PM - Singapore Airlines' Winning Strategy

Singapore Airlines' Winning Strategy
Posted by Scott Berinato on August 19, 2008 11:43 AM

The airlines' annus horribilis is well documented, but not all airlines are teetering on the precipice of bankruptcy.

In this week's Harvard Business IdeaCast (see audio player below), Harvard Business School Professor Rohit Deshpande discusses one airline that's not just surviving the current downturn, but thriving: Singapore Airlines. Why is Singapore offering complimentary espresso on flights when others are charging for luggage and taking away in-flight movies? How has the company avoided the doom and gloom that so many other carriers face?

By staying out of what Deshpande says is a loser's game of competing for customers on price, of treating them like commodities.

Singapore Airlines is a throwback, by design, to the days when flying was glamorous and customer service was king. "They've created a luxury travel experience and retained the glamour of long-distance travel. It's almost retro," says Deshpande, who authored and teaches a Harvard Business School case on the airline.

Of course customers have to pay more for this experience, but Deshpande says most don't mind. Flying has become so stressful, they're willing to pay a little more for a better experience.

My first reaction to Deshpande's analysis was, "What about coach?" I wondered if the focus on first- and business class was anti-democratic. If Singapore Airlines was bringing back the glory days of aviation, was it also bringing back the exclusive nature of '50s air travel, when only large businesses and the upper classes could afford the experience. In turn, wouldn't this affect global business and commerce if it became difficult for entrepreneurs, small business owners and others to afford to fly?

But Deshpande says that Singapore brings its customer service focus to all cabins, even if it's making its money off of the front of the plane. "They give more frills to economy than any airline," he says. "They were the first in-seat TVs and offered more channels than any airline. They have, even in economy, more flight attendants per passenger."

Singapore also goes against conventional wisdom by using the downturn as a time to make capital investments, not shun them.

The net result is an airline that's built customer loyalty and a solid business. Listen to the IdeaCast for more from Professor Deshpande on Singapore Airlines' winning strategy.