The threat of substitute services
This aspect of the Five Forces refers to the extent to which the product or
service offered by an industry incumbent can be replaced by another similar service.
Porter (1985) argued that businesses providing substituteable products and services
were at risk of market losses. Once again, distinctions must be made between the
short-haul and the long-haul arms of Singapore Airline’s business operations. The
threat of substitute services to the short-haul element of the business is relatively
moderate. With globalization, there are increasing investments in transportation links
between major geographical hubs, including those served by Singapore Airlines. It is
possible, for example, that high-speed rail connections will exist between the major
cities of Eurasia in the future (Richards, 2012). More immediately, a threat to
Singapore Airline’s market for long-haul business class passengers is posed by the
growing recalcitrance of workers in internationalization organisations to travel for work.
Due to increased concern with the environmental impact of air travel, improved real time
telecommunications technologies and the growing number of virtual
enterprises, individuals that would previously have made considerable use of long term
business travel are finding that they can do their work from home.