FEBRUARY 1 — It has not been a good start for Singapore Airlines (SIA) flying into the new year. Twice within a month, it has upset its customers as it garners bad press that may affect its standing in an increasingly competitive environment.
Worse, it risks shaving off some of the trust among customers as an airline that thinks first of how they may be affected before it implements a new cost policy or customer procedure.
At the beginning of the year, SIA announced a 1.3 per cent credit card service fee for outgoing flights from Singapore from January 20, only to retract the policy before its implementation following a public outcry.
Although this fee had already been introduced for flights departing Australia since November 2016 and flights departing New Zealand, Belgium, the Netherlands and the United Kingdom since April last year, the Singapore home market was not ready to accept it.
SIA referred to the fees as “costs relating to the acceptance of credit cards,” when it really is an attempt to recover the surcharge levied by credit card companies on SIA, as the vendor which is benefitting from such clientele.
It brings to mind how airlines faced with rising fuel costs so adroitly levied a surcharge as if it was something to be agreed separately between the fuel companies and the consumers, with the airlines as the middlemen.
Sure, airlines are likely to pass on such increases in costs to consumers, but as far as the latter are concerned, it is the bottom-line total of a ticket fare that matters – the kind of transparency that watchdog organisations across the globe are trying to enforce.
In a competitive environment, market forces will determine how much of that can be passed on, since consumers have choices.
In the case of the credit card service fee, it looked like SIA had assumed it would garner the same compliance at home, and on account of that might not have done enough to pre-empt and assuage a potentially unhappy reaction.
Its quick move to abort the policy was a saving grace. Unfortunately, that was all too soon lost as more bad press followed over another episode of how the airline could have been more sensitive towards its customers.
SIA’s new online booking system, which automatically included travel insurance in the ticket purchase at the time of booking, riled many of its customers.
Most were unaware of the inclusion, and felt that SIA should not have assume d that the optional feature is something they would have wanted. It smacked too much of an uninvited hard-sell.
In its defence, SIA said that “the inclusion of insurance is clearly displayed, the cost is reflected in the booking summary panel at the payment page, and customers can opt out if they do not wish to add the insurance to their booking.”
But it clearly missed the point of its customers’ displeasure. Sure, they could opt out, but why should the burden be placed on them? Should it not have been offered as an opt-in feature instead? Some customers who wanted a refund also expressed unhappiness about what they deemed a tedious and unnecessary process. Others have expressed frustration at having to deal with SIA’s appointed insurers.
Auto-inclusion of travel insurance is not a common airline practice, and SIA is sadly mistaken if it thinks it is setting a trend.
As an example, Virgin Australia stopped the pre-selection of travel insurance on its online booking platform in 2016 following discussions with the Australian Competition and Consumer Commission.
Other watchdog organisations have warned airlines against such practices in their quest to protect the rights of consumers.
The Consumers Association of Singapore has also weighed in on the matter.
Its executive director Loy York Jiun said: “It is common for consumers to overlook the option, especially if they do not require it, and this can lead to additional charges for extra services or items which the consumers may not be aware that they are purchasing.”
SIA is said to be reviewing the matter, but would not commit on whether it will change the procedure. “Minimally, what the team is trying to do is, if it is not clear enough, what can we do to make it even clearer, (so) that people do not inadvertently do so,” SIA chief executive Goh Choon Phong told reporters on Jan 29.
On the credit card surcharge U-turn, he said: “We have to accept that some things may not work and we have to show that if it doesn’t work, that we learn quickly and move on.”
While SIA goes about repairing the damage, one wonders if its moves were in response to the competition from other carriers — particularly low-cost operators — and aimed at trying to gain on the roundabouts what it loses on the swing.
Many legacy airlines offering lower economy fares are trimming back on the perks and aspects of service hitherto considered part of a normal package.
American airlines are offering basic economy fares that will only see seats assigned at the time of boarding at the gate.
Cathay Pacific and SIA offer special economy fares which do not gain full mileage points. And British Airways has announced that economy seats in its new planes will not be able to recline, freeing up space to squeeze in more seats.
In fact, what SIA does with the automatic inclusion of insurance coverage runs against the very grain of the budget model that unbundles the service package, charging customers for only what they want as extras instead of “slipping in surreptitious add-on-charges,” as one customer reportedly put it.
Clearly, SIA will need to be more open and transparent if it wants to retain or regain — as the case may be — the trust of its customers. — TODAY
* David Leo is a published author and aviation veteran.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
