How to minimise cash payments on award tickets

cover photo by patrickdelrosario

The Idea

  • SQ charges fuel surcharges (YQ) on award tickets which can result in a “free” ticket still burning a hole in your pocket
  • However, YQ varies depending on your point of origin. It is typically the highest for flights originating out of SIN. To reduce the amount of YQ you have to pay, you can try
    • Finding a cheap one-way ticket to a stopover location and continuing your journey from there (eg HKG-SFO, ICN-SFO, FRA-JFK, NRT-LAX)
    • Finding a cheap one-way ticket to Manila and routing from there (flights from MNL have no YQ)
  • Of these 2 options, the first is probably easier as it does not involve back-tracking. However, it is only possible on non-direct flights.For direct flights, you should weigh up the cost savings versus extra time involved

The Details

SQ’s award ticket policy is a bit of a bitch. You’d think that after flying thousands of miles and generating lots of ancillary fees for them by using a miles-earning card that they’d at least let you enjoy the fruits of your labour. Hardly so. Even if you do manage to get increasingly scarce saver award availability, SQ further levies fuel surcharges (known as YQ) and taxes on your redemptions.

This is not unique to SQ. Many Asian and European airlines (but surprisingly not penny-pinching US ones) levy YQ on award redemptions, arguing that your miles are only paying for the fare component and that fuel is payable separately.

This, of course, is a load of bs. You wouldn’t go to a restaurant and expect to have to pay separately for the gas used to cook your food. Why should airlines have it different?

Furthermore, SQ’s YQ has always been higher than the market’s. Oil prices have been declining for a while now, but SQ only recently announced its decision to cut YQ, and even that cut was much less than the % by which oil prices have fallen. Rumour has it that SQ has a lot of badly-made fuel hedges which have locked it into relatively high jetfuel prices.

Whatever the case, fuel surcharges are a fact of SQ redemptions. So what can we do about them? Is there a way to reduce the amount we have to pay? The solution is to not start your journey from Singapore. Let me show you 2 options below

Option 1: Start your journey from the stopover

The first method is only applicable on long-haul routes involving a stopover. Typically this means SQ’s North and South American routes, because most European destinations are non-stop.

Let’s say I wanted to go from SIN-SFO. I have 2 options. The first is to route from SIN all the way to SFO, which would cost me 68,000 miles plus S$385 of taxes and surcharges.

SQ award ticket, 1 way SIN-HKG-SFO

The second is to only route from HKG-SFO, which would cost 63,750 miles + HKD650 (S$110) in taxes and surcharges.

SQ Award ticket, 1 way HKG-SFO

If you do this, you’d need to get from SIN-HKG, obviously. A budget airline ticket would set you back about S$110

Kayak sample fares, SIN-HKG 1 way

Remember that we value miles between ~S$0.04-0.05 each. This means the total saving is 4,250 miles (valued between S$170-S$210) plus S$275 in surcharges. Minus away the cost of the SIN-HKG positioning ticket and your savings are ~S$350. That’s quite a bit!

Just remember you need to factor in the cost of your baggage which will be chargeable on a budget airline.

Option 2: Start your journey from Manila

The Philippines recently passed legislation which banned airlines from charging YQ on top of tickets. This isn’t going to affect SQ’s revenue operations from Manila- they’ll just bump up the base fare to cover whatever the YQ would have been. But for their award tickets, this opens up a very interesting opportunity.

Look what happens when I price the same ticket from MNL to SFO, via SIN and HKG

SQ Award Ticket, 1 way MNL-SIN-HKG-SFO

The number of miles required is still the same, because Manila is in the same zone as Singapore. However, look at the taxes and surcharges- they’ve dropped to US$56.65, or ~S$75, because there’s no YQ for flights originating from MNL. So despite the fact we’re flying 1 more leg on SQ, the cash outlay of our redemption has dropped by S$310!

The question you then need to ask yourself is this- is it worth my time to take a budget flight to Manila and start my trip from there?

