Singapore Airlines reported a quarterly loss for the first time in five years. CEO Goh Choon Phong has warned that job cuts may be on the horizon. But if Singapore is not careful, it will find itself in an even worse situation.
I start with the following premise: carriers cannot cut their way to growth. Singapore faces intense pressure from regional low-cost rivals. Look at fares: you’ll pay a very hefty premium to fly on Singapore Airlines over much of the competition. Even some “legacy” competition like Malaysia Airlines offer far cheaper fares.
The result: Singapore is losing money. Its longhaul operations allegedly perform even worse than short-haul operations and the situation is not improving. If Singapore cannot profit in this era of cheap oil and a growing worldwide economy, will it ever?
Thus, I can appreciate why Singapore is mulling change. And I know human capital often seems the most expendable. While I do have a philosophical problem with a carrier slashing hundreds of jobs while the CEO makes 100X+ that of a front-line worker, I don’t doubt that CEO Goh is correct in stating that some jobs are becoming “irrelevant”. Changing technology and consumer demand naturally translates to change in personnel needs.
Trimming staffing is one thing, cutting onboard services is another. Singapore’s reputation is built on being a premium carrier. If the airline starts cutting the very things that distinguish it from the pack, not only will it lose the budget crowd, but the premium crowd too. If anything, Singapore must find ways to innovate the onboard product to attract even more premium customers.
CONCLUSION
It’s not just the “Singapore girls” that give Singapore Airlines its allure. It is a consistent and high-quality onboard product. I can only exhort Singapore not to be “penny wise, pound foolish” as it weighs how best to return to profitability. That includes staffing and service.
image: Singapore Airlines
Do you know SQ issued a krisflyer partnered with Indonesian bank of BCA instead of its own banking like DBS? However, the competition in asia is tough one…
The model of “we’ll be premium-heavy, and sell million dollar glasses of lemonade because we’ll only need to sell one glass” doesn’t work as well once you have LCCs sucking out your economy seating (and nobody has made all-premium configurations work long term outside of LON-NYC). Much of how the airline industry is priced is NOT priced efficiently (in the sense of market-clearing prices; granted that’s tough to do for an airline that has to “predict the future” when it comes to demand and not selling something for cheap today and losing out on money tomorrow). If the answer for SQ is to change how they price and service levels accordingly, that is what they have to do. Note that Tigerair, SilkAir and Scoot are doing better than SQ itself.
PS: how many cash tickets have you bought on SQ for J/F? If the answer is “none”… I wonder if SQ can make money based on bloggers flying in their premium cabins on Chase MR mileage redemptions to KrisFlyer. 🙂
Just flew back on SQ J, HK -SFO and the service was disappointingly mediocre. The head stewardess (in the red outfit) was surprisingly cold and indifferent (to everyone), she did not seem to care to interact with any of the passengers and rarely smiled. She looked bored and uninterested in her job. The other stewardesses all seemed rushed the entire flight and seemed to want to just get their task over with. It felt like I was being served by an American Airlines crew dressed as an SQ crew.
I asked 2 of the stewardesses what they liked best about working with SQ and they both had to think about what to say. One said that what they liked best was being able to live in Singapore and the other one said they liked the currency conversion benefits by being paid in Singapore Dollars. Wow… their answers had nothing to do with SQ as a company. Employees who are not excited about their employer are less likely to perform at their best. I hope this is not an omen about the company.
SQ has always been my gold standard for consistency in excellent service. I hope that what I experienced was just an anomaly.
I wonder if SQ failed to take advantage of cheap oil prices due to hedges made earlier when oil prices were higher.