"AbstractPast decades have seen an increase in air transportation and a significant decrease in the averageoperation costs. It is observed that airlines have low profitability, the market liberalization andincreasing opportunities and competition have diminished the prices, where airlines facedincreasing costs.Considering the advantage in costs, airlines should develop strategies tosuccessfully remain in the market. The important factors that influence the cost related strategiesin the airline strategies include characteristics of the aircraft, cost of labor and quality ofmanagement. The present study analyses the consistent superior performance of Singaporeairlines and the success of the companyafter adopting a difficult dual strategy in a highlyvolatile market environment for the airline industry. The various factors that contribute to thesustenance of competition in the market by the Singapore airlines company are also discussed.The effective management of labor costs, innovation and excellent human resource managementare also highlighted and discussed. IntroductionCivil aviation industry has seen a dramatic rise in the last fifty years, while the technologicaladvances has lead to the decrease in costs and prices and this stimulated a rapid growth indemand for airline services. (Doganis, 2010). In a market based industry, cost reduction is animportant way of being competitive when the prices decrease. Even though it is relevant toreduce the cost, the relative impact of each of the component on the total cost depends on factorsthat may or may not have association with the airline industry. Airline industry is dynamic, andrapid changes occur in many of its features, and due to this, for a decision making in thebusiness, it is important to have a clear knowledge on the associated costs and its determinants.To flourish in an extremely difficult environment, it is necessary for the airlines to adoptstrategies that are clearly articulated and are executed efficiently. The present study explores thekey drivers for the performance of Singapore airlines, the general level of annual profitability,cost structure, revenue sources, and the importance of ancillary revenue are also discussed. Cost structure of airlinesThe revenue as well as the cost structure of airlines is divided traditionally between the issuesassociated with operation and non-operation. The operating costs of an airline company can be direct and indirect, and the direct costs includeall costs that depend on the type of aircraft such as the cost of flight, maintenance and overhaulof aircraft and depreciation costs. The indirect costs include all the costs that remain unchangedwith the change of plane such as the costs that are not directly dependent on aircraft operations.As there was need to increase security measures, costs have risen as there was a necessity toinvest for facilities as well as equipment to screen baggage and tracking.in addition to this, escalating fuel prices result in high operating costs, with high labour costs have an adverse effecton the profit. (Marcella et.al, 2013).The operating income is influenced by six market drivers such as Cost factorsLower number of employees per ASM or departureLower salary expense for the employeeLowest cost for the gallon of fuelRevenue factorsLarger revenue per RPMHigher load factorLonger flight stage.Cost factorsEmployees per ASM or departureEmployee per available seat mile or ASM is an important factor that influences costs andprofitability, and the ability of the airline to manage this expense is very important. Salary expense for the employeeIncreasing the salary or reducing the employee number has a significant impact on theproductivity of the airlines. Fuel costsEven though fuel costs have doubled and they have a significant impact on the profitability of theairline companies, the airlines cannot manage fuel costs beyond the leveraging scale and usingfinancial derivatives to hedge the prices of fuel.Revenue per revenue passenger mile (RPM)The average price that an airline can charge the passenger per mile flown by the passenger is theindicator of revenue efficiency.Load factorLoad factor in airlines is the number of occupied seats to the total number of seats flown, thisratio shows the efficiency of airlines in using the fixed assets when flying. The load factor is onemore significant factor in determining the impact of airline profits.Flight stageFlight stage is the average distance of flight per leg of travel, and this factor has significancewhen operating income per departure is considered. (Chopra and Lisiak 2006). The non-operation cost determinant of an airline is the managers who has high or total control,and some items that can be considered as a part of this category include marketing, productplanning, financial policies, business policies and business strategy. The quality of managementand the efficiency of management can also be considered as determinants as they influence thedegree of impact of the other factors. (Rogéria and Michelle, 2014). Cost control Given the difficulty in the economics of the airline industry, cost control is one of importantstrategic priority of the airlines. Fuel prices and airport charges in the industry cannot becontrolled, hence airlines have focused on labor cost savings to get good results. Managers of theindustry should also focus on productivity as poor productivity can translate even low wages intohigh labor costs. High labor productivity can provide significant benefits to the airline industry.Ott and Neidl (1995. Importance of Ancillary revenuesAirlines recently is increasingly dependent on ancillary sources of revenue, which are therevenues derived from something that is additional to the main part of the function. In airlineindustry, these revenues are not derived from the service of transportation of a passenger fromorigin to destination. The airlines is increasingly pursuing its ancillary revenue, because ofincreasing competition from low cost carriers, and most of the airlines find it necessary tounbundle their product depending on the situation. The rationale behind unbundling is to sustaincompetition, that is lowering the advertised base ticket fare. In an environment, where there is anecessity to earn even the slimmest of the positive margins, ancillary revenues that representaround a small percentage of their total revenue indicates that add-ons are solidified as animportant part of the business. Nonetheless, different airlines differ in their emphasis on theextent of add-ons in their business strategies. The sales of air tickets and the management of seatinventory has shown a continuous improvement, while the ancillary revenue related to passengeris uncertain and needs improvement. With the increasing number of airlines unbundling theirproduct and lowering their base ticket fare to sustain competition, importance is attributed toadd-ons in the revenue optimization process."