Kayak sample fares, SIN-MNL 1 way

Kayak shows that the fares for a one way ticket from SIN-MNL start at ~S$120.  This means your net saving is S$310-120=190. (You’ll also need to take into account luggage charges levied by budget airlines)

Once you factor in the additional time you will need to schedule to make your connection, the overall appeal of starting your trip from Manila may diminish. However, keep in mind that our analysis is based on SQ’s current reduced YQ. 6 months ago the difference in taxes and surcharges between an award ticket starting in SIN and one in MNL would have been upwards of S$500.


Neither method is perfect. Option 1 is easier to do, but isn’t an option on flights without a stopover. Option 2 can be done for any flight, but requires flying SIN-MNL-SIN-wherever. Once you factor in flight time to MNL plus the buffer you need to give yourself for transit, the cost savings may not be significant enough to sway your decision.

Ultimately what will drive your decision is what SQ does with its YQ in the future. If oil prices rebound and SQ raises its YQ again, your time-money tradeoff may shift more favorably in the direction of one of the methods above.

The presence of fuel surcharges on SQ award tickets is another reason why you should take a look at Lifemiles, which doesn’t have any of this nonsense going on. Why not create an account with them today so you can take advantage of their highly lucrative mile-buying promotions?

Beware the Dynamic Currency Conversion scam

cover photo by richardschneider

The Idea

  • DCC is a service offered on Visa/Mastercard payments overseas that bills the customer in his home currency, while tacking on a conversion fee that can be as high as 8%
  • Although in theory you have the right to reject DCC, in practice a lot of customers never get asked by the merchant. This is against the T&C of Visa/Mastercard, but still happens very often
  • Be extremely vigilant when using your Visa/Mastercard overseas, or use AMEX. If given a charge slip with DCC, deface the merchant’s copy and write “DCC rejected” on both your copy and the merchant’s to support a dispute if necessary
  • Read the wiki on Flyertalk to get educated on this scam- don’t fall prey to it!

The Details

Dynamic Currency Conversion (DCC) is a scam and needs to be stopped.

The underlying idea behind DCC is that it gives you the “convenience” of knowing in advance how much your credit card will be billed when you pay in a foreign currency. Suppose I’m shopping in the USA and I want to charge US$100 to my card. If the merchant has a DCC terminal installed, an option will appear asking me whether I’d like to DCC the transaction and pay S$145.10, for example.

“What a great convenience!” said no one, ever. “What’s the catch?” Well, US$10 is about S$134.20 at today’s exchange rates. Even if you paid using your credit card and incurred a 3.5% forex fee, you’d be paying at most S$138.90, maybe even S$140 at most once you factor in all the markups.

You’ll notice that S$145.10 is much higher than S$134.20. That’s right. DCC is sold to merchants as a way for them to generate extra revenue- this additional spread (as high as 8% potentially) earned through DCC is shared between them and the payment processor. The DCC playbook even gives clerks lines to encourage customers to accept DCC, such as

  • “Oh, it’s more convenient for you because you know how much you’ll be paying”
  • “Oh, it’s better than being hit with some unknown exchange rate when you get your bill”
  • “Oh, I think you look stupid enough to fall for this”

There’s a long Flyertalk thread on this and it appears that even the sales staff in a lot of places are ignorant as to what DCC is- either telling the customer they “have no choice but to use DCC” or that the DCC-ed rate is “just for their convenience and they will be charged in their home currency”

“Ok,” you say “No problem, I’ll just opt not to use it”.  That’s great, but every time I’ve been hit by DCC I’ve explicitly requested not to use it, or not been given the option.

For example, Avis will automatically DCC your transaction if you pay with a Visa or Mastercard. Nowhere in the payment process does it give you the option to opt out of DCC. To opt out, you have to physically visit a billing counter before you begin your rental and ask them to process your transaction manually

Another time, I was at a restaurant in Shanghai (DCC is particularly rampant in China) and saw on my credit card charge slip the DCC option. Despite ticking CNY, I was still billed in SGD when I got my statement. Because of this, I’m extra vigilant about any credit card slip I sign overseas.

