| Singapore Airlines is a good example.
Twenty years ago, SIA stewardesses were paid an average
of about $1,000 per month, a fraction of their counterparts
from developed countries. SIA's excellent cabin service
and high operating efficiency were its trademark. Today,
the pay plus allowances of an SIA stewardess is about
$3,400 per month. But if we add in profit sharing, inputed
gratuity and SIA's CPF contributions, the total cost
to SIA of employing one stewardess can be as much as
$4,200 per month. This is higher than what many other
airlines in the world pay. Meanwhile, the service quality
and the operating efficiency of other airlines have
improved tremendously, closing the gap and posing strong
challenges to SIA.
For example, British Airways, one
of the strongest challengers, has, over the last 4 years,
reduced its costs by about £750 million (S$1.8
billion) through single-minded management action. Through
strategic alliances with other airlines like Qantas
and American Airlines, British Airways is striving to
grow in the major markets of North America and the Pacific
region. Notwithstanding BA's current problems with some
of its unions, the company has turned around dramatically,
from an overall deficit of £544 million (S$1.29
billion) for 1982, to a pre-tax profit of £640
million (S$1.5 billion) announced in May this year.
The pattern of regional competition
in the airline industry has also changed. The fast growing
regional economies have fuelled demand, leading to more
direct flights from countries in the region to other
destinations in the world. This has made it harder for
SIA to route passengers from the region into its main
trunk routes through Singapore.
In response to these changes, SIA
has had to find new ways of offering better services
at lower costs, and to seek tie-ups with other airlines
to protect its market share. SIA also has to ensure
that it continues to have first class management and
strong internal consensus with harmonious relations
between workers, managers and unions. |
