is also a part of the Asianess’ successes. Tourism and hospitality researchers have initiated a discussion about the notion of Asianess, but still little attention has been paid to this topic.
Additionally, this case study suggests that the understand the uniqueness of its organizational culture, its service’s philosophy and ts human capital strategy, which, together, form the core of its success. The transferability of this model to other international airlines around the world is dependent upon how uniquely a corporation forms its own culture and how human beings are willing the scarify some of the local issues and adopt a hybrid culture. Thus, the success of Singapore International Airlines in the global air transport environment can be attributed to Singapore and Singapore Airlines’ spirit and strategy.
The International Air Transport industrys context The air transport industry contributes more than $ 1400 billions to the world conomy, which is around 14% of USA’s GPD, and 90% of France’s GPD. Its employs 29 million people from around the globe. Over the past decade, carriers have increased their energy efficiency by 21%, the productivity of the workforce has increased by 54%, the unit distribution costs have decreased by 58% and general costs not related to fuel have dropped by 10%.
Consumers have benefited from a reduction of 30% of the price of air tickets. In the meantime, Airlines find themselves in trouble, suffering economic downturn and especially the surge in oil prices. In 2008, Cathay Pacific, a Hong Kong company, lost more than 80 million U. S. dollars. Air France-KLM, a French- Dutch company, announced a decline in net profit in the first quarter of that year, along with British Airways announcing a fall of 88% of its operating income, while Lufthansa reported a 20% decline in net profit it the following quarter.
In 2009, there have been few companies that have made profits with the decline in traffic 2010 will also inevitably be a difficult year for players in the aviation industry, primarily to airlines although an upturn should appear. These few examples clearly reflect the oncern of the International Air Transport Association (IATA), which announced a loss of over 5 billion U. S dollars in 2008 for the Airlines due to sharply falling demand. Worse, according to them, the first part of 2008 saw 25 companies go bankrupt world- wide.
Major airlines react to this serious situation with particular recovery plans: the Air France KLM Group has decided to exercise greater control over employment, the hiring freeze, the elimination of positions while strengthening its competitiveness plan “Challenge 10”, with the goal of achieving 190 million Euros in additional savings. Cathay Pacific has announced a program to reduce its costs. It is the same for most U. S. airlines which are reducing their capacity. As a result, several consequences penalize all stakeholders and trigger a reduction in choices for passengers along with lower quality service in some cases.
To support these objectives, most companies make their IT investments a priority. The largest component of this revolution is the services offered to passengers. In this regard, efforts include IT equipped fleets. In Europe, 31% of companies hope to offer Internet on board their flights. Asia has that rate reaching 73%. Additionally, 20% of European airlines intend to propose on-board telephony within two years. This means that the Furthermore, airlines companies are facing stagnating markets, fierce market share competition resulting in a decline of their attractiveness, and challenges in the management of customer relationship satisfaction.
The operators’ survivability depends on their willingness to adopt deep restructuring in their relationship with their customers. “As consumers are increasingly gaining power and control, organizations today have to enter into a dialogue with them and help them co-create their own experience. Customers are no longer considered as receivers of value, products and/or services provided by companies. Rather, customers are regarded as active partners in the production process “(Bettencourt 1997; Wind and Rangaswamy 2001; Prahalad and Ramaswamy 2000; Hamel 2002; Bendapudi and Leone 2003; Mooney and Rollins 2008).
In this sense, customers have shifted their role from the one of receivers of services and products to the one of part time employees or co- producers (Von Hippel 1998; Honebein and Cammarano 2006; Pini et al, 2008). Since the beginning of the twenty first century, the literature on consumer experience has een growing fast and the debate among scholars and practitioners is fervent. Many authors have argued that western societies are moving from the “service economy’ to the “experience economy’. This new concept considers the importance of emotions and the meaning to them.
In such conditions, personal transformation results in the produced experience. (LaSalle and Britton, 2003. Schmitt, 1999) argue that: “this experience is strictly personal and implies the customer’s involvement at different levels (rational, emotional, sensorial, physical and spiritual). Its evaluation depends n the comparison between a customer’s expectations and the stimuli coming from the interaction with the company and its offering in correspondence of the different moments of contact or touch-points (Lasalle and Britton, 2003. Shaw and Ivens, 2005).
