Mini Project SM1

ID#070403
PUBLISHED ON
FEBRUARY 17, 2011
Singapore Airlines
Continuing Service Improvement
BY TODD JICK *
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A Customer’s Journey
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Paul Denver walked up to the Singapore Airlines Raffles Class (business class) check-in
counter, pushing a baggage cart piled high with multicolored pieces of luggage. The golf
clubs, scuba gear, and baby stroller lay on top. Five-year-old Tamara ran alongside. Marsha
Denver was behind, slowed down by toddler Janice, who insisted on walking although she
could barely stand. At the counter, the Aéroports de Paris agent in her blue uniform was
speaking with a passenger, her face level with a soft-colored arrangement of exotic flowers.
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The Denvers moved to the counter. “Good afternoon. Flying to Singapore?” the agent asked.
In fact, their itinerary was a good deal more complicated, combining business for Paul in
three Asian locations with a holiday on Bali for the family. Paul, a member of several
frequent-flyer programs, had already flown Singapore Airlines and had been impressed with
the quality of its service. He felt confident that the airline would solve any problems that
might arise on the six-leg trip that his wife and he were undertaking with their two small
children.
Singapore Airlines’ Journey

Our job is not just to fly people from A to B, but to have them enjoy the flight.
We’re not in the transportation business; we’re in the service business. All
airlines claim this, but the big difference is not in the objectives set out by
management, or in the ads developed by the marketing department: it is in
the delivery of service.
We have a high reputation for service and that means that when someone
flies with us, they come with high expectations. Still, we want them to come
Author affiliation Copyright information

*
Senior Lecturer in Discipline in Business, Columbia Business © 2007-2011 by The Trustees of Columbia University in the City of
School New York. This case includes minor editorial changes made to the
version originally published on December 11, 2007.
Acknowledgements
Marie Bell and Francesca Gee provided writing assistance for this This case is for teaching purposes only and does not represent an
case. It is based on a case that originally appeared in Managing endorsement or judgment of the material included.
Change, 2nd edition, by Todd Jick and Maury Peiperl.
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away saying “Wow! That was something out of the ordinary” (Yap Kim Wah,
SIA senior VP, Products and Services Division). 1
After years of continuing success, Singapore Airlines (SIA) had established itself as the
leading carrier in terms of service. Countless awards—received year after year throughout
the ’80s, ’90s, and into the new millennium—testified to its preeminence. In 2004 the Condé
Nast Traveler’s Readers’ Choice Awards named it the world’s “best airline” for the 16th time
in 17 consecutive years. Unlike many international airlines, SIA had retained its
profitability—a significant feat in the face of concerns about terrorism and the spread of the
SARS virus that had both impacted air travel. Indeed, in 2004 Fortune had ranked SIA second
in the airline category of its World’s Most Admired Companies survey.
But SIA could not rest on its laurels. With varying degrees of success, rival carriers were
emulating its dedication to excellent service to lure and retain high-spending business
travelers in an increasingly competitive market. Many emphasized the gourmet food,

vintage wines, smiling hostesses, and onboard technology that were the cornerstone of SIA’s
competitive advantage. Additionally, in recent years low-cost carriers had emerged. Now
that a lower-priced option was available, delivery on SIA’s service promise was even more
important.
SIA saw that continuous service improvement was the only way to retain its supremacy. Its
management recognized that passengers, to the extent they were still willing to pay a
premium for service, expected even more for their money—especially from SIA. Moreover,
service had to improve while expansion continued—industry estimates suggested a 5% to
8% annual increase in revenues with a 5% increase in net profit in the years after 2003. SIA
planned to achieve its goals with a “three pillar” strategy of superior in-flight service, the
most modern fleet, and outstanding ground service.
ON BOARD: “INFLIGHT SERVICE OTHER AIRLINES TALK ABOUT”
From the 1970s on, SIA had seen superior service as its only possible source of competitive
advantage. “We selected the two-letter airline code SQ to remind our people that an SQ flight
is not just an ordinary flight, it’s a quality flight,” explained a ground services senior
manager. At the outset, SIA had no domestic network and only a small customer base among
Singapore’s population of two million, few of whom could afford air travel. The Singapore
government made it clear that the airline had to stand on its own feet: although it was a flag
carrier, it would receive no subsidies.
According to a favorite piece of company lore, in-flight service began in 1947 on the first
flight of SIA’s predecessor, Malayan Airlines, when the pilot picked up a thermos flask of ice
water from under his seat and passed it around to his five passengers. A few years later, the
carrier was the first to offer economy-class passengers free drinks and headsets as well as a
choice of high-quality meals.
The slim, impeccably groomed flight attendant in traditional Malay costume smiled at the
Denver family as they entered the aircraft and quickly glanced at their boarding cards.
“Good afternoon, Mrs. Denver,” she said “Let me show you to your seats.”
Singapore Airlines: Continuing Service Improvement | Page 2

