Singapore Airlines SWOT and PESTLE Analysis

Strength

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Weakness

1. Location drawback with respect to other competitors: Singapore Airlines has a location disadvantage to connect with US in long haul distances with respect to its competitor airlines such as Cathay pacific and Philippine Airlines, which have a major market share in the traffic to US. As these rival airlines are geographically situated closer to major North America, they can fly without using long-range aircraft unlike Singapore Airlines. Further, the gulf carriers such as Emirates, Qatar Airways and Etihad are well placed geographically with access to two-thirds of the global population within an eight-hour flight distance and have captured a significant market share over the last few years.

2. Weak presence in major markets such as North America and China: Singapore Airlines has been plagued by growing competition from Chinese and North American carriers leading to its relatively weak presence in lucrative markets such as China and the United States. The airline has also decreased its non-stop flights to United States in wake of increasing competition and low profitability. The airline has also not been able to enter into any strategic alliance with Chinese airlines majorly due to the difficult economic environment and regulations. Increasing competition has also led to airlines cutting ticket prices just to hold market share which has severely impacted yields. Singapore Airlines clocked a passenger yield of just 10.1 Singapore cents per passenger-kilometer in March-quarter 2017 which was the lowest since 2009, highlighting the airlines low yields.

3. Majorly reliant on international traffic: Singapore Airline which is the flag carrier of the country suffers from the lack of domestic market on which it can bank upon in face of increasing international competition. Rival Chinese carriers and Australian aviation major Qantas have a huge domestic market presence to rely upon and increase their dominance. Further with opening up of long-haul routes such as direct Perth-London with the latest Boeing and Airbus jets, Singapore as a connecting hub may lose its relevance in the future, thus impacting SIA’s demand.

Opportunity

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Threat

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Political

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Economic

1. Fall in the ATF (aviation turbine fuel) prices: Due to the tensions and to gain market, countries like Saudi Arabia, UAE wanted the fall of oil prices, which is a positive factor for Singapore Airlines as their income would increase. Irrespective of the increase in prices of ATF, SIA have never compromised in pricing strategy, it has always followed premium pricing strategy. So, once the prices come to normal, their may be effect on the business of LCC.

2. Adverse currency movements: Volatile foreign currency movements and the depreciation of SGD against other benchmark currencies can significantly impact SIA’s margins. The SGD has significantly depreciated over the past few years which has resulted in foreign exchange losses for SIA. Further, the SGD is still perceived as being overvalued as per industry outlook and may further depreciate till 2018 impacting SIA.

Social

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Technological

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Weakness

1. Changes in regional and global regulatory framework: The aviation regulations differ vastly across different countries, underscoring the importance of SIA to adhere to the regulatory standards as applicable. Any changes in the regulatory framework of Singapore Airlines can completely affect the business and as it is backed by government, it would have an impact at global level. One notable example is the adoption of the ASEAN Air Traffic Management master plan in 2017 which will pave the way for seamless single sky across ASEAN member countries. This will open up new opportunities for the carriers in the region but will also significantly increase the competition. Singapore Airlines through its subsidiary carriers SilkAir and Scoot; and can look to capitalize on the opportunity and expand its network.

2. Lawsuits in case of service deficiencies and pricing: Singapore Airlines is a global carrier and deals with hundreds of thousands of customers daily across different geographies and any issues with its service may lead to lawsuits. The airline has been involved in several lawsuits in the past related to customer grievances, personal injury claims. The airline has also been fined S$112 million for allegedly being part of price–fixing cartel by the European Commission (EC) in 2017.

Environmental

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