Singapore Airlines Ltd. History
Airmail Transit Centre
Republic of Singapore
Incorporated: 1972 as Singapore Airlines
Sales: S $7,72 billion (US $4.96 billion) (1998)
SICs: 4512 Air Transportation, Scheduled
Today, SIA is internationally recognised as one of the world's leading carriers. Our route network spans over 90 cities in more than 40 countries, we fly the most modern fleet in the industry and we are the world's largest operator of Boeing 747-400s, which we call MEGATOPs. But we never forget that we owe our size and commercial success to our customers. Singapore Airlines was the pioneer of inflight services such as free drinks and complimentary headsets. With innovations like our revolutionary KrisWorld interactive entertainment system, we are still setting the standards today--standards which have made the name of Singapore Airlines synonymous with impeccable service around the globe.
Singapore Airlines Ltd. (SIA), the national airline of Singapore and a major carrier in the Pacific region with routes to Europe and North America, is known for its unparalleled customer service as well as for its continuing efforts to upgrade its aircraft and technology. SIA is 54 percent owned by the Singapore government with minor shareholdings by Delta Airlines and Swissair. A long-established strategic seaport, Singapore is an important transit point for travel to other areas of the Far East. Even during times of severe recession in the airline industry, SIA has been the world's most consistently profitable airline and, unlike most, a virtual stranger to debt. The "Singapore Girl" flies to 90 cities in 40 countries.
SIA was incorporated in 1972, and its origins date back to the formation of Malayan Airways Limited (MAL). In 1936 the British government and Imperial Airways localized air transport in Singapore and Malaya (now Malaysia) by forming MAL. This new airline was owned and operated by Imperial Airways and the Ocean Steam Ship Company and was formally incorporated in Singapore in October 1937. During this time, however, an Australian company, Wearne Brothers, began scheduled airline services between what was to be MAL's prime route, Malaya to Singapore. The first chairman of MAL, Frank Lane, concluded that the market could not accommodate two carriers operating this route. Consequently, MAL remained inactive for the next ten years. World War II and the Japanese occupation of the region ruled out commercial air transport, and during this period Wearne Brothers went bankrupt and ceased operations. In 1946 Singapore's airport reopened, and Britain's renamed national carrier, British Overseas Airways Corporation (BOAC), agreed to relinquish its control of MAL to a local concern, the Singapore Straits Steamship Company. In May 1947 MAL began scheduled services with two Airspeed Consul airplanes, six pilots, six radio operators, a dozen administrative personnel, and a few ground crew members. One month later a third aircraft was added.
The new airline was successful; commercial air transport increased dramatically after World War II, and initial services between Singapore and the Malaysian city of Kuala Lumpur were fully booked at M $35 each way. By the end of 1947 MAL had introduced three DC-3s into its fleet, and within a year of its first flight the airline was carrying 5,000 passengers every month. Over the next two years Bangkok, Rangoon, and Borneo were added to the destination list, and three more DC-3s were purchased; during this time MAL gained membership to the International Air Transport Association (IATA). Rapidly growing as a major air transport center, Singapore began to attract such established carriers as Air India. In 1955 the new Paya Lebar Airport, capable of accommodating jets and large planes, was completed.
In August 1957 Malaya received its independence from Great Britain, signaling dramatic changes for MAL. The government of Malaya took a holding in the company, and the Singapore Straits Steamship Company sold its shareholding to BOAC and the Australian airline Qantas. As a result of this restructuring, the Malayan government, BOAC, and Qantas each held a 33 percent stake in MAL. The airline added two Viscounts to its fleet in 1959 and began offering service to Hong Kong in 1958. Furthermore, MAL entered the jet age with the loan of a Comet from BOAC to service its international routes. Profitable every year since 1948, the company was proving to be a sound investment for its partners.
In 1963 the Federation of Malaysia was formed, comprising the former British colonies of Singapore, Sarawak, and Sabah. The airline was renamed Malaysian Airways Ltd. Under the leadership of Keith Hamilton, who joined MAL in 1960 after 12 years with Qantas, the company opened an office in New York to promote travel to Malaysia. In 1965 Singapore achieved its independence from Malaysia and the governments of Malaysia and Singapore acquired joint majority control of the airline in 1966, renaming it Malaysia-Singapore Airlines (MSA). The year 1968 marked the opening of a new 16-story headquarters building in Singapore, the commencement of service to Tokyo, and the purchase of three Boeing 707s and five 737s, making MSA competitive with other large jet operators. By 1971 service to Rome, London, Frankfurt, and Sydney was available.
