Bargaining power of CustomersConsumers bargaining power is very strong due to they can choose another airline easily because a lot of airlines in the world, especially budget airlines. Luxury travellers are willing to pay higher prices in return excellent services with comfortable trip is main concern.
Common travellers are more demanding about the price than services. Since Kris flyer program had been promote to retain customer loyalty and in addition add on services like sky spa, in-flight massage treatments and jacuzzi in the air will be more attractive.Singapore visitor and tourism arrivals are keep increasing year by year and mostly from China and India.
They usually buy air ticket from travel agency and should be change the reward incentive instead of a zero commission policy by SIA to travel agency to make it full capacity.Bargaining power of SuppliersSingapore Airlines has two major suppliers of aircrafts i.e. Boeing and Air bus which are able to maintain. Currently SIA have 11 aircrafts on order and should be increase to add more aircrafts to reduce the rental of leased aircraft cost.
Safety standards, enhance services, Advance technologies and fuel costs all aid to create a strong level of Airline Industry’s supplier power. Fuel cost is steadily 27% of the airline expenditure between 2016-2018 because of fuel hedging gain in financial year 2017/2018. These aircraft leased fee and fuel hedging profit are the major benefit to increase SIA profit.In 1992, SIA engineering company Division of SIA and became a subsidiary of Singapore Airlines for aircraft safety and servicing and productivity, efficiency, quality and more value-added services for customers.Singapore Terminal Service for ground handling carrier which are baggage managing and in-flight meal and beverages supply by SAT.Rivalry in the industrySIA fleet average age is approximate 7years with diverse plan services, strongly attractive to the customers. The customers always compare the airline companies in term of provided services and prices and are able to have wonderful experience in the airline industry.
SIA major transformation plan “bold radical measures” which was more revenue and more passengers to filling up more seat per aircraft to improve SIA processes more efficiently and positive impact on the bottom line instead of cut cost.Threat of new entrantsThe aircraft refurbishing solution mainly in the various parts used for cabin and interior are made from different types of lightweight materials to make it luxury quotient of VIP cabins and commercial cabins. In the other hand, decreases the gross weight of aircraft, which result in fuel savings.
As the airline enterprise now a days deregulation of Low Cost Carrier (LCC) with lower fares and higher load factors. SIA have strong impact on the customer with their services compare with various existing airlines.Threat of a substitute products or servicesSIA had target particularly on medium and lengthy haul flight luxurious traveller that alleviation and time when touring with less cost.In same time developed to train talent staffs to become skilled staffs. So that their offerings are higher amongst than rivals and do not easily to replacement in the airline industry.Advancement technology have evolve new treat, Teleconferencing to each other at long distance so that they no need to travel along to another place.
This technology has seriously treat as substitute to the whole airline industry. Even though this technology is a good replacement for meeting, it is only part of the reason for business travelling, other side still have to discuss on sensitive issue with face to face meeting or signing contracts purpose, still have to travel there personally to be present.