BY TODD JICK*
“Isn’t she pretty?” Marsha whispered to Tamara. “Do you remember this dress?” She was
pointing to the long-skirted sarong kebaya, a figure-hugging outfit made of flowery batik
cloth. Designed by Pierre Balmain, it combined the charm of traditional Asian wear with the
elegance of French haute couture. But Tamara looked uncertain. “Of course you remember!”
said Marsha. “We saw it at Madame Tussaud’s!”
Although the face of the “Singapore Girl” figurine in SIA’s advertisements was changed
every 18 months, the company’s constant attention to training had turned the real flight
attendant into a symbol of Asian charm, grace, and hospitality. The Singapore Girl
advertising concept was so successful that Madame Tussaud’s, the London wax museum,
had chosen it as an emblem of international travel. And the outfit, on sale at most Singapore
souvenir shops, was almost as popular as the Singapore Girls themselves, an indication that
the flight attendants were also emblems of the island state.
But Marsha, a professional who believed in equal opportunity, wasn’t sure that she

altogether approved of the Singapore Girl concept. SIA flight attendants had to retire before
they turned 35 unless they were promoted to a higher position; that policy would be illegal
in many Western countries because of age-discrimination laws.
Female flight attendants were given a maximum of three five-year contracts and were not
taken back as cabin crew after they had given birth (although they could then work for the
airline in a ground services position). Stewards, on the other hand, were regular (not
contract) employees and could work until they reached the normal retirement age in
Singapore.
The young woman’s gestures were graceful but precise as she advanced down the aisle with
a tray of scented towels. “Would you like a hot towel, Mrs. Denver?” she asked. “Be careful,
you could burn your hands!” she told Tamara. But Paul was mildly annoyed when she woke
him up some minutes later to offer him a glass of champagne. The flight attendant seemed to
follow established procedures rather automatically, oblivious of the fact that he was asleep
and might not want to be disturbed.
Neither of the Denvers, however, had any gripes about the smiling steward who, shortly
afterwards, brought the children lots of games and small toys. After lunch (a choice of three
main courses, exotic desserts, fresh fruit, fine cheeses, and vintage port or a liqueur), he came
back to ask whether they needed help with the baby. By then Janice was asleep—mercifully.
“THE MOST MODERN FLEET”
As Marsha settled down for the 13-hour, nonstop flight to Singapore, she surveyed the
newly fitted Raffles Class cabin appreciatively, admiring its tasteful decor and subtle shades
of purple. She was sitting on the top deck of a Boeing 747-400 “Megatop,” the fastest 747
with the largest stretched upper deck. Not quite as glamorous as the supersonic Concorde
that SIA used to fly on the London-Bahrain-Singapore route in the 1970s, but nonetheless
very comfortable, she thought. “No wonder Singapore Airlines comes so out often on top in
magazine surveys,” she remarked to her husband as she activated the comfortable, 60-degree
leg rest, with adjustable calf support, and stretched her legs across the 42-inch pitch.
Page 3 | Singapore Airlines: Continuing Service Improvement

BY TODD JICK*
In 2007 SIA was the world’s largest operator of Boeing 777 planes, with 58 in operation and
another 31 either on option or firm order. The 747-400, the jumbo jet’s fourth generation, had
played a crucial role in the expansion of airlines from the Asia-Pacific region. In 2004 SIA
broke its own record for the world’s longest commercial flight, flying from Singapore to New
York City. In March 2005 SIA’s passenger fleet was composed of 89 aircraft. Because SIA
frequently brought in the latest models, the average age of its aircraft was five years and four
months, and its fleet remained one of the industry’s youngest. SIA was slated to fly first the
Airbus 380 in 2008, one of the world’s biggest planes—a super-jumbo aircraft able to
accommodate 500 passengers.
The Denvers’ flight was equipped with SIA’s in-flight entertainment system (Kris World
Entertainment) that included 104 TV shows, 60 movies, 85 interactive games, and 12 music
channels. Although he was tempted to use the entertainment system, Paul sighed and pulled
out his laptop. There was no power outlet immediately visible, so he asked the chief flight

attendant, recognizable in her red sarong kebaya, where it was located. Showing Paul where
it was, she also told him that high-speed Internet service was available for a nominal fee.
Passengers could not only work on their laptops, but also keep up to date with the stock
exchange or money market prices and transmit data to their companies or to customers on
the ground—without ever leaving their seats. An astounded Paul immediately logged on.
“OUTSTANDING SERVICE ON THE GROUND”

The holiday on Bali had been a success. The children had enjoyed the white sand at Sanur
beach while their parents watched temple ceremonies and the popular wayang kulit Balinese
shadow plays or bought batiks in countless patterns and colors. The Denvers were now at
Ngurah Rai airport in Denpasar, checking in for a one-day layover in Singapore on their way
back to Paris. Paul pointed first to a single brown leather suitcase, then to the jumble of bags
and sports gear on the cart. “This one we’ll need in Singapore tomorrow,” he told the check-
in officer. “But we’d really prefer to check everything else in through to our Paris flight.” The
agent replied, “I’m not sure we can do this. I’ll have to ask the supervisor.”
While they waited for him to return, Paul gazed at the poster on the wall that declared
“Singapore Airlines Ground Services. We’re with you all the way.” “We’ll soon find out
about that,” he thought. On a previous leg, at the Manila airport, he had asked to have one
bag sent to Singapore and checked in at the left-luggage counter and to have the rest of his
luggage sent to Denpasar. The SIA supervisor had gone to great pains to oblige, sending an
e-mail to Singapore’s Changi Airport to ask staff there to retrieve the bag, carry it to the
security clearance area for a bomb search, and finally check it in at the left-luggage office.
Attention to service on the ground was the most ambitious pillar of SIA’s strategy, dating
back to the late ’80s, when the “Outstanding Service on the Ground” (OSG) campaign was
launched. It focused on improving service at reservation desks, ticket offices, and, most
importantly, at each airport SIA flew to. Making customers’ perception of ground service as
positive as their perception of in-flight service was a challenge. Typically, passengers
interacted with sales or check-in staff for just a few seconds or minutes, and tended to
remember them only when something went wrong. And while in-flight service was