Birth of Singapore Airlines
In April 1970 Malaysia announced that it would establish its own national carrier for domestic and international flights. This resulted in the dissolution of MSA and equal distribution of assets between Malaysia and Singapore. Singapore received all the Boeing aircraft, the facilities in Singapore, and overseas offices in 18 countries. Malaysia received the remaining aircraft, facilities within Malaysia, and a cash payment from Singapore to make up the difference. In June of 1972 Singapore Airlines Limited was formed; its first chairperson was the former joint chief of MSA, J.Y. Pillay. In July of 1972 Singapore Airlines (or SIA as it came to be known) purchased its first Boeing 747s, which would become the mainstay of its fleet. The purchase of these aircraft coincided with an increase in frequency of flights to such destinations as Zurich, Athens, Frankfurt, Osaka, London, and Kuala Lumpur, which it now serviced 11 times daily. An immediate concern of SIA was to become known as a leader in international air travel. To this end, the company conceived a marketing strategy that stressed its commitment to passenger comfort and service and established the airline's distinctive group of air hostesses. Nicknamed the "Singapore Girls," the stewardesses, wearing custom-designed oriental sarongs, became recognized for their friendly and efficient service.
In addition to its marketing campaign, SIA launched a successful behind-the-scenes lobbying effort to convince various countries to grant the airline access to their airports. To cope with its growing number of flights and planes, SIA established a subsidiary called Singapore Airport Terminal Services Ltd. (SATS) in 1973. The company also embarked on a large-scale training program for all of its staff that included a S $20 million training center and several state-of-the-art flight simulators. By 1975 SIA's lobbying, marketing, and staff training efforts began to pay off with a 54 percent increase in passenger traffic that year alone. The fleet now consisted of seven Boeing 747s, 14 707s, and five 737s.
In addition to facing a large increase in passenger traffic, SIA had to accommodate a surge in operating costs, brought about not only by increased expenditures but also by huge increases in the price of oil in 1973 and 1977. SIA survived this crisis by adopting a companywide cost-cutting program and relying on its loyal customer base. In 1976 SIA's annual passenger volume passed the two million mark--doubling the 1973 volume--and SIA ranked third among airlines in the Far East Asia region, behind Japan Air Lines and All Japan Airlines. In 1977 SIA's lobbying of the United States government to grant access rights paid off, and it began service to San Francisco, Guam, and Honolulu. Also during this year SIA and the Singapore government announced plans for a vast new airport in the city of Changi, featuring a new headquarters building for SIA, a freight terminal for SATS, and an in-flight catering center. The government provided a five-year plan for the construction of the airport, which was scheduled for completion in 1981.
In July 1977 SIA announced a joint operation with British Airways to provide Concorde jet service between Singapore and London, an arrangement intended to bring prestige to SIA and help British Airways fully exploit the potential of its new supersonic aircraft. Featuring the SIA yellow-and-black logo on one side and the British Airways logo on the other, the aircraft had its maiden flight on December 9, 1977, but service was halted after three flights because of protests from the Malaysian government over environmental damage the Concorde caused while in Malaysian airspace. Full service resumed 13 months later on a thrice weekly basis via an alternate route and with a stop at Bahrain in the Persian Gulf. The service was terminated, however, in November 1980. Nevertheless, the project was deemed a marketing victory, and SIA became known as one of only four airlines to operate the supersonic aircraft.
In the early 1980s SIA continued to expand its services in the United States. Weekly flights to Los Angeles via Tokyo began at the end of 1980. The following year marked the opening of Singapore's new airport at Changi, offering improved service to visitors in Singapore and giving SIA the opportunity to expand its fleet. During this time, the comforts of the new airport, along with SIA's renowned customer service, resulted in SIA being named the top airline in the Asia Pacific region by customer preference. In response to a growing demand, six Boeing 747-300s (known as "Big Tops") were acquired, as well as seven Airbus A310s, to help SIA in its large-capacity routes. The purchases were part of a plan conceived in 1978 to replace the airline's entire fleet to decrease maintenance costs and increase punctuality. The workhorse of SIA's fleet has been the Boeing 747, which accounted for 90 percent of the airline's flight revenues; the company had purchased more than 50 of the aircraft, including a single order for 20 in February 1986, worth US $3.3 billion to Boeing.
