SQ according to HBR: successful dual strategy of cost leadership and premium branding

[LionCity]

I was reading today's Business Times and SQ was discussed in Harvard Business Review. They mentioned that SQ is successfully adopting a dual strategies of cost leadership and premium branding. Their cost per passenger mile is even lower than the American budget airlines. There are a lot of innovation in the organization both high and low level.

In general, the airline seems to do pretty decent job in this aspect.

As far as cost cutting is concerned, I see SQ is getting to the limit in terms getting to the point of being threadbare and pushing the limit on the managers and employees to achieve in cost without affecting service.

I already see lower level of service but I do not want to be naggy to the point of overstating the obvious.

What do you folks think?

[ycp81]

More cost-cutting in the works..

[feb01mel]

More cost-cutting in the works..

Yes, more to come.

Some cost cutting measures are already being taken but not obvious to the eyes of passengers.

[UMD]

One thing for sure besides the e-magazines.

I also notice that the size of the new C class napkins is now smaller as well.

[jjpb3]

Finally got around to the HBR article as my leisure reading.

The article does a relatively good job calling to question the tradeoff traditionally seen for cost leaders vs. premium providers, and it's difficult not to admire the success of SQ as a business. But I'm not so convinced that the dual strategy works as well now.

Yes, SQ has achieved its cost leadership through some very smart insights about the momentum from investments in soft assets (human capital, branding). (I think the article underappreciates SQ's smart thinking on using MI and TR to control the impact of the the likes of Air Asia and Jetstar.) But the data seem only to go as far as 2009, when the airline had not had to feel the importance of loyalty beyond the transactional 'What have you done for me lately' mindset.

How many of us here would wholeheartedly endorse a statement like "Anything that touches the customer must be consistent with SIA’s premium positioning" [emphasis mine]? I'd have a number of qualifications to that.

Still, a very thought-provoking read. And I'm the first to admit I may not be representative in my opinions.




The writers also undermined their argument by citing Skytrax in their very first paragraph.

[jammed]

Finally got around to the HBR article as my leisure reading.

you got the FULL article? i came across one on HBR site but it was really short, and sounded like a teaser to a full one. Is the actual a HBR-style case study, or a academic piece?

[jjpb3]

you got the FULL article? i came across one on HBR site but it was really short, and sounded like a teaser to a full one. Is the actual a HBR-style case study, or a academic piece?

Yes, I've got the full article. It's not an HBS/HBR case study, but is more along the lines of a conventional business review article.




(I have a different [more arts & sciences] view about what constitutes an 'academic' article ).

[LionCity]

Finally got around to the HBR article as my leisure reading.

The article does a relatively good job calling to question the tradeoff traditionally seen for cost leaders vs. premium providers, and it's difficult not to admire the success of SQ as a business. But I'm not so convinced that the dual strategy works as well now.

Yes, SQ has achieved its cost leadership through some very smart insights about the momentum from investments in soft assets (human capital, branding). (I think the article underappreciates SQ's smart thinking on using MI and TR to control the impact of the the likes of Air Asia and Jetstar.) But the data seem only to go as far as 2009, when the airline had not had to feel the importance of loyalty beyond the transactional 'What have you done for me lately' mindset.

How many of us here would wholeheartedly endorse a statement like "Anything that touches the customer must be consistent with SIA’s premium positioning" [emphasis mine]? I'd have a number of qualifications to that.

Still, a very thought-provoking read. And I'm the first to admit I may not be representative in my opinions.




The writers also undermined their argument by citing Skytrax in their very first paragraph.

Waiting to read the article. Agreed with you on the part that the premium positioning that touches the customer. The number of qualifications seem to be growing longer. Slow Death of premium customer service by "many small cuts" or relying too much on past branding?

[LionCity]

I finally read the article courtesy of a good friend. Must add that the Airline did carried it out pretty well using small innovations to reduce cost and done many things correctly. We are doing the same thing at work too with focus on innovations. Reducing weight albeit small quantum still helps to save the earth.

Personally, the innovation effects to me as a small time customer is that the innovations seem to be geared towards cost cutting rather than enhancing the overall service experiences. The airline unfortunately seems to want to maintain at most a status quo in service and if this is true, I think this is very unfortunate unlike the headier days of the past management.

I see the seats do get better but the other areas seems to be heading the other way in terms of food/drink quality, PPS downgrading despite higher hurdle rate, still sticking to many older planes in Regional routes, 3rd rate non-AVOD with poor colour, poorer off plane experiences etc. That is with higher price of ticket to top it up.

Keeping SATS is probably better than adding up all these cost saving measures. At least their former staff in SATS were in line with the airline's philosophy.

[B727]

SIA management does have its work cut out maintaining a balance between keeping costs down and quality up. Its homebase SIN is no longer the SIN of the 70s--it has grown into a major world city with major worldly costs of operating a business.

That said, some things are not to be taken lightly. SIA may well be riding on its branding success which took off some 30 years ago. Many things do have a price and can be eliminated to cut costs, but things like customer loyalty/goodwill going back several decades is, as they say, priceless. Every now and then, a callous call center rep or an imbecilic email response from the PPS Club really makes one question one's loyalty (measured int terms of SGD natch) is really worth that much.

Meanwhile the competition is still rolling out the tray of petits fours

[SQtraveller]

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[225]

I think SQ will be OK for now as people flying from Singapore sometimes do not have an option as they do have the best times/ go direct to destinations etc However with more middle east airlines, Qatar and Emirates for example spending a lot of money on new kit and offering good levels of service and more importantly cheaper fares they can not keep ramping up prices and dropping service, people will move even if it means a stop over.
Quick comparison Singapore to LHR in J and you can get a restricted fare on Qatar for S$5200 or semi flex for 6200. Emirates 5700. SQs only option 7742. Yes it involves a stop over so timing may not suit everyone but still that is a big difference if you have the time.