BY TODD JICK*
provided by Singapore-based staff who were recruited, trained, motivated, and rewarded by
SIA, ground service was provided by handling agents spread across 70 stations around the
world. And those agents were often SIA’s direct competitors (for example, British Airways
handled SIA flights at Heathrow Airport).
Each airport unit had to meet a set of standards in the areas of punctuality, baggage
handling, speed and friendliness of check-in, efficiency of seat assignment, number of
compliments and complaints from customers, and professionalism in handling delays.
Changi, the region’s largest hub, also had to meet standards in the efficiency of transfers. At
every airport, the station manager was held accountable for achieving these standards;
awards were given to stations that did well. The OSG campaign inculcated three principles:
“Show You Care” (through body language evidencing interest and attention), “Dare to
Care,” and “Be Service Entrepreneurs” (by displaying creativity to exceed customers’
expectations). The campaign involved motivational seminars, “booster training,” reminders

and reinforcement through monthly reports by country managers, Higher Ground (a
dedicated newsletter), and monitoring and recognition. Posters with slogans such as “Go
Near, Not Away” or “An Impossible Situation is a Disguised Opportunity” decorated staff
quarters.
Ingredients of Success
The three pillars of its strategy all contributed to SIA’s undeniable prosperity. For years the
airline had topped carrier profitability tables as its pre-tax profit rose from $69 million in
1983 to $1,596 million in 2004–2005 (despite the company’s first loss ever, of $312.3 million in
the first quarter of the 2003–2004). (See Exhibit 1 for SIA’s 10-year profitability trends.)
Behind this success were policies—and practices—deliberately and systematically developed
by management. These included long-standing guiding principles such as long-term
planning, steady growth, a diversified route network, a decision to stick to core
competencies, and helping attract visitors to Singapore.
A POLICY OF STEADY ORGANIC GROWTH
Managers at SIA rejected the idea that consolidation would inevitably lead to an industry
consisting of a handful of megacarriers and a few niche players. The airline’s leaders were
nervous that SIA would grow too fast, and generally suspicious of acquisitions despite SIA’s
strong cash position. “Our goal is to continue to operate a successful airline,” said an SIA
executive. “If we have to grow to do that, we grow. But we never set out to be a
megacarrier.” Because of its long-term vision, SIA did not let what one senior manager
described as “the slumps and bumps in the business cycle” disrupt its investment plans. It
tried to diversify its network so that SIA was not dependent on any one market or route, but
still remained focused on its core activity: aviation and its supporting services. Through the
early part of the new century, SIA weathered the effects of terrorism, the impact of the SARS
virus, and the rise in fuel costs—and became known as one of the most effective hedgers of
oil.

BY TODD JICK*
“We wish to retain our individuality,” said Joseph Pillay, SIA’s chairman in the early ’90s,
“and to expand at a measured pace that permits us to retain those essential qualities that
have made SIA one of the foremost carriers in the world in terms of quality of service, depth
of commitment to employees, technical prowess, and financial strength.”
In 2000 SIA became a member of the STAR alliance (a global network of airlines), thereby
offering its customers worldwide distribution. It reaped advantages that included sales
benefits from dovetailed schedules and savings from both shared ground facilities and
shared sales and check-in offices.
A STRONG CORPORATE CULTURE
One reason not to grow through acquisitions was to protect SIA’s idiosyncratic culture,
which managers saw as a hybrid of East and West, reminiscent of the former colony’s long-
standing role as a regional crossroads. “The Singapore Girl is a cross between Western and
Asian flight attendants. Typical Western service is lots of communication and talk while

Asian service is shy and distanced. Our people are fairly confident and they are unique in
Asia in not suffering from a language barrier when talking with international travelers, since
English is Singapore’s official language,” remarked SIA’s personnel director.
The importance of the Confucian ethic of filial piety and deference to hierarchy was limited
at SIA. “We expect loyalty to the company and the country,” said another personnel
executive. “But we don’t give seniority a lot of value. People move up according to
performance. Singapore in general operates on meritocracy. And a lot of our operations are
overseas; inevitably we imbibe a lot of Western values.” However, the majority of SIA’s
employees were Singaporeans with shared values and concerns, and SIA’s management saw
the importance of this unity. “We are a cohesive group and we work together as a team with
the same culture, attitudes, and motivation,” said one senior executive.
RECRUITMENT
The service concept required total commitment from all front-line staff, whom SIA saw as its
interface with passengers and its greatest asset. “The only way to guarantee that customers
are satisfied is by making sure that those who serve them are satisfied with their jobs and
have a positive attitude,” explained a senior manager. He continued, “A key element in a
service-minded organization is the motivation of the employee.” But years of growth
presented SIA with a major challenge when it came to recruiting from Singapore’s dwindling
labor market. Between 1972 and 2005, the staff had grown from 6,200 to an average of 13,600.
Hiring the right front-line staff was thus a major priority; recruitment of cabin crew in
particular was highly selective. Applicants had to be under 25 and were screened for a
positive attitude toward work, good appearance and posture, and language skills. To try to
ensure that employees possessed those qualities, a psychological test known as the
personality profile system (PPS) was developed with outside consultants to determine the
service aptitude of applicants. “Character molding and positive mental attitude are essential
components of a successful cabin crew. The crew must anticipate passengers’ needs,”
explained the director of marketing services. “That means being attentive. This is something

