Critically evaluate the operational activity of Singapore Airlines Essay

Critically evaluate the operational activity of Singapore Airlines - Essay Example The intention of this study is Singapore Airlines as one of the best rated airline companies operating in the globe. The highly turbulent and capital intensive industry segment generates a considerable need for organizations like Singapore airlines to ensure better operational abilities. Considering the fact that the domestic market of the nation is very small hence the airline needs to use the international route to stay in the business and maintain profitability and sustainability. Moreover the competitive price wars being introduced into the market by the advent of the low cost carriers also plays a major threat to the profitability and sustainability of companies like Singapore Airlines. Hence it is imperative for Singapore Airlines to ensure operational excellence that can help the company stay afloat in the highly turbulent and competitive business market. Singapore airlines have crafted a well structured operational strategy to maintain sustainability and retain the competitiv e edge. In this regard the company has procured new and advanced aircrafts like Boeing 777 and 747 to save on costs and generate efficiency. It is the first company to have used the world’s largest carrier for long haul flights generating greater revenue per unit spent on operations. The airline also had a good fuel hedging strategy under which the airline was the first among the major airline companies having international operations to be able to fully offset the entire quantum of price element by virtue of hedging strategies. This helped the company to save on costs in the highly volatile oil market that is characterised by heavy fluctuations and skyrocketing prices (Morrell & Swan, 2006, p.14). Singapore airlines have also used the hub and spoke model to enhance its reach to new areas. The airline has made Singapore the hub and draws passengers from neighbouring nations to its hub in smaller aircrafts. From its hub the company uses larger aircrafts like Boeing 747 and Air bus A380 to fly to far off destinations. In this way the company tries to use the international market to generate revenues. This assumes importance considering the fact that Singapore is a very small nation with a very small market and hence in order to maintain profitability and sustainability the company needs to tap the international audience. Figure 1: Operational Statistics-Singapore Airlines (Source: Singapore Airlines, 2010, p. 6) The figure shown above illustrates the operational aspects of the airline company. The figure clearly states that the carrier has generated a one percent change in the number of passengers carried with the figure at actual being 16647 (in thousands). The passenger load factor that is a measure of an airline’s usage of its capacity has also shown a slight improvement of 0.1 percentage point to 78.5 percent. However the figure is considerably impressive considering the dip in the number of passengers owing to recessionary activities in the eco nomy and the advent of low cost carriers in the market. The figure for available seat kilometres has also shown an increase by about 2.3 percent. This implies that the carrier has augmented its efficiency in using its available passenger seats. The figure for revenue passenger kilometres also shows a significant increase of 2.3 percent to 84801.3 million kilometres in the year 2010-11. This implies that Singapore Airlines has generated greater efficiency in generating revenues by flying passengers over greater distances. The measure of passenger yield has also risen by about 14.4 percent to reach figures of 11.9 cents per kilometre. This implies that the company generated greater fare as revenue flowing per mile from the passengers across various routes. The increase in the value over its previous year shows that the company