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Bilateral air service agreements negotiated between individual nations limited the routes of a given airline and hence the airline's growth. The global airline industry had responded to this challenge with a mix of acquisition, strategic alliances (for e.g., the STAR alliance) and related diversification strategies. In early 2004, the emergence of low cost carriers in Asia was a threat to Singapore Airlines’ (SIA) proven and successful business model, based on premium fares for premium services. To maintain what the airline’s shareholders regarded as acceptable returns, while continuing with its well-developed and highly effective work processes and systems, the company had to make deeper cost cuts in its operations...
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