Some studies proved that both sides of the created value are necessary, it is important to deliver an adequate balance between utilitarian and hedonic values to the customer. According to C. K. Prahalad and Venkatram Ramaswamy (2007), companies spent the 20th century managing efficiencies. They must spend the 21st century managing experience. Today, businesses have to continuously reinvent themselves if they want to adapt to complex and dynamic market realities. Globalization makes it difficult for firms and organizations to differentiate themselves from competitors.
Technology provides interaction spaces and creates a new consumer, well informed and introduced into networks. Dialogues and interactivity between equal partners, being engaged with each other and listening to each other, replace the traditional top down approach. Few companies have succeeded to survive and distinguish themselves from the international competition. Singapore Airlines has taken long strides forward in this field and has thus become an icon providing valuable lessons to the traditional airline industry giants around the world.
Singapore international Airlines’ spirit of hospitality Service quality is the essential in the hospitality and tourism industries. If we delivery a high quality service by high trained professional employees, we respond to the evolving latent customer needs. According to Mr Raymond Bickson, CEO of Taj Hotels Resorts & Palaces: “a recent survey stated , on average, a guest comes in contact with hall… hat’s 42 opportunities or moments of truth where the experience is made and your brand determined” (reproduced By David Eisen, 02 August 2010; from US publication Luxury Travel Adviser).
Singapore International Airline understood this phenomenon and made it the reason for its survival. Background of Singapore International Airlines History Singapore Airlines (SIA) began in 1947 as Malayan (Later Malaysian) Airlines, a Joint venture association between the Malaysian and Singapore governments, operating mainly as a regional airline in the South East Asia. In 1965, Singapore separated from Malaysia, and later, the two governments agreed to set up two separate airlines. As a result, Singapore Airlines was born in 1972.
Due to its geography and the size of its territory, Singapore airlines was forced to skip the step normally taken at this time by air operators to start their operation: domestic flights. As such, it pursued its activities internationally, operating routes between Singapore and the neighbouring countries. They came to the market as an independent airlines company and started “competing with international airlines for routes, getting access to airports, securing lights slots and landing rights, and attracting a new customer base”. (Martin Roll- Business & Brand Strategist, in “Asian Brand Strategy’.
Award by Best Business Books 2006). As Singapore Airlines experienced a heavy competition since the start of its operations, the organization created a driving spirit focus on the branding using a differentiation strategy from the start of its activities. This differentiation is based on 4 strategic attributes, namely providing service excellence cost-effectively, innovating in both a centralized and a decentralized manner, being a technology leader and a ollower, and achieving standardization and personalization in your processes. These are well maintained and carry the company’s non-negotiable strategy: Innovation.
Singapore Airlines was the first to introduce hot meals, free alcoholic and non- alcoholic beverages, hot towels with a unique and patented scent, personal entertainment systems, and video on-demand in all cabins, updated its technology to enhance cost efficiency and marketing positioning. SIA has the youngest fleet of aircrafts (the first Airline to fly with the A380 in 2006, SIA also flew the Concorde etween Singapore and London in collaboration with British Airways), genuine quality and excellent service personified by the infamous trade mark: “The Singapore Girl”.
The Singapore Girl brand The Singapore Girl, concept of a stewardess-driven service culture. Genuine SIA cabin crew were used to promote uniqueness of Singaporean service excellence defined setof aesthetic and warm personality traits as being representative of SIA’s style of service. It is the icon of Singapore Airlines’ hospitality. It refers to the high standing services provided not only in-flight but also on the ground by male and female cabin rew members. The Singapore girl symbolizes “the Asian values and hospitality, and could be described as caring, warm, gentle, elegant and serene.
It’s a brilliant personification of SIA’s commitment to service and quality excellence. ” (Martin Roll – marketing scope becomes so legendary that Madame Tussaud’s Museum in London started to display the Singapore Girl in 1994. “It is one of the most recognisable trademarks despite some criticisms of sexism and subservience in the image”( Alvin Chua, Singapore Airlines, written on 2010-08-05, National Library Board Singapore) . The social status of the Singapore Girl has become an institutional reference in Asia, providing Singapore Airline with a selective and quality recruitment reputation.
