Sia Alliance Strategic

The alliance could be the sources of cost reduction in labor cost in marketing, maintenance, and flight operations. Other sources of cost reduction are in equipment and property cost, capital cost for aircraft, and also expenses for third party services such as ground handling.

Access to new markets by tapping into a partner’s underutilized route rights or slots.

Defense of current markets through seat capacity.

What are the strategic and operational considerations for SIA joining the strategic alliance?

SIA has a good reputation for excellence in customer service. By joining the strategic alliances, SIA could focus in best-cost provider strategy that SIA could give customers more value for their money by incorporating good to excellent product attributes at a lower cost than rivals.

There would be a cost efficient management of value chain activities :

• It could develop the product by providing a greater number and variety destinations with convenient connecting fights through harmonization of partner airlines’ schedules. From the alliance with Delta Airlines and Swissair, SIA would service a greater number in US and Europe.

• It could provide attractive customer service at a lower cost than rivals by operational cost savings in maintenance, catering services, and exchange of personnel in times of need. SIA would pursue efforts to boost sales volumes and spread out the costs such as advertising, selling and administrative costs.

• It could also create a good quality product such as holiday packages (Swiss skiing packages and vacation packages in US and Europe) and frequent flyer programs.

Why is SIA reluctant to join the larger strategic alliance?

SIA has to pick a good partner so that SIA could avoid a partnership in which