BY TODD JICK*
people must have in them to begin with; you can’t change attitude. That’s why SIA has the
PPS test.”
TRAINING
With ongoing training initiatives, SIA continually reinforced it emphasis on service, training
about 9,000 people per year. Approximately 70% of SIA’s training courses were held in-
house and encompassed functional training and general management skills. The company
had seven training schools in the core functional areas of cabin crew, flight operations,
commercial operations training, IT security, airport services training, and engineering;
general management training was driven by the SIA Management Development Center.
Cabin crew underwent a four-month full-time course, which was longer than the training
SIA’s competitors provided. While noting the importance of technical aspects of cabin
service, one SIA executive warned crew against becoming over dependent on procedures.
“Of course we need good systems and procedures,” he said, “but what has distinguished us

from other airlines all these years is the human touch.” The crew was taught little tricks such
as memorizing the names of Raffles class and first class passengers at boarding, or learning
to spot which flyers wanted to chat and which wanted to be left alone.
The Commercial Training Department trained SIA employees and handling agents around
the world. All new front-line ground staff attended an orientation program and an OSG
seminar; these were held in Singapore and in regional centers every three months. Within
one year, all new staff went to Singapore for product training. “We teach the staff that
customers are our bread and butter,” explained a training manager. “We say things like,
‘Don’t think of customers as nuisances. They are our employers.’ We tell them to be
customer champions.”
The methods used included experiential learning activities such as problem-solving games,
analyzing case studies of real-life situations, and role playing; staff were asked to put
themselves in the shoes of a frequent traveler, or a first-time flyer, or a mother with small
children. There was also “rescripting,” where shy participants were told to convince
themselves that they were customer champions. Training also involved brainstorming, with
staff asked to think of what they could do to solve an actual problem at their station.
Outdoor activities and even boot camp training were also among SIA’s varied training
resources. (See Exhibit 2 for a description of an OSG course.)
In its staff training, SIA faced the seemingly contradictory challenge of both achieving
consistency of service and conveying the need to be flexible in providing that service. For
example, SIA extensively tested and refined its service procedures before introducing any
change. Performance managers conducted research, time, and motion studies that assessed
customer reactions in order to develop service protocols that would allow cabin crew teams
of 13-14 people to deliver the same high service every time. However, SIA also wanted its
people to be flexible and creative so that they were able to develop solutions when an
unusual situation arose. As one executive noted, “The worst thing about service delivery is
when everybody just follows the book. I want them to be flexible and creative. In Singapore
there is a tendency for people to be too regimented in their thinking.”

BY TODD JICK*
In 2007 SIA launched the “Transforming Customer Service” (TCS) initiative, which involved
not just cabin crew, but also engineering, flight operations, and sales support staff. Forty
percent of the resources for TCS were allocated for training and motivating staff, 30% for
reviewing processes and procedures, and 30% for creating new products and services ideas.2
TCS’s goal was to help empower employees both to take steps to make things better and to
be flexible (e.g., by giving cabin crew discretion to make upgrades on board). TCS was
implemented not just in Singapore, but in all SIA stations. And it was supplemented by a
many self-improvement training courses, which (although not required) always had large
enrollments.
One cabin crew director described the initiative: “TCS has led to dramatic change by giving
cabin crew more flexibility. Competitors can match our equipment but they can’t match what
we are and how we think.”
LEADERSHIP DEVELOPMENT

Particular attention was paid to the “field commanders”—the front-line supervisors. By
motivating them and instilling leadership qualities in them, SIA believed it could facilitate
handing down its distinctive culture to a new generation of staff. An ambitious development
program for senior cabin crew was aimed at making them feel that they were part of
management and at boosting their commitment. A similar program, “Take the Lead,” was
developed for ground service supervisors. “We’re training them to be OSG leaders, to play a
more active role and provide better guidance to their subordinates,” explained a customer
affairs manager. “We don’t want them to depend on the head office. We want them to take
the initiative.” Being a service entrepreneur meant being assertive and resourceful, he said.
“We say to them, ‘There will always be opportunities for you, in your dealings with
customers, to establish a certain impression so that they will come back and fly SIA again.’”
STAFF RECOGNITION AND REWARD
Through various divisional newsletters, frequent meetings and briefings, and the glossy in-
house magazine, Outlook, SIA recognized staff for outstanding customer service and good
ideas and kept them informed of company problems and plans. A sizeable part of all
employees’ earnings—as much as three extra months of pay in a good year—came through a
profit-sharing scheme. Examples of rewards included the following:
• Staff Ideas in Action (S-I-A), which awarded cash prizes of up to $9,700 USD for
good ideas
• Winning Ways, for cabin crew who had received a minimum of three compliment
letters and no complaints over three months. (One winner had received 23 letters of
praise.)
• Managing Directors Awards, which recognized front-line staff who went beyond the
call of duty in providing ground service. Selection criteria included both consistency
in performance and outstanding acts of service (see Exhibit 3).
• Health for Wealth, a $3,000 USD prize given out every month to a ground service
employee at Changi airport to encourage all staff to stay fit. This award was aimed at