By 1987 SIA's destination network spanned 54 cities in 37 countries, and the airline had installed one of the world's most modern computer centers, with a staff of 350, to coordinate and control its flights and other operations. In recognition of the airline's 40th anniversary that year, SIA engineers restored the airline's first plane, the Airspeed Consul. Furthermore, the Singapore government, which held 73 percent of SIA, floated part of its holding on the Singapore Stock Exchange, giving foreigners the opportunity to own up to 20 percent of the airline. Employee holdings remained significant at 17 percent.
Still Climbing in the 1990s
In 1989 SIA teamed with Delta and Swiss Air to create a formidable global alliance. By 1998 the carrier was also inking agreements with Lufthansa and Air Canada. It aggressively promoted similar arrangements with Ansett and Air New Zealand, which greatly increased SIA's presence in the South Pacific.
Although the carrier continued to grow in the 1990s, controlling costs remained a necessary priority. SIA used its younger, lower-cost SilkAir subsidiary to cover gaps in its route network. The company continued to expand its network, which included 68 cities in 40 countries in 1994. In response to rising labor expenses, SIA began shopping overseas for personnel, establishing a software developer in Bombay and investing in a Chinese maintenance facility and a Cambodian start-up airline. It continued to seek opportunities to invest in other Asian carriers, such as China Airlines and Thai Airways International.
In 1992 SIA spun off its maintenance unit, SIA Engineering, which also continued to grow, building a new hangar at the Changi Airport. In 1998 SIA Engineering entered into joint ventures with Hamilton Standard and Pratt and Whitney. In 1995 the ground-handling subsidiary, SATS Airport Services, opened a $150 million multi-tier airfreight terminal.
SIA lobbied worldwide for freer markets in the 1990s, which it said held the key to industry profits. The traditional system of regulation, bilateral agreements between individual nations, could only hinder the world's airlines with inefficiency, according to company officials. In 1992--93 SIA earned an operating profit of $548 million. This figure reached $657 million in just two years.
Still, the pressures of competition induced SIA to install a "cabin management interactive system" in every seat. The CMIS gave passengers a six-inch screen with a choice of six movies, as well as video games, telephones, etc. The consoles cost $4 million per plane to install. Other liabilities accrued when the carrier had problems selling jets as they reached an age of five years. It finally resorted to leasing the aircraft in slow resale markets.
The Asian financial crisis severely cut into SIA's earnings in the late 1990s, prompting it to examine its global route network for poorly performing routes. Service to Berlin was canceled in early 1999. Still, SIA used its ample cash reserves to further upgrade passenger amenities, spending $300 million to renovate the cabins of its aircraft. The first two 747s to receive the upgrade were painted in an exotic livery reminiscent of a tropical sunset. SIA prefixed its traditional slogan "A great way to fly" with "Now more than ever."
Principal Subsidiaries: Singapore Airport Terminal Services Ltd.; SATS Apron Services Pte. Ltd.; SATS Airport Services Pte. Ltd.; SATS Catering Pte. Ltd.; SATS Security Services Private Limited; SilkAir (Singapore) Private Limited; Tradewinds Tours & Travel Private Limited; Singapore Aviation and General Insurance Company (Pte.) Limited; SIA Engineering Company Private Limited; Singapore Flying College Pte. Ltd.; Aero Laundry & Lines Services Private Limited; Abacus Travel Systems Pte. Ltd. (61%); Singapore Jamco Private Limited (51%); Cargo Community Network Pte. Ltd. (51%); Star Kingdom Investment Limited (Hong Kong); SH tours Ltd. (United Kingdom); Auspice Limited (Channel Islands); Singapore Airlines (Mauritius) Ltd. (Mauritius); Airline Software Development Consultancy India (Pvt) Limited (51%); Eagle Services Asia (49%).
- Allen, Roy, SIA: Take-Off to Success, Singapore: SIA, 1990.
- Bociurkiw, Michael, "Time for Champagne," Forbes, December 14, 1998.
- Donoghue, J.A., "Superior, Innovative and Adept," Air Transport World, June 1994, pp. 30--39.
- "Flying Beauty," Economist, December 14, 1991.
- Leung, James, "Winging Their Way to Global Might," Asian Business, December 1996, pp. 24--34.
- Tanzer, Andrew, "The Prime Minister Is a Demanding Shareholder," Forbes, April 2, 1990, pp. 152--53.
- Westlake, Michael, "Success in the Air," Far Eastern Economic Review, October 15, 1987, pp. 78--81.
Source: International Directory of Company Histories, Vol. 27. St. James Press, 1999.