Singapore Airlines 2014 Annual Report Download - page 12

nything that happens around the world
can affect airlines. Economic troubles,
natural disasters, man-made disasters
– all can impact us in some way or
another. The last financial year was no
different, in that we faced challenges
on many fronts once again. Rather than
dwell on short-term issues, however,
I would like to provide in this year’s Letter to Shareholders
a holistic overview of the strategic challenges that we have
been facing, and outline what we are doing to address them.
The SIA Board and Management constantly review the
industry landscape to determine where and how we must
adapt, as we fully appreciate that those who are not willing
to change will soon find themselves at a disadvantage. This
is especially true at a time when we have new competitors
with deep pockets seeking to take us on in areas where we
have traditionally been an industry leader.
We are clear about the challenges that we face: competition
from other full-service airlines; competition from low-cost
carriers; and finding ways to expand our reach around the
world. We are not standing still in any of these areas.
Competition is not new, but the competitive environment
in the full-service market has never been more intense, with
other airlines adopting a similar business model as us. We
are addressing this challenge by continuing to invest heavily
in the three main pillars of our brand promise to ensure we
remain a market leader, through service excellence, product
leadership and network connectivity.
During the last financial year we introduced all-new cabin
products on new Boeing 777-300ERs entering the fleet.
Feedback from customers has been excellent, prompting us to
retrofit 19 existing 777-300ERs with the same products. We
will also be introducing a Premium Economy Class next year,
while continuing to induct new aircraft to maintain a young and
modern fleet, and investing heavily in new lounge designs.
Our world-leading customer service continues to improve,
through a constant focus on staff training and development.
An industry-leading Customer Experience Management
system will also be rolled out this year to help us meet ever-
growing customer expectations.
At the same time we continue to expand our network
reach, by adding new destinations and increasing frequency
on existing routes. In addition, we have been partnering with
more airlines around the world to give our customers a wider
choice of travel options as well as to encourage more travel
through the Singapore hub.
As low-cost travel has continued to grow in popularity, we
continue to invest in this area too. We own 40 per cent of Tiger
Airways and see a positive future for it over the long term. We
also have the medium-haul low-cost segment covered through
Scoot, which has been growing rapidly. This is what we call
our portfolio approach to airline operations, ensuring that we
are covered at all ends of the market spectrum; the premium
market is well covered by Singapore Airlines and SilkAir, while
the low-cost market is well covered by Scoot and Tiger.
We are also working to expand our reach globally, as
not all passenger and cargo traffic can flow through a single
hub. One such example is in India, where we are establishing
a joint venture airline based in New Delhi, 49 per cent-
owned by SIA and 51 per cent-owned by Tata Sons. Scoot
is meanwhile establishing a new base in Bangkok through a
joint venture airline with local carrier Nok Air.
The above are just some examples of how we are
investing in support of our long-term business objectives.
Operating conditions have been difficult for some time,
but we have not been standing still and are certainly not
complacent. We have identified the key challenges and are
investing for the future. We are confident that we are moving
in the right direction.
I would like to close by expressing thanks to our people
for helping to keep the SIA Group so strong throughout these
difficult times. To my fellow Directors, thank you as well for your
contributions over the past year, with a special thanks to Euleen
Goh who stepped down from the Board during the last financial
year after serving as a Director since 1 September 2006.
CHAIRMAN’S LETTER
TO SHAREHOLDERS
010
SINGAPORE AIRLINES