BY TODD JICK*
reducing the high incidence of sick leave among check-in and other ground service
staff, who had to work shifts 24 hours a day.
• An OSG Feedback Competition, which tested staff’s grasp of front-line issues. “Each
question consisted of a scenario and three possible answers,” explained a customer
affairs manager. “They have to think it through, maybe get together with their peers
to deliberate. It encourages staff to think about these issues.” The 20 winners each
received a $1,000 USD shopping voucher.
MONITORING CUSTOMER SATISFACTION
Much effort went into monitoring praise and criticism from customers, which were
examined at weekly meetings of SIA’s compliments and complaints committee. On average,
cabin crew received nine complimentary letters for every complaint; however, ground staff,
whose transactions with customers were quite different, received nearly as much criticism as
praise. “On board we’re pouring champagne and giving out caviar,” said a ground services’

executive. “In ground service we take your money and your coupon, we check your
passport.” Each complaint was investigated and answered in writing. Any lessons drawn
were passed on to the trainers and departments concerned, and a selection of both praise and
criticism was published regularly in in-house publications. Because they were so
professional in service recovery, by the early ’90s ground services staff sometimes received
compliments even when flights were delayed. (See Exhibit 4 for examples of both negative
and positive letters.)

Trends in customer satisfaction were carefully analyzed using formal customer feedback
mechanisms including surveys of 10% of SIA flights, benchmarking surveys that compared
SIA with other airlines, mystery shopping on competitors’ flights, and comments from the
front-line staff. An in-house performance index survey continuously tracked SIA service.
Every quarter 18,000 passengers’ ratings of 30 factors, such as the eye appeal of meals or the
friendliness of check-in staff, were analyzed. Index movements were carefully studied for
early indications of how SIA was meeting passengers’ expectations. The index improved
year by year.
MANAGEMENT STYLE
SIA’s leadership made conscious efforts to delegate authority to the lowest level of staff
possible. Employees described SIA as a democratic company where the top management
welcomed new ideas, criticisms, and initiative from everyone throughout the organization,
and encouraged them to speak out, make suggestions, and generally express their opinion.
“We try to keep reporting lines as short as possible,” said an SIA leader. “We are not a
formal organization.”
SIA tried hard to become a flat organization, spinning off business units as soon as they were
self-sustaining. “We’re trying to stay small,” explained one managing director. “We are
creating many small, autonomous divisions to keep decision making down.” When a new
engineering subsidiary was formed, top management pointed to several benefits, saying it
would increase accountability, enhance esprit de corps, encourage innovation and

BY TODD JICK*
entrepreneurship, and provide a competitive advantage in the high-growth engineering
maintenance business. Next on the list were computer services and cargo operations.
SIA had a policy of management mobility; directors and managers were rotated every three
to five years. According to the assistant director of personnel, this prevented them from
becoming jaded and fostered team spirit: “Loyalty to a function or a division is not as great.
It’s difficult to say, ‘I’m a marketing man,’ when tomorrow you may be in finance. It forces
you to look at the company as a whole.” Managers also moved between the airline and the
various subsidiaries. In the same spirit, SIA encouraged multidivisional task forces.
SIA’s Demanding Customer
In Denpasar the check-in officer at Ngurah Rai airport had returned with the SIA supervisor.
“I am sorry, sir,” the supervisor said, “Our procedures require that your luggage travel to

only one location. You can send it to Singapore or to Paris, but not to both.” His tone was
courteous but his response angered Paul, who launched into a lengthy explanation, pointing
to the fact that a week earlier in Manila his request to split his luggage at check-in had been
accepted quite readily. Then he realized he was wasting his time and shut up, but decided to
complain in writing. His letter read as follows:
I thought that Singapore Airlines was committed to service, in particular to
improving ground service. I was pleased with check-in staff in Manila, who
went out of their way to help me. This is the kind of service I expected from
SIA. What I cannot understand is why your man in Denpasar was so
uncooperative.
THE BUSINESS AND COMPETITIVE ENVIRONMENT WORSENS
In the post-9/11 world, air travel was under siege from the threat of terrorist attacks, the fear
of the spread of diseases such as the SARS virus, and escalating fuel costs. One industry
observer noted:
As other airlines sank into financial distress, SIA spent much of the previous year battling
SARS…earnings and margins took a nose dive and new discount entrants popped up on the
radar and oil prices took flight…Flying is big business but airlines are generally a bad
business, one that’s getting worse. In 2003 seven of the world’s 16 largest airlines lost money.
Their return on assets was just 3.4%, far less than the average cost of capital needed to keep
this capital-intensive business going…cost has become the industry buzzword. 3
In the increasingly competitive marketplace, customers also began to take perks such as
frequent flyer programs for granted. Finally, one other threat to continued growth was
corporations’ decision to slash travel costs, requiring executives to travel less or to fly
economy class.
Despite these many challenges to SIA and the industry in the early 2000s, and an
unprecedented quarterly loss in early 2003, SIA executives remained confident that Asia’s
most successful airline would succeed without major cost cutting or a merger.

