Economic elements which include interest rates, oil price, taxation changes, economic growth, inflation and tariff is the most important factor affecting directly to Airline industry. Also, the economic health of countries is influence strongly to flight demand. Singapore Airlines has been taken advantage of economic development in Singapore in where the more business and investment to Singapore the bigger number of customers for them.
As targeting to serve business people, Singapore Airlines even has to concern more about economic situation. Their financial report last year has shown the decrease in revenue by 20.6% from 15,996.3 $billion in 2009 to 12,707.3 $billion in 2010 as the consequence of Asian financial crisis and the recession (Singapore Airlines, 2010). In addition, recession is seen as the main reason for decrease in air travel. Also, it seems to be very difficult for Singapore Airlines as well as airline firms in determining demand and costs. Moreover, Singapore Airlines has to consider the price fluctuation such as oil price as its rising causes increasing flight prices which might hamper Singapore Airlines' competitive advantages in terms of competing with budget airline firms.
By continuing consider economic factors around the world helps Singapore Airlines has more appreciate information and right decision when they come to other countries. For examples, as a major shareholder criticized that the deal is unfair, Singapore Airlines was in trouble when negotiating to buy 24% stake in China Eastern Airlines as a step of occupying Asian market. On the other hand, the growth in Asian economics has opened more market and created more opportunities for Singapore Airlines.