Singapore Airlines (SIA) is one of the biggest entities that operates from Singapore. Due to the nature of the industry it operates within and the quest to become a global giant, Singapore Airlines continuously changes its strategic and operational systems. This has culminated in many modifications and adjustments that are due to decisions from its shareholders and the topmost directors and managers. The purpose of this report is to critically evaluate and analyse organisational change and its modification in SIA over the past 5 years. This will include the discussion of the initiators of change and the desired objectives. The report will also focus on the human needs and its implications to the SIA Airlines
Initiators of Change in SIA (2010 – 2020)
SIA operates in the aviation industry. Therefore the company is likely to be affected by the industry factors and the pointers relevant to the sector. There are several pointers and matters that have caused SIA to change over the past decade. It is important to identify them at this point because that will form the basis for the discussions that will be conducted in this report. The most relevant of these factors include:
Shareholder expectation: The primary stocks of Singapore Airlines are owned by the Singapore government and the Temasek Holdings which controls 56% of the shares of the company. Most national carriers end up failing. However the public-private partnership between the government of Singapore and Temasek Holdings has culminated in a major push for survival, expansion and growth in order to make the company a profitable one that attains the highest levels of increase in shareholders’ wealth;
Size & Focus: Singapore Airlines has positioned itself as one of the leading global carriers on the planet. It is currently ranked 10th in the world for the number of passengers carried and 15th in terms of revenue in the global aviation industry.
Customer Needs and Expectations: Singapore Airlines is known for responding to consumer needs. This is because the aviation industry today is based on the principle of consumer sovereignty and firms in the industry must proactively examine the needs of consumers in an emergent strategy in order to meet these needs.
Climate Change: This is a major issue of concern that causes major changes in the aviation industry. It is the basis for the evolution of airline companies and this has laid the foundation for major changes in different airlines.
Safety Records: The tendency of indulging in accidents either attracts or repeals flyers from choosing to use a particular airline.
Changes and the Leadership of SIA
The current status of Singapore Airlines can be attributed to changes made by the management that was appointed in 2010 and 2011. There was a change in the topmost leadership of the company, which led to major restructuring processes that occurred over the past 5 years.
On the 4th of February, 2010, there were some major changes that were announced by the management of the company. This includes the appointment of Mr. Gho Choon Phong as the Executive Vice President for Marketing and Sales. Mr. Goh had experience as the President of the SIA Cargo. There were also major changes to the Operation and Planning Unit of Board of Singapore Airlines that was to coordinate significantly with the Marketing and Sales unit to promote prompt planning and the achievement of specific consumer needs.
The change in leadership in 2010 meant that the Operations and Sales/Marketing team were required to coordinate significantly by the vice presidents of each unit, reporting relevant operations to each other. However, the new arrangements meant that the heads of the operations and marketing units were both required to report directly to the Chief Executive Officer. This showed that the company was destined to move onto an emergent strategy. The process was to ensure that there was a bigger chance of integrating consumers’ concerns and trends in the markets into operations. This was in contrast with the previous system that was steeped in an isolated organisational structure that allowed both units to operate independent of each other (check Appendix 1 below).
Change Management & SIA
Change management refers to the conscious effort by the management of an organisation to move it from one point to the other with a practical and appropriate approach to deal with all the matters related to the changes. This involves the careful formulation of a plan and its implementation in order to achieve a stated or desired end.
The popular model of change management is Lewin’s change model which involves three main steps:
Unfreezing in Singapore Airlines
Singapore Airlines in the first decade of the 21st Century embarked on several strategic approaches that were meant to put it at par with the major airlines that were leading the industry at that time like British Airways, Air France, Lufthansa, Alitalia and American Airlines. Singapore Airlines sought to compete with these entities by getting a presence in the richest countries at that time which were in Europe, North America and Australia.
The main approaches they adopted in 2000 – 2010 included:
Focusing on the London-New York route which was the most lucrative at that time;
Expansion through the acquisition of airline business units in Australia, Europe and North America
Secondly, the trend of trying to make Singapore Airlines look like a global player was problematic. This is because apart from the show-off of an Asian airliner owning major stakes in Eurocentric countries was expensive and it did not really add much in terms of revenue. Therefore, the new management of 2010 had to end these two things and face the realities of the time.