What’s funny is that Banks, who are losing out due to DCC (they don’t get to impose their forex markup), are taking steps to negate whatever advantage might have existed from DCC by levying a surcharge for SGD denominated transactions done outside of Singapore (ie DCC-ed transactions)

So how do you avoid this scam? My suggestions

  • Wherever possible, pay with AMEX. AMEX does not support DCC
  • When given a credit card chargeslip with two boxes to tick (SGD vs local currency), mark local currency very clearly and write on the receipt “DCC rejected, Local option selected”. Make this marking on both your copy and the merchant’s in case you need to file a dispute
  • When the staff say that they are “unable to change the charge” or “the system forces them to use DCC”, they’re ill-informed or lying. Don’t take it personally, just deface the merchant’s copy of the chargeslip as mentioned above. During a dispute, Mastercard/Visa will ask the merchant to submit a copy of the chargeslip- where there’ll be your clearly written statement saying you rejected DCC

I strongly urge you to read the wiki over on Flyertalk which explains DCC in more detail and gives sample charge slips displaying DCC so you know what to look out for.

What bugs me the most about DCC is how cynical it is, purporting to confer a non-existent benefit on the customer. Hopefully you’re not better placed to protect yourself. Because The More You Know…

themoreyouknowOf course DCC can be useful to you. Just look at the converted amount on your receipt. Then cancel it out and know that whatever amount you end up paying, it’ll be lower than the converted amount!



In-depth analysis of the OCBC Voyage card

cover photo by luke ma

This is the second part of a two part article on the OCBC Voyage Card. The first part can be found here

The Idea

  • The Voyage Card has a high annual fee of S$488 which is non-waivable
  • Analysis of VM value shows VMs are worth ~3 cents each regardless of whether you redeem them for economy, business or first class. Therefore the Voyage Card is only useful if you intend to redeem economy class tickets.
  • The fixed value of VMs leads me to believe the Voyage Card is really a glorified cashback card with 3% cashback on general spend and a slightly higher cashback on foreign and dining spend
  • I do not recommend applying for this card due to the high annual fee and mediocre earning potential

 The Details

Continuing our analysis where we left off in the introduction, let’s take an in depth look at the features of the OCBC Voyage Card, and more important, the maths behind it

ocbc voyage

Annual Fee, Joining Bonus and Other Perks

The annual fee for this card is S$488, and cannot be waived. You get 15,000 VMs as a sign up bonus. The card itself is made of metal- probably the first mass affluent metal card to come out, after the Centurion, DBS Insignia and UOB Reserve.

Perhaps disappointingly for a card targeted at premium users with a high annual fee, the Voyage Card doesn’t come with any Priority Pass. You get 2 visits per calendar year. That’s it.

You get complimentary limo transfer to the airport with a min S$5,000 spend each month. That’s much higher than other providers- ANZ Visa Travel Card offers it with S$2,500.

VM Earning Rates

You earn 1 VM for S$1 of local spending, and 2.3 VMs for S$1 of foreign spending or local/foreign spending on dining.

Intuitively, this is much lower than what other cards offer (eg UOB PRVI Miles with 1.6 miles (soon to be 1.4) on local spending and 2.5 miles on foreign spending, UOB Preferred Platinum with 4 miles on dining). However, we have emphasised repeatedly that VMs are more valuable than Krisflyer miles, because they are not subject to inventory restrictions or conversion fees, plus they earn miles of their own when flown.

VM Spending Rates

Here’s where it gets interesting. Attached below is the published “award chart” for VMs. Because VMs can be redeemed with any airline and destination, there is no fixed award chart like airlines have. What I suspect is that OCBC assigns a VM some monetary value, then works backwards from the cost of a commercial ticket to get the VMs needed.

Note that the chart below does not include taxes and fees ,these are additional (but can be paid using VMs too- way to go for transparency, OCBC)


Let’s see if we can prove this through some sleuthing work of our own.