BY TODD JICK*
In terms of strategic response, airlines roughly fell into three camps:
• Traditionalists, who continued to raise standards—even though this meant
maintaining high prices and perhaps frightening off cash-strapped customers—and
who advertised heavily. The logic was simple: surveys showed that 88% of business
and first-class travelers rated the larger size of their seat as their “preferred aspect of
business class travel,” and that what they feared most on long-haul routes was
physical discomfort.
• Old-style entrepreneurs, who competed on price, even though this put the perceived
quality of their product at risk and hurt revenue per seat. Their target was the
budget-conscious traveler.
• Radical entrepreneurs, who were prepared to abolish the traditional class structure
of aircraft and try to sell something entirely new, offering, for instance, a combination
of first-class seats and business-class levels of service and prices. 4

INTERNAL PRESSURES
The Labor Shortage in Singapore: Singapore’s economic success had at least one undesirable
consequence for SIA. In the ’90s, almost all its flight attendants were Singaporeans or
Malaysians; the only exceptions were a few Japanese, Taiwanese, or Koreans, who were
recruited for their linguistic expertise. But the continued labor shortage made it increasingly
difficult for the airline to recruit the home-grown attendants who had been its main
marketing tool for two entire decades: in its advertising, it exclusively used Singaporeans or
Malaysians.
SIA clearly saw that it would have to recruit beyond the borders of their tiny island state and
neighboring Malaysia. But could the Singapore Girl be Thai or Indian or even European?
That move would erode a key difference between SIA and Cathay Pacific, which cultivated a
cosmopolitan image with a multiethnic cabin crew fluent in a variety of languages besides
English. Although SIA’s leadership saw some advantages in heterogeneity, they thought it
made it harder to have shared values and dedication to service. “Cathay has problems with
the assimilation of different nationalities: they have a hard time getting them to work as
teams,” said one senior manager.
The “Young Turks”: Traditionally, SIA staff had felt a strong attachment to the company.
“We’re almost like Communists, we believe in a cause,” joked one senior manager. “I want
the company to do well. I don't see it as an employer.” But the new generation, which one
executive described as the “young Turks,” had somewhat different expectations. As
Singapore became more affluent, individual values tended to replace the Confucian tradition
of respect for authority, and some managers felt that the young generation lacked dedication
and a service spirit.
Young Singaporeans were better educated, more mobile, and readier to challenge the status
quo. Although those who worked for SIA were proud of being part of Singapore’s most
prestigious company, they also expected a higher standard of living. As a result, unions were
becoming more militant. “In the early years, we were like a small family,” said Managing

BY TODD JICK*
Director Cheong. “As we grow bigger, the relationship between management and unions is
becoming more formalized and there’s a greater degree of tension.”
Strategies for Satisfying the Demanding Customer

SIA’s marketing director knew that it would be tougher to retain their competitive
advantage:
More and more airlines are trying to duplicate the causes of SIA’s success.
Even if the world economy picks up, the good old days are over. The
industry will be fitter. Competitors are doing away with excess manpower
and looking at their route structure. The bottom line is becoming more
important, the aircraft more reliable, the staff more motivated. There is
structural change, as well as mental change, among airline executives.

Another SIA executive spoke of the challenge to remain strong:
SIA is changing all the time. We start off telling ourselves we must
continually improve. There is no such thing as “we have nothing more to
learn.” But we’re not talking about changing people, we’re talking about
strengthening what we have. We encourage our people to look for new ways
of doing things. SIA’s image is strong; that is not easy to keep up unless you
continue to strengthen your operations, you come up with new ways of

doing things. We never will sacrifice quality. If you try to save by cutting
down on what you give the customer, people feel it straight away. We won’t
allow cost cutting to affect what we’ve built over the years. For instance,
we’re looking for ways to prepare the food ahead of time, but that is to give
cabin crew more time to look after our passengers, not to reduce the number
of crew.
The challenge for SIA was to train front-line staff to anticipate customers’ needs in order to
satisfy them—even before the passengers themselves realized that they had those needs. One
way to do this was to be flexible, explained an in-flight services senior manager:
Demand is evolving, and one of our strategies is to provide flexibility,
especially in first class and business class. For instance, on long trips you can
have your meals at anytime you like. We encourage our people to be flexible.
They have to be on the watch out to do more things that will remain
ingrained in passengers’ minds, and turn any negative impression into a
positive one. As long as the company continues to see itself as its main
competitor, it will continue to improve and innovate.
Responding to the Customer: Two Approaches

As discussed above, customer feedback was analyzed at weekly meetings of SIA’s
compliments and complaints review committee. Paul’s letter provided an interesting test of

BY TODD JICK*
the airline’s approach to continuous service improvement: one of its demanding customers
was challenging it to go further. Two major views emerged at the meeting.
The first approach, underlining the importance of safety, standards, and consistency, could
be summarized as follows:
First and foremost, we have considerations of security, cost, and efficiency:
there are lots of security regulations on the handling of luggage. Secondly,
the Manila supervisor incurred a lot of expense for the company: if we were
to have this as a standard procedure, it would mean tremendous costs.
Thirdly, the risk of mishandling would be a lot higher. We are proud of our
low rate of mishandled luggage, by far the lowest among major airlines.
Passengers far prefer to have their bags with them in a normal situation. But
of course we tell our staff that OSG means going beyond, finding a way to
satisfy the passenger. This is a classic dilemma. I’m not saying it would be

impossible to satisfy Mr. Denver, but it is a choice we’d have to make. I
certainly wouldn’t tell off our people in Denpasar for refusing to split the
luggage. In this industry, in the final analysis the safety and security of the
passenger are more important, and this means procedures. I don’t want to
compromise on that.
The second approach stressed the need for staff to use their judgment and make considered
decisions, rather than follow established guidelines:
We need a balance between the soft part, people’s judgment, and the system
of rules. We need the system of course, but only as a guide. More emphasis
must now be placed on judgment, responsibility, and entrepreneurship.
At first glance, the Manila agent should be congratulated for his decision. We
encourage staff, even junior staff, to take considered decisions. The Manila
agent took a decision and he took responsibility for it. He went out of his way
to help a passenger. The Bali agent didn’t show any courage; he just played
by the rules. We’ve been telling our people, “Go beyond the rules. We dare
you to innovate.” We’ve asked them to use their judgment. He was probably
worried about giving away the company store. We must show him what was
missing in his thought process: if he tries to accommodate a passenger, we
will support him.
I want all our people to show that they can think through a situation and
make judgments on behalf of all customers, whether they’re traveling
economy, business, or first class. The pressure is on the front line. The
pressure is also on us to coach and counsel. If we determine that the Bali
agent did make a mistake, he should discuss the issue with his staff. In that
case, we would congratulate the Manila agent, and also recommend
discussion there. The issue would be mentioned in the Manila agent’s annual
performance review, but the Bali agent would not be penalized.

