Economic benefits, Managerial Economics

Singapore Airlines  is facing the possibility of a new competitor " Qantas " to enter the Singaporean market, especially in premium market, Singapore Airlines is dominant on the market entirely(Qantas flies into row with regional rival 2011). According to Australian Financial review report, Qantas's proposal is encountering serious interaction and attention by the Government of Singapore(Francis 2011). Qantas issue raises many questions about the seriousness of the Singapore government and the legislative authorities, as well as on the future of Singapore Airlines. This essay is based on the Liu model in the analysis and diagnosis of the relationship between Singapore Airlines and the Singapore government.

When we talk about the relationship between Singapore Airlines and the Singapore government, then it is different from talking about the relationship between a multinational company with host government, which means that the national company will depend on a different strategy from the foreign  company's strategy. The relationship between the parties may see more competition and a little cooperation, Low absorptive capacity of the market argument will lead the Singapore Airlines to form a lobby to pressure the legislative and executive powers in order to develop legislation and laws that prevent the entry of a foreign competitor, Or at the very least, provide a certain level of protection to Singapore Airlines from any foreign competitor aspires to enter the Singaporean market to take advantage of local resources.

However, Singapore government may  allow to  a foreign competitor to enter their market if they were in need of organizational and technological skills and access to foreign resources in order to achieve integration of resources. Singapore government may not have the justification for that from viewpoint of sky reporter Jameson ( Jameson 2011) about Qantas. In premium market, Singapore Airlines far outweighs Qantas lines. The Singaporean government has to find a justification in the host Qantas if they argue that allowing to Qantas to enter the Singaporean market and the acquisition of 51% by Singaporeans, better than giving an opportunity for the Malaysian government to take advantage of that. In addition, that the entry of Qantas to the Malaysian market instead of the Singaporean market does not mean that Singapore Airlines will not be affected at the same time, Qantas will be outside the control of the Singapore government.

Some politicians argue that the entry of a foreign competitor does not serve the interests of Singapore, they cite the position of the former prime minister which refuse to enter a foreign competitor of Singapore Airlines to premium market. And argue that there is no economic benefits and political gains from enter Qantas to Singapore market, also mentioned to Jetstar Asia experience which owned by Choo but it run by Jetstar. According to resources dependence theory the relationship between Singapore Airline and Singapore government Singapore will be cooperative with government in an attempt to acquire red Q In the case of the agreement provides for Singaporeans to acquire 51% of the company, thus red Q will transform from a rival company to a subsidiary. And in an attempt to create a new budget Airlines which started seriously thinking of create Scoot Airlines.

Posted Date: 3/18/2013 6:19:47 AM | Location : United States

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