Singapore Airlines (SIA) has long been considered the gold standard of the airline industry. The company’s superior passenger service and well-respected reputation among travellers has earned it numerous awards over the years. With the aggressive expansion of Middle Eastern airlines in recent years, however, SIA seemed to have quietly fallen into the background.
Financially, SIA’s performance had suffered despite the expanding airline industry. Between 2012 and 2017, SIA’s revenue remained flat with slim margins. Operationally, the breakeven load factor (the percentage of seats occupied by passengers) was higher than the actual load factor, suggesting that SIA was making losses on its operations . A boost in profit in December 2017 came not from passengers, but from increased cargo demand to support heightened holiday online shopping towards year-end . While there is no doubt that SIA’s service is still among the best in the industry, competitors have been catching up, making service less of a differentiating factor for the airline.
Regaining the Crown
To remain competitive, SIA recognized the need to reinvent its competitive advantage and develop new competencies. Earlier this year, the company announced the Innovation Digital Blueprint with the goal to become the leading digital airline in the world . In addition to working with governmental agency partners in the next 5-10 years, the blueprint aims to cultivate an open innovation culture through interaction with stakeholders inside and outside of the company in the immediate term.
Firstly, a Digital Innovation Lab is being set up to encourage employees to experiment new ideas that could tackle problems that they observe on the job. The lab offers a platform on which SIA staff can work with external partners such as startups, incubators, and accelerators to reduce maintenance costs and improve the airline’s service standards .
Secondly, the airline launched the AppChallenge for Singaporean university students and the global community at large. The program aims to crowdsource digital ideas to tackle 5 main pressing challenges that SIA is facing: 
- Improving mobile application engagement to enhance user experience throughout the travel journey
- Improving experience of offloaded passengers due to overbooking
- Enabling better inflight shopping experience to integrate e-commerce into travel retail purchases
- Tracking inventory usage to provide insights into usage patterns/demands and improve forecast accuracy
- Tracking Food and Beverages consumption to track F&B wastage and collect data about passengers’ consumption patterns onboard more efficiently
During the challenges, SIA provides technical support for contestants by granting them access to the company’s APIs (application programming interfaces) related to flight schedule, flight status, baggage check-in, and customer loyalty points, among others. Winning teams would receive monetary awards, mileage, as well as a possibility to collaborate on the proof of concept with SIA.
Is Idea Generation Enough?
Involvement of the Singaporean and global communities in the idea generation process is a positive step towards launching SIA into the digital age. To strengthen the ideas’ impact, however, SIA could consider involving the public in the idea selection process as well. Ultimately, passengers are the most important stakeholders in SIA’s business and will be ones who decide what matters most to their travelling experience. Being able to place a duty-free order online 24 hours prior to flight time may not be as important to passengers as a better mechanism to predict the airline’s overbooking. SIA may find itself focusing its effort and allocating resources inefficiently without the customers’ input. Opening up idea selection to the public will also push the company to commit to implementing these ideas and signal to customers that SIA values their involvement in its re-positioning plan.
In the medium term, SIA could aim to tackle more complex problems by dividing them up into smaller components. The more granular and diverse the tasks, the larger the potential pool of participants in the challenge . Offering smaller tasks and designing the competition to better encourage collaboration among participating teams could also enhance the agility and variability of ideas. For instance, a team in the competition thought the idea that they originally planned to pursue was too complex to be done by their own team members and ended up changing their target problem at the eleventh hour. They might have been able to come up with a small, yet brilliant, idea that could contribute to solving a larger, more complex issue had they had an opportunity to team up with people with a different set of background.
Open Innovation as Competitive Advantage?
As SIA grants contestants access to its several APIs, how could the airline determine how open is too open? At what point would open innovation allow other airlines to replicate the ideas? In addition, SIA also owns Scoot, a low-cost sister airline operating medium- and long-haul flights globally. Would open innovation be beneficial for Scoot amidst rising competition in the low-cost aviation segment as well?
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