Change in Singapore Airlines
The real change came when Singapore Airlines realised that the epicentre of the world was moving from London and New York to the numerous trading centres that were springing up in Asia, the Middle East and parts of Europe, Latin America and Africa. New cities had sprung up and as of 2010 everyone was talking of China, the oil-rich gulf states, India and Latin America. The geostrategic centre of the world had therefore shifted to Asia and Singapore Airlines had to change to make their airline operations more relevant to the world and make optimal use of their location.
Therefore Singapore Airlines took steps to go global and face competition with other global airline industry newcomers like Emirates, Qatar and Etihad. Therefore, Qatar Airlines became a global player and sought to diversify and operate in places regional and global cities like Sao Paulo and Johannesburg and maintain a strong presence in the main emerging countries around the world. They also focused on Asia.
The focus on Asia led to the creation of a regional low-cost carrier system that focused on cutting down on quality and improving sales to carry as many people as possible.
Refreezing & Singapore Airlines
Once Singapore Airlines moved towards globalisation, a number of pointers came up that needed consideration. First of all, there were newer risks and newer issues that had to be examined. Refreezing led to major changes in the management of risks like war and epidemics. Singapore Airlines also became more sensitive to global fluctuation price risks. Therefore, they had to spend more time dealing with these risks.
Change and the Human Needs of SIA
John P. Kotter presented 8 steps that are necessary and relevant for change. And they are consolidated into three main changes which affects the human resource unit of an organisation. Human needs were mainly part of the refreezing process. However, it is discussed separately in this section to provide a deeper insight into it. First of all, the impacts of the change had three main implications:
Staff and employee implications;
Consumer needs and expectations and
Reputational issues and matters
Figure 1: The Kotter Change Model
Create a Climate for Change
Staff members of Singapore Airlines were given a series of briefings about the changes that were occurring in the external environment. This included programmes that helped to establish a sense of urgency. This led to the formulation of a set of guiding principles which included major changes to organisational culture due to consumer need changes, reputational matters and new plans for staff. From there, a new change vision was formulated for the organisation.
Engage and Enable the Whole Organisation
The new vision and plan for promoting a multicultural organisation and an appropriately skewed process of providing services led to the communication of a vision for a buy-in. This included new sessions and training for the empowerment and promotion of better services. This led to some short-term wins and gains that were consolidated and encouraged.
Implement & Sustain Change
New measures and new practices were encouraged and enhanced further. This was incorporated and now, the multicultural and all-encompassing culture defines Singapore Airlines.
Recommendations for further Improvement
Currently, Singapore Airlines is doing well as a global player. The presentation of low-cost and no-frills services has made it popular amongst the growing middle class. However, there is the need for more specialisation and focus to enter non-traditional markets in places like Brazil, Africa and India. These are countries that are fast growing and there is the chance to grow further and localise in order to compete with the major stakeholders and players.
Singapore Airlines can also consider entering non-traditional markets in places like Africa and Latin American. These are routes that are not developed. Singapore Airlines can either expand through acquisition or establish a unit. This will help them to develop and harness the new market and expand further.
Change in Singapore Airlines was initiated and sustained by traditional issues in the airline industry as well as the main pointers relating to contemporary change and competition. The appointment of new directors and restructuring of the corporate governance structure caused the operations unit to coordinate affairs more closely with the sales and management unit. This caused the airline to become one that operated on an emergent strategy. Singapore Airlines’ new management had to unfreeze by stopping their expansion into western countries and high-end airline routes. They changed to become a global airline player. And this meant optimising their geostrategic location, and focusing more on new and emerging markets around the world including markets in Asia, Latin America, Eastern Europe and the Middle East. Singapore Airlines presented a low-cost airline services to consumers in Asia and other emerging markets. This provided a high-level of revenue and kept the airline going. The impact on the workers included the need for training and on consumers, there was the need to study consumers closely and also fix reputational risks and dangers like emission and environmental concerns.
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Appendix 1: Singapore Airlines Pre-2010 Organisational Structure