Singapore Airlines reported a quarterly loss for the first time in five years. CEO Goh Choon Phong has warned that job cuts may be on the horizon. But if Singapore is not careful, it will find itself in an even worse situation.
I start with the following premise: carriers cannot cut their way to growth. Singapore faces intense pressure from regional low-cost rivals. Look at fares: you’ll pay a very hefty premium to fly on Singapore Airlines over much of the competition. Even some “legacy” competition like Malaysia Airlines offer far cheaper fares.
The result: Singapore is losing money. Its longhaul operations allegedly perform even worse than short-haul operations and the situation is not improving. If Singapore cannot profit in this era of cheap oil and a growing worldwide economy, will it ever?
Thus, I can appreciate why Singapore is mulling change. And I know human capital often seems the most expendable. While I do have a philosophical problem with a carrier slashing hundreds of jobs while the CEO makes 100X+ that of a front-line worker, I don’t doubt that CEO Goh is correct in stating that some jobs are becoming “irrelevant”. Changing technology and consumer demand naturally translates to change in personnel needs.
Trimming staffing is one thing, cutting onboard services is another. Singapore’s reputation is built on being a premium carrier. If the airline starts cutting the very things that distinguish it from the pack, not only will it lose the budget crowd, but the premium crowd too. If anything, Singapore must find ways to innovate the onboard product to attract even more premium customers.
It’s not just the “Singapore girls” that give Singapore Airlines its allure. It is a consistent and high-quality onboard product. I can only exhort Singapore not to be “penny wise, pound foolish” as it weighs how best to return to profitability. That includes staffing and service.
image: Singapore Airlines