To be identified as a Singapore Girl became a dream for many young people in Asia and around the world. An interview with Mr Harry Chu To provide a greater understanding of the SIA phenomenon, we decided to interview an executive from Singapore Airlines to have their own perception of their Brand. Mr Harry Chu, PR Manager at Singapore Airlines has been kind to answer to our following questions: Thank you, Mr Harry Chu, for accepting to highlight the istinguished Singapore Airlines’ strategy. Your contribution to this research is highly appreciated.
QI: How has Singapore Airlines championed business success through brand excellence (i. e the “Singapore Girl” campaign)? Mr Harry Chu: Singapore Airlines (SIA) has always positioned itself as an exclusive, modern, premium global airline of Asian origin that offers our customers the best in-flight service and products in the world. Q2: What is Singapore Airlines’ art of delivering great customer service? Mr Harry Chu: At Singapore Airlines, we believe in listening to our customers and we do so via arious means such as focus groups, surveys and feedback letters.
We rely on external expertise in some areas to help us pinpoint trends that may impact our customers’ tastes and preferences, such as in the area of in-flight dining, where we have the help of our International Culinary Panel and Wine Panel (more information on the Panels available on our website at singaporeair. com). Q3: How does your staff keep itself at the forefront of these areas of activity? What is Singapore Airlines’ philosophy for motivating employees to go above and beyond and to sustain the service culture?
Mr Harry Chu: We are also unstinting in our investment in training programmes for our service staff to meet the needs of our increasingly sophisticated customers. All these measures ensure we do not deviate from our objective since founding – which is to provide air transportation services of the highest quality. Branding and marketing may be important, but the best campaign in the world cannot stand on its own for long if these ideals and standards of customer satisfaction are not upheld consistently on the ground. Q4: How does Singapore Airlines succeed in managing its four paradoxes?
Mr Harry Chu: In the spirit of offering an “in-flight service that even other airlines talk about”, SIA has introduced many industry-leading innovations over the years. These include: First to offer a choice of hot and cold beverages, including alcohol, in the late 1940s when the Airline was known as Malayan Airways Limited. Free headsets, a choice of London to Singapore in 1984. First to introduce satellite-based in-flight telephones or the KrisFone in 1991. Introducing Kris World, a state-of-the-art in-flight entertainment and communications system across all three classes in 1996.
Being the first to introduce audio and video on demand on our flights from 1997. Taking in-flight dining to new heights with the setting up of the International Culinary Panel or ICP in 1998. The panel of renowned chefs meets twice a year to advise the Airline on culinary trends and design meals for passengers in all classes. First to introduce Book the Cook service on First and Raffles (business) Class in 1998. It is a meal service that enables our customers to place a meal order in advance from an extensive selection of Asian and Western meals.
Many of these meals are specially created by the ICP. Introducing the widest lie-flat business class seats, or the SpaceBeds, on all intercontinental, long haul flights. The revolutionary lie-flat bed in SIA’s Raffles class took its first flight on our London route in May 2002. Q5: How does your organization create and sustain a culture and environment to deliver these activities to customers? And what are the behaviors and the core competencies that serve as the foundation of your service excellence strategy?
Mr Harry Chu: To stay ahead in the competitive landscape, we will continually look to enhance our service delivery and maintain our unwavering focus n placing our customers’ needs first, both on the ground and in the air. Together with constant product innovation, our modern fleet and an extended global network, we ensure that our customers have the best travel experience and SIA continues to be a great way to fly. Singapore International Airlines’ (SIA) service excellence is an inspiring and pedagogical management case which attracts much attention.
As the airline industry is the most global activity, any and all innovation is seen, observed and often quickly copied and challenged. Thus the issue of transferability of Singapore Airlines’ service anagement will continue to be of relevance to airlines companies. Furthermore, implementing service excellence establishes a direct link between the employees’ involvement and successful competitive strategies. In order to compete efficiently and effectively in their markets, airlines companies need to implement service excellence to ensure both internal and external customer satisfaction.
A strong company culture that values employees can help achieve motivated contact employees, customers satisfaction, high performance and distinctive company’s competitive advantage. Although, the transferability of SIA service xcellence to other international airlines operators might affect its efficiency. All SIA service excellence transfers have to be based on three key successes if they are to remain sustainable: The top management’s commitment; they will please your customers. To not take care about your staff translates to customer loss.
