Economic crises make little dent on Singapore Airlines' pursuit of excellence, thanks to its constant acquisition of advanced aircraft and acclaimed emphasis on service. Guo Jiaxue reports.

Undaunted by the pessimism and uncertainty that spread across the globe in the first half of 2012, Singapore Airlines (SIA) is ambitiously proceeding with the acquisition of latest aircraft. It is phasing out its Boeing 747s, the "Queen of the Skies", though they are among the world's most recognizable aircraft and still widely used by many other airlines.

This is not unusual for SIA which has earned a reputation for frequently renewing its fleet. It introduced the world's largest airplane, A380, to Hong Kong in mid-2009, right in the middle of the financial crisis.

"We are continuously investing in new types of aircraft. It doesn't matter if there is an economic upturn or downturn," says Alvin Seah, the carrier's general manager in Hong Kong.

"Obviously, the European crisis is affecting all airlines. The major issue for us is the cost of fuel that has been increasing over the last few years. These are the two main challenges," he says. "Most long-haul carriers are under pressure because of the fuel price. That's why we always bring in new aircraft, they are more fuel-efficient. They are also good for passengers, more modern and comfortable."

The economic slowdown in some major economies has greatly changed the global aviation industry. The declining market in developed countries and soaring fuel prices are challenging - even hurting - many airlines, leading to the rapid growth of low-cost carriers.

The SIA Group has noticed the increasing appetite among consumers for budget, no-frills travel.

"We have seen from the US and European markets how the introduction of low-cost carriers has created new market segments. We feel that we can capture that segment also with the launch of our fully owned, low-cost subsidiary Scoot," Seah says. Scoot made its first flight in June.

"We have a share in (budget carrier) Tiger Airways, we own Scoot but the two airlines are managed independently," he stresses. "SIA itself is still focusing on premium products."

The luxury airline decided to make no compromises despite the ongoing economic gloom and the fuel price hike caused by the Middle East unrest. It still firmly believes that premium travel will continue to be an important market segment over the long term.

"Business travelers who work in big companies normally prefer premium service airlines as time is precious for them. SIA takes greater care of customers than low-cost carriers and they appreciate this kind of service," Seah says with confidence. "That's why even though there is competition from low-cost carriers, we are still doing well in terms of providing a different type of service."

Despite an operating loss of S$5 million ($4 million) in the first three months of 2012, there was a 6.9 percent increase in passenger volume, driving the group revenue up by 3 percent.

SIA however knows the importance of remaining competitive in tough times and has been continuously investing in the strengths it already has. As an airline born with no domestic flights to run and competing with other carriers in the international market, it has surmounted tough obstacles.

"We have faced competition since day one, so it is not unfamiliar to us," Seah says. "Even during downturns, we maintain our investment in products and services which we believe will ultimately hold us in good stead when the global economy recovers."

Although Seah stresses that there is no magic formula to run an airline profitably, he identifies three strengths of the group famed for its slogan "a Great Way to Fly". These are service excellence, product innovation and network connectivity.

SIA has aggressively sought to be an industry leader through innovation. It has made a lot of industry-firsts in aviation history, including offering office software and iPod/iPhone connectivity in the cabin, though the office software has been discontinued. The airline's SpaceBed was the widest business class bed in the sky when it was launched. Passengers in first class and A380 suites can enjoy the largest screen in the industry, a sleek 23 inch LCD.

To improve food standards it hired eight award-winning chefs from around the world to form an international culinary panel to create unique selections.

Most recently, the airline has been rolling out inflight Internet connectivity on some of the aircraft. It will be progressively made available in all, in view of the increasing importance and popularity of smartphones. The airline's lounge in the Hong Kong International Airport has recently added food service.

But as Seah says, "what is new today may turn common tomorrow". All the hardware advantage can be replicated by competitors. The Hong Kong general manager, who has been with SIA for almost 20 years, believes the area in which the airline truly leads is service.

"We constantly raise the bar on service levels. It is that intuitive touch, what some call the 'heartware', that is hard to replicate. SIA has forged a reputation for providing service that even other airlines talk about," says Seah with evident pride. "That's where the reputable Singapore Girl comes into the picture. She represents the genuine, warm and caring service that a customer can expect onboard our flight."

Service on the ground is equally important, he points out. The whole service chain extends from the time passengers make a booking to when they disembark and leave the airport.

Another advantage the airline enjoys is Singapore's airport. The Changi International Airport, one of the best in the world, provides a wide option of destinations and frequency of flights linking 98 cities in 37 countries.

"Say, for example, passengers from Hong Kong want to go to Europe. They fly to Singapore first. Then there is a wide range of flights to Europe they can choose from. Options are very important, especially for business travelers. There could be a very short connection time."

That is part of the reason why SIA keeps a strong presence in Asia. It enables Asian travelers to fly conveniently to destinations in Europe, the US, Australia, and farther. As Asian growth has become the major driver for the global economy, the strength stands SIA in good stead.

"We need a network to all parts of the world. For example, passengers from the Chinese mainland or Hong Kong are traveling with us, going to Europe, going to Australia, going to India. We need to maintain the network to support the growing market," Seah says.

The airline's subsidiary company SilkAir offers a choice of more destinations in Asia. The full-service regional carrier with smaller aircraft covers second-tier cities, like Medan, Surabaya and Solo in Indonesia, and Chengdu, Chongqing and Xiamen in China, to complement SIA which operates high-volume routes to big cities.

SIA has had roots in Hong Kong for 52 years. The fast-paced city with its immense exposure to international finance and trade has been one of the airline's largest stations with seven departures daily. Seah moved to Hong Kong with his wife a year ago.

"Hong Kong people work very hard, but they also know how to enjoy themselves," he says. Picky Hong Kong customers have high expectations. "Our greatest challenge is to ensure that we live up to and exceed these expectations."

(HK Edition 07/27/2012 page8)