Hope and Change: The world has changed for Singapore Airlines. Can Singapore Airlines change too?

Nothing has changed. Yet everything has changed.

In many ways, Singapore Airlines is the same high-flying jetsetter it always was. It’s still synonymous with world-class customer service. It’s still a pioneer in new aircraft technology and an innovator with respect to inflight amenities. It still has competitive operating costs and a strong balance sheet. It still has a government shareholder keen on promoting aviation. What’s vastly different, however, is the darkening macroeconomic and competitive world around it.

Through all the trials and tribulations of the 2000s—the 9/11 attacks, the SARS virus, the global financial crisis and so on—Singapore Airlines lost money only once (2009) and often produced double-digit operating margins. Over a slightly broader sweep of time, from the thick of the Asian financial crisis in 1998 through 2010, the airline’s average annual operating margin was 9%. But since 2011, the average has been a lowly 2%.

Singapore Airlines was a textbook airline success story for reasons beyond just its service, its costs, its governance, its technology and the economic and political virtues of its dynamic home nation. Also key to its strength was the weakness of others. For much of its lifetime, Singapore Airlines was a battleship in a sea of shipwrecks: immature state-owned Chinese carriers to its north, a flailing Air India to its west and a host of overstaffed and politically tainted carriers within the ASEAN region, including Indonesia’s only international carrier of note, Garuda, which spent the 2000s cleaning up a giant financial mess left behind by the ousted Suharto regime. Malaysia Airlines and Thai Airways were better but still far behind Singapore Airlines in terms of efficiency and reputation. Which left Hong Kong’s Cathay Pacific as its only worthy competitor for many itineraries.

Singapore, moreover, was uniquely well-positioned as a gateway to Australasia. Rivals in Europe, North America and Japan had far higher costs. And not until the mid-2000s did low-cost carriers start getting a foothold in East Asia. Importantly, Singapore Airlines had a thriving cargo business too, greatly benefiting from a long upward trend in export-based regional economic development. A ground handling business, meanwhile, buttressed the group’s profits with operating margins sometimes exceeding 20%.

Singapore Airlines made some…

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