BY TODD JICK*
In fact, the issue is more complex. What we really need to understand is the
thinking behind both decisions. What led each of them to his decision?
Saying “No” to a passenger is more difficult than saying “Yes.” But did the
Bali agent just fall back on regulations, or was there a basis for his judgment?
What about the Manila agent? Did he say “Yes” just to make it easy? How
did he arrive at his judgment? Front-line staff must put themselves in the
customer’s shoes and determine whether a request is reasonable, genuine, or
whether someone is trying to take advantage of the airline. The Bali agent did
not have to copy the Manila agent’s decision if his conclusions were different.
Consistency is to do well all the time, not just to say “No” (or “Yes”)
consistently—this is what SIA is trying to inculcate.
This debate was part of a larger set of issues for SIA. Could the airline contain costs without
sacrificing service? Could it grow and still maintain its high service standards? And could it

in fact further improve its already high quality of service?
Meanwhile, Paul awaited an answer to his letter.

BY TODD JICK*
Exhibits
Exhibit 1
Financial Performance
SINGAPORE AIRLINES PRE-TAX COMPANY PROFITS
2000
1800
1600
1400

1200
1000
800
600
400
200
0
1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004-
96 97 98 99 2000 2001 2002 2003 2004 2005

BY TODD JICK*
Ten-Year Charts
Exhibit 1 (continued)
Source: Avsoft Information Systems, Ruby, England.

BY TODD JICK*
Exhibit 2
OSG Course
‘We are ready to give,’ say SATS OSG Participants

Trainee Passenger Services Agent (PSA) Michelle Koh, who was in a batch of trainee PSAs
from SATS to attend the Outstanding Service on the Ground Program, gives a first-person
account of her experience.
“I CARE.” That is the OSG (Outstanding Service on the Ground) motto my class—Batch
140—picked up very early in the one-day program held on 8 May.
First, we chanted it as a group. Later we discovered its meaning on a more personal level
when we were taught how to “stroke” each other positively to bring out the best in each person. We
learned how effective positive stroking could be through an exercise in which we sent complimentary
messages to one another. Initial shyness overcome, this exercise became easy and fun.

However, when asked to state our own strengths, most of us were hesitant. Yet, there was no
reservation in highlighting our weaknesses. Perseverance in this exercise provided some self-
discoveries.
Now that we knew ourselves a little better, we embarked on a very important project:
teamwork and cooperation. I must admit, though, that I was very puzzled on seeing plastic chains,
cane hoops and wooden blocks on the stage in the auditorium where our training was being held.
What had all these items to do with teamwork and cooperation? I was soon to find out. In
the “centipede activity”, our class was divided into two teams. With ankles shackled to one another,
each team was expected to move forward and backward, and up and down a flight of stairs in the
shortest time possible.
Yes, this exercise certainly called for teamwork and cooperation. When we did not move
together, ankles hurt, tempers flared, and someone fell down!
One of the other exercises taught us that careful planning was necessary if we wanted to do
our jobs well. This was where the hoops came in. The objective was to get each member through the
hoops, without using a hoop twice and without the members coming into contact with the hoops.
Sounds confusing, but we had to do it. With some planning, agility and strength, we managed.
We rounded up the day with the “Trust” activity. It entailed a participant throwing himself
backward into the arms of his teammates. I remember thinking at the time that any sane person
would hesitate to do this if he had the slightest doubt about the person who was to catch him. But
then, at the OSG course, we were doing rather “insane” things, were we not? I held my breath and …
my teammates caught me—a lesson in trust indeed.
At the start of the course, Instructor Clara Nai had warned us that it would not be all fun
and games. She was right. It was also quite tiring, both mentally and physically. But the unanimous
verdict at the end of the day was: “We are ready to give!”

BY TODD JICK*
Exhibit 3
MD Awards
BOUQUETS
MANAGING DIRECTOR’S AWARDS: A Sample
Our Very Important Employees and Their Deeds
Maite Losada Kalyan Tadashi Yakumaru
Cargo Supervisor, BRU Subramanyam Customer Services Officer,
NRT