When I put together the data points, I get the following table. I’ve made 2 assumptions – first, that the VMs required are for SQ tickets. Second, that for economy tickets, the prices are for a fully-flexible ticket (upgradable)

Destination Base Fare S$ VMs Req Implied cents/VM
Melbourne (F) 7,750 259,000 3.0
Paris (F) 13,400 400,000 3.4
Taiwan (F) N/A 138,000 N/A
Bangkok (J) 1,100 38,000 2.9
London (J) 6,550 218,000 3.0
San Francisco (J) 8,750 238,000 3.7
Bangkok (Y) 520 21,150 2.5
Hong Kong (Y) 698 25,000 2.8
Kuala Lumpur (Y) 290 12,650 2.3
London (Y) 2,080 59,650 3.5
Maldives (Y) 940 31,500 3.0
Melbourne (Y) 1,100 42,400 2.6
Seoul (Y) 1,300 38,150 3.4
Tokyo (Y) 1,425 38,150 3.7

One thing that is coming out of this analysis is the average value of a VM is roughly 3 cents. Suleyman over at HWZ has done similar number crunching and come to a slightly higher conclusion of 3.5 cents

“I did a comparison using SQ Economy (using SQ flexi fares), Business and First/Suite fares. The business and first fares come out consistently to about 34 VM/$ (except for Taiwan as SQ has no First Class fares to Taipei). Economy fares went as high as 4% but I see those as less accurate since there can be quite a bit of seasonal fluctuation in Economy fares.”

The other, interesting conclusion Suleyman has

“Because the ‘rebate’ percentage is consistent across all classes, the card is actually better for redeeming Economy class tickets rather than premium class seats.

When redeeming from KF charts, miles are worth about 2c each when redeeming economy, 4.5c for business and 6c for first (this takes into account surcharges that needs to be paid for award tickets). So, this card will trump the best general miles earning card out there (UOB PRVI Miles – 1.6 miles/$ or 3.2c/$) when redeeming in Economy. For dining & overseas spend, it will still compare favorably with the 10x cards like UOB Preferred Platinum Amex & UOB Visa Signature (7.82 c/$, compared to 8c/$), but you have no issue with award availability and earns miles on the ticket

Conclusion is that this is the miles card to get if you are looking to fly economy class (perhaps even budget as well), which is an odd place to be in for a card targeting affluent/HNW…”

He’s hit the nail on the head here. So let’s say a VM has a fixed value of 3 cents. Recall that we said the value of a KF Mile varies depending on how you redeem it– from as low as 2 cents in economy to 7 cents in first.

S$1 General spending on the VM card gets you 1 VM (3 cents), whereas spending on the UOB PRVIMiles card gets 1.4 miles (from 15 May onwards) which is 2.8 cents if you redeem economy class tickets.

Based on this math, the only sensible way of using the Voyage Card is to use it for general spending and earn economy class tickets (the Voyage Card loses out on specialised spend- S$1 on dining earns you 2.3 VMs ( 6.9 cents) versus 4 miles (8 cents economy, 16 cents business, 28 cents first) on the UOB Preferred Platinum card)

However, it’s good to emphasise again that the maths is not conclusive- you need to decide how much value you place on certainty. A Krisflyer mile is worth 4-5 cents IF you can redeem it for a business class saver ticket. A VM is ALWAYS worth 3 cents because you’re guaranteed a seat so long as commercial availability is present.

The value of a VM increases slightly when you consider how many miles you will earn from a VM-redeemed ticket. I’m not able to think of a way to value this option, but when you factor in the high annual fee and the lack of other perks I’m sure there’s some offsetting going on.

I realise this is a lot to take in, so my final thought on this is- if you ALWAYS redeem for business or first saver (or don’t redeem if neither is available), the Voyage Card is a bad deal.


The Voyage Card is so hard to assess precisely because we’ve never had anything quite like it in Singapore. On the one hand, I applaud OCBC for coming up with something new- the ability to redeem miles on any airline. On the other, I can’t help but feel this is more like a glorified cashback card. The VMs they give to you have a fixed value- OCBC is essentially giving you a 3% cashback card with special cashback bonuses for overseas and dining spend. Viewed this way the Voyage Card is really another failed attempt by OCBC to break into the miles market. They’d better hope people really have a fetish for metal cards, because the math certainly isn’t in their favour.

Why not learn about some better miles-earning cards here?


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