SINGAPORE AIRLINES (A COST EFFECTIVE LEADER) BY KOLAWOLE OLAYINKA In an industry plagued by intermittent periods of disastrous under-performance, its intriguing

that SIA has combined the supposedly incompatible strategies of differentiation which it pursues through service excellence and continuous innovationand cost leadership. (Heracleous, Wirtz, & Johnston, 2004, Heracleous & Wirtz, 2010). The values of cost-effective service excellence are enshrined in a unique, self-reinforcing activity system that makes the values real for all employees. We found that the five pillars of this activity system are: rigorous service design and development, total innovation (integrating continuous incremental improvements with discontinuous innovations), profit and cost consciousness ingrained in all employees, holistic staff development; reaping of strategic synergies through related diversification and world-class infrastructure. (Heracleous, et al., 2004). SIAs training program focuses on the necessity of keeping costs down. Cost considerations affect every decision made at SIA. In day-to-day operations, the aim is to reduce waste without compromising customer service. For instance, when cabin crews noticed that about a third of passengers dont eat dinner on late night flights out of Singapore, they recommended carrying less food. Unlike other airlines, SIA offers two brands of champagne in first class, Krug Grande Cuve and Dom Prignon, and spends $8 million on champagne every year. But its cabin crew minimize costs by pouring from whichever bottle is open unless a passenger specifically requests the other brand. No cost is too small to reduce. (Heracleous & Wirtz, 2010). SIA obtained a competitive advantage in the airline industry by developing a way to reduce costs and earn positive economic profits. REFERENCES

Heracleous, L., Wirtz, J., & Johnston, R. (2004). CostEffective Service Excellence: Lessons from Singapore Airlines. Business Strategy Review, 15(1), 33-38. Heracleous, L., & Wirtz, J. (2010). Singapore airlines balancing act. Harvard business review, 88(7), 145-149.