Customer Services Agent,
Lena Kellens MAA
Reservations/Ticketing
Officer, BRU
Maite and Lena were on holiday During the year 1991/92 Kalyan Tadashi received four written
when their SQ flight was diverted received 15 written compliments. compliments and numerous
to AMS. Although they were on In all these cases, he repeatedly verbal compliments in the year.
leave, they spontaneously showed that he cares for our

helped their working colleagues passengers. The passengers For example, Tadashi voluntarily
manage the disruption. They were impressed not just by his gave a distraught passenger,
helped passengers with their acts of assistance but also by who had no cash in local
rebookings, distributed meals his high standard of service and currency, the money he required
and newspapers on the coach to the kindness he displayed. for his airport tax. The
AMS, assisted passengers at passenger, who turned out to be
AMS and, helped them with their For example, he helped a sick a priority passenger, later wrote
transfer flights in SIN. They and elderly passenger who was in to compliment Tadashi and to
assisted layover passengers, booked to fly on another airline. return the money.
looked after them at the hotel, His selfless act for a competitor
airline’s passenger so impressed In another case, a couple were
and helped them with their delayed in arriving at the airport
onward flights the next day. On the passenger’s relative that the
relative said in his letter of due to a traffic jam, and had to
arrival at MEL, they again helped park their car at the terminal
the passengers before catching compliment that he would in the
future travel on SIA. instead of their pre-arranged car
their own flight to BNE. park. Tadashi offered to drive
Over 36 hours and over three Kalyan wins the award for the car to the other car park and
continents, Maite and Lena consistently giving outstanding looked after the car until they
displayed many OSG qualities. service to our passengers. returned.
They went beyond the call of The many compliments Tadashi
duty to help the affected received were testimony of his
passengers throughout the consistent helpfulness beyond
journey, they sacrificed their own the call of duty.
time, displayed initiative and
showed they cared. They truly
embody the OSG spirit, “We’re
with you all the way.”

BY TODD JICK*
Exhibit 4
Feedback Example
Compliments and Complaints from Passengers
FEEDBACK EXAMPLE
Customer Comments On Ground Service…
“…our flight was disabled due to mechanical problems and we were stuck in Jakarta airport
without access to a telephone or a fax machine for most of the day. The ground crew in Jakarta
promised to send fax messages on our behalf…these messages were not transmitted.
“They attempted to arrange alternative bookings for us but …these arrangements were never
completed. We did suggest that as the delay had caused us to miss our connection in Singapore
and because it was not possible to book an alternative flight with Qantas, we should be put on the

Singapore-Darwin flight on 4 July. We were told this was not possible as the flight was fully booked
in economy and although business class seats were available we would only be able to upgrade if
we paid the extra fare.
“… On arriving in Singapore … we were given vouchers for Hotel accommodation and meals, but,
although our luggage had not arrived in Singapore, were not given an allowance to purchase
toiletries, etc. … Our luggage still had not been traced when we boarded SQ223 and we were told
that it was probably still in Jakarta. When we arrived in Perth, however, we found our things had in
fact been loaded. Although it was a relief to see the luggage, I find the fact that it had been loaded
but not recorded on the flight manifest most disturbing.
“… As you can imagine the experience was most upsetting and extremely tiring. In addition, as
a consequence of the missed connection we “lost” several days from a holiday which had been
planned for over a year. …” - R.C.P. Surrey
“… When we returned to San Francisco, my 4 “It was indeed our pleasure to see you last
wife removed two of our four bags from the week at the Singapore Airlines counter at
carrousel while I was in the rest room. At our Brussels Airport. Our children have always
hotel I discovered that one bag was not ours. traveled alone, but were never as happy as
After many phone calls, I contacted the they were with your company. They were very
Singapore Airline baggage person and well looked after, and also at N.Y. the ground
learned that my bag was at the airport and staff was very helpful and courteous. We take
that I had a bag of a man who was going to this opportunity to thank you, and your Airline
Honduras. I was surprised that it was not for the excellent service, and it’s surely not for
suggested that the bags would be nothing that you are known as the best!
exchanged. Having flown all night and being
My husband is a non-resident Singaporean,
76 years of age, I was quite tired after the
and we are happy that you have started this
12-hour flight. Nevertheless, I got a taxi,
service to N.Y. and hope to use it more often.
returned the bag to the airport and retrieved
…”
mine. My friends tell me that in similar
circumstances they have had their bags - D. & P. M . New York
returned to them at the hotel by the airline.”
-F. G. Texas

BY TODD JICK*
Endnotes
1 This statement and all other statements made by SIA personnel as well as all information about SIA
that appears throughout the case were drawn from Jochen Wirtz and Robert Johnston, “Singapore
Airlines: What It Takes to Sustain Service Excellence—A Senior Management Perspective,” Managing
Service Quarterly 13, no. 1, 2003.
2 Jochen Wirtz and Robert Johnston, “What Makes Singapore Airlines a Service Champion?" Strategic
Direction 19, no. 4 (April 2003): 26-28.

3 “Turbulent Times,” Edge Singapore, May 16, 2005.
4 “A Time for Fresh Ideas,” Financial Times, April 19, 1993.

BY TODD JICK*

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Singapore Airlines’ Journey

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“OUTSTANDING SERVICE ON THE GROUND”

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and positive letters.)

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SIA’s Demanding Customer

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Strategies for Satisfying the Demanding Customer

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continue to strengthen your operations, you come up with new ways of

Responding to the Customer: Two Approaches

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Source: Avsoft Information Systems, Ruby, England.

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‘We are ready to give,’ say SATS OSG Participants

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MANAGING DIRECTOR’S AWARDS: A Sample

Our Very Important Employees and Their Deeds

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leave, they spontaneously showed that he cares for our

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Page 19 | Singapore Airlines: Continuing Service Improvement

Direction 19, no. 4 (April 2003): 26-28.

4 “A Time for Fresh Ideas,” Financial Times, April 19, 1993.

Singapore Airlines: Continuing Service Improvement | Page 20

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