Empowerment of the front- line staff will allow quick service recovery: “Staff performance is a function of ability and motivation. Reward systems are the key to motivation, and service staff must get the message that they will be recognized and rewarded for providing quality service. A monitoring and rewarding strong service performer is also one of the most effective ways of retaining them”; Customer- oriented culture. A supportive institutional context is also extremely vital to success in this sensitive and tough industry.
Not any country can offer serene social, political and cultural atmospheres for doing business. Singapore, however, can afford such claims. Airline companies around the world suffer from a lack of independence in management and decision making, as they are either under national political influence or under the influence of stakeholders aiming for rapid return on their investment. Innovation and creativity need long term strategy horizons. Conclusion The airlines industry is witnessing an important and dramatic shift. Major world airlines are facing severe changing waves.
The low-cost carriers have changed customer behaviors, even the former high contribution consumers have become mainly preoccupied by prices while seeking high standing services. No operator can control the rapid exponential evolution of the business. There have been major shakeouts and loose consolidation among premium, full service players and wide expansion in the low-cost carrier market as well as in the closely regulated Asian irspace. Air travel has become a commodity and most major routes are saturated with fierce competition.
In a global context where products and services are virtually identical, customers are getting empowered by the IT revolution while competition is getting fiercer and fiercer. The future challenges in the airlines industry will revolve around the ability to establish a competitively distinct strategy. Thankfully, as long as regional cultures remain, airline services will be able to distinguish themselves. Sensory marketing could be of great help to insure these distinctions (the costume, the food, the music, smells… or in other words, these particular life styles. Service differences will enable airlines companies to shift from a product and service centric to an experience centric, based on human creativity and the respective local culture. According to Cathay pacific: “A great flight is not Just about providing a smooth check-in, good food and comfortable seats, it is about anticipating what a customer wants before they need to ask a true long-term differentiation between ourselves and our competitors is the unique service style provided by our staff.
Our research has shown that service has an even greater impact on passengers’ perceptions than he product we offer”. (Cathay Pacific Airways Limited – Company Perspectives/ Profile, 2009). Singapore Airlines strongly embedded positioning and commitment to the brand has positioned it well to compete in the new landscape. It has shown that adaptability to particular needs and environments is a must to insure high quality services tailored to different consumers’ latent needs.
The national culture and nature of the service excellence’s transferability and the latter could be achieved with the respect of regional cultural specificities and the maintenance of a global igh standing service excellence, providing multilingual in-flight attendants, catering varieties according to religious and medical customer particularities, adaptable entertainment programs, special attentions during special occasions (i. e. hearing “Merry Christmas” would greatly please Christian passengers from the Captain upon landing, or “happy honeymoon” to a newly married couple reaching their destination of choice).
Personalizing random in-flight experiences creates a surprise that enhances the customer’s satisfaction, as its reach his/her latent needs. A key conclusion drawn from this research is that: “The core competence of Singapore International Airline’s cost-effective service excellence, and the culture values supporting it, are ingrained into both the hearts and minds of employees as well as into organizational processes. This may help explain why SIA’s competitive advantage has been sustained for decades.
While it is easy to copy single elements, it is much harder to reproduce an entire, self-reinforcing, activity system”. (Loizos Heracleous, Jochen Wirtz & Nitin Pangarkar; in “Flying High in a Competitive Industry: Cost-Effective Service Excellence at Singapore Airlines” edition Mc Graw Hill, 2004). Questions: ) What evaluation can we make of the Singapore International airlines’ service strategy? 2) How can we explain the success of this strategy? 3) Is the service excellence, an important marketing differentiator factor?
Explain 4) Which role plays the culture in the transferability of the SIA’s spirit of service? Explain 5) To which extend SIA’s Human Resources strategy explains the excellence of its service? 6) Which are the risks for SIA to lose this competitive advantage? Explain 7) Which recommendations could be done to SIA to keep it’s distinguish world position sustainable? References Ahmad Mahdzan. A (2006). Singapore Airlines Limites: Building A Culture of Service Excellence. mahdzan. com/papers/sia/SlNGAPORE_AlRLlNES. pdf Bickson, R. CEO, Taj Hotels Resorts and Palaces’ interview, (2010, August 02).
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