News

SIA to honour half-price business fares

8 Dec 2014 by Alex McWhirter

Singapore Airlines has done the right thing.

In a statement issued in Singapore this morning and reported in the Straits Times, the airline said it will accept all 900 of the wrongly priced tickets that it recently sold in Australia.

What happened at the end of November is something that happens to all airlines at some time — hundreds of Australian travellers were holding incorrectly priced SIA business class flights to various points in the world, including in Europe and Asia.

Travellers paid around AU$3,500 for tickets which should normally have cost AU$6,000, according to initial reports in the Sydney Morning Herald. The discounted price was not questioned because both they and their travel agents thought it was one of SIA's promotional deals.

Indeed, there was no reason to be suspicious as the airline has offered such deals in the past. Here in the UK, SIA held a similar promotion during a traffic downturn in 2009 (see news, March 2009).

SIA's decison to honour the tickets has avoided much bad publicity which could have persisted for months (because of the various flight dates for the incorrect fares).

But SIA still failed in the PR department. It should have been more cautious. Instead of saying it would reconsider the passengers' fares, it simply refused to honour them.

Travellers were told they would either have to pay twice the price or else fly economy class. To be fair, a full refund was also offered if passengers decided not to travel or opt for another carrier.

I am not a legal expert but past experience has shown that tickets booked online but wrongly priced are a minefield. There is no clear indication as to the outcome.

Normally, airlines will keep quiet, as happened in SIA's case, hoping the problem will go away.

But in this case there were so many people involved that the problem soon emerged into the glare of publicity. And Australia is a strong consumer market with many vocal customers.

By honouring so many incorrectly priced tickets, SIA stands to lose several million dollars in revenue. But if it is smart, the airline won't lose anything at all.

As one airline consultant told me: "If SIA's yield management is worth anything, the airline will simply swallow the mistake and recover the yield [revenue per seat] from the rest of the flight."

Indeed, that's probably what SIA is doing at this very moment.

singaporeair.com

Alex McWhirter

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