Tag Archives: awards

How does this Krisflyer devaluation compare to previous ones?

Devaluations, like award show mix ups and male pattern hair loss, are an inevitable part of life.

The reaction from many frequent flyers to devaluations follows a predictable trend

  • Denial- “This is just a rumour. There’s no way the airline would do something so nasty to its customers”
  • Anger- “How dare they do this to me after I’ve been so loyal to them!”
  • Bargaining- “Ok so they’ve done this but maybe they’ll throw us something nice in the next few months”
  • Depression- “So all the miles I’ve been working so hard for are now worthless/ worth less (depending on the drama quotient of the speaker)
  • Acceptance- “There’s no way I’m going to switch carriers anyway”

The stages need not be in that order but they always, invariably, end in acceptance. I’ll bet you that 90% of the outraged posters on FT/SQTalk/Straits Times Forum/reunion dinner still fly SQ regularly.

We see the same reactions to Krisflyer’s latest devaluation. But how does this devaluation compare to the ones that came before it? Is it as bad as it looks?

How often do devaluations happen?

Image result for airline devaluation
Everyone’s favourite thing to see.

The last two devaluation exercises happened in 2007 and 2012. So I’d say 5 years is par the course for a big one.

However, inbetween big ones you have smaller, mini devaluations. Technically speaking, anything that makes award flights more expensive or difficult to obtain should certainly be seen as a devaluation. A devaluation does not necessarily mean award prices need to be increased. It could be a move that makes awards harder to obtain, or that imposes additional restrictions on existing award (eg 2016 when Krisflyer changed its rules so only premium economy tickets could be upgraded to Business class)

In the quest for great justice, I spent the better part of two days looking for whatever I could find on the previous devaluations.

Let me emphasize how difficult this was. In the spirit of transparency, SQ puts script in its site that prevents the Wayback Machine from effectively trawling the site. Which means I have to piece together information based on scraps I pick up on Flyertalk and SQTalk. And most of those forum posts have links to the SQ website, which have since expired. Which means I have to figure out what people are talking about without actually seeing the document they’re referring to.

Behold, my research skills. SQ laojiaos, please feel free to chime in.

A history of devaluations

2007 Devaluation

How much notice did they give?

Officially: 2 months. The news came on 27th November and impacted redemptions from 1st Feb onwards.

Unofficially: the news leaked early on the website and was picked up by Flyertalk on 29th September before being quickly taken down

What did they give?

  • South Africa economy class awards went down from 60K to 55K. Well, that’s something, I guess.

What did they take?

  • 23 award zones were consolidated into 14. This led to a de facto increase in award prices for a lot of destinations
  • Redemption rates increased. Unfortunately I don’t have the entire award chart before and after, but I do know from the mailer that economy round trip saver awards increased as follows
    • Adelaide: 40K to 55K
    • Egypt, Middle East: 50K to 55K
    • Japan & Korea: 40K to 45K
    • Australia & NZ: 50K to 55K

(this might be confusing because some of these rates are higher than the current threshold, eg Australia is now 50K return in economy saver [at least until 23 March]. The explanation is that certain economy class awards have a price decrease in 2012- read on)

  • Unrestricted awards (Standard) were increased across the board to 2X the miles of saver. They were previously 1.25 to 2 times.
  • Companion awards were removed. I never even knew that SQ once upon a time had companion awards. These refer to discounted award tickets that you can redeem provided someone in your party has bought a revenue ticket
  • Krisflyer members were barred from redeeming First and Business Class saver awards on the new 777-300ER aircraft (i.e. the new 2006 cabin products). Only unrestricted (standard) awards were made available. Of all the moves, this was probably the most dickish.

Did they say “enhance”?

Nope. I mean even Krisflyer didn’t have the cojones for that.

2008 Devaluation(?)

How much notice did they give?

13 days- Members were notified on 16th September and changes took place from 29th September

What did they give?

  • One way awards now cost 50% of round trip instead of 70%. I guess we still take it for granted that one way awards should be 50% of round trip but it’s not the case across all programs even today, eg Asia Miles
  • Introduced “Full” awards. The joke goes you’d have to be a “full” to book one, because they cost more than 5X the miles needed for a saver

What did they take?

  • There was concern that the introduction of Full awards would reduce seat availability for Saver and Standard awards, despite the fact that the FAQ explicitly denied this. Probably points to trust issues engendered amongst Krisflyer members after the PPS devaluation and the removal of lifetime membership.

6. With the introduction of the Full award, will there be fewer seats available for the Saver award and Standard award?

No, seats for the Full award will be made available in addition to the seats set aside for the Saver award and Standard award.

  • I’m not thrilled by the availability of saver space still, but I don’t think Full awards had any sort of impact on award space. Full awards were pretty much  “last seat availability”- you could redeem them so long as a revenue ticket was available for sale. But why would you? In any case I put a (?) behind the devaluation in this heading because the changes were mostly positive. I’m guessing SQ really got a lot of backlash for the 2007 devaluation and had to throw something out there to appease customers.

Trivia

  • They also renamed the “unrestricted” award “standard”, which is the terminology we have today

Did they say “enhance”?

  • Yes, but probably justifiably so in this case

As part of our ongoing commitment to making your membership more rewarding, we will be introducing a number of redemption enhancements to the KrisFlyer programme on 29 September 2008 – offering you greater value, convenience and flexibility in redeeming your KrisFlyer miles for award tickets.

2012 Devaluation

How much notice did they give?

Slightly under one month. Changes were announced Feb 3 and took effect March 1.

What did they give?

  • Krisflyer members were now allowed to make First and Business class saver award bookings on the latest cabin products (777-300ER, A380, A340-500). However, Suites saver awards were still blocked from redemption
  • Some economy class saver prices decreased, by ~2.5K miles in most categories

What did they take?

  • Business and First saver awards increased in price as new zones were created and others removed. Amazingly, I managed to piece together the pre-2012 award chart
click to enlarge. all prices here before 15% online redemption discount. *Prior to 2012, the UK had its own redemption zone that was priced at 60/90K miles for business/first saver. Post 2012 the UK was grouped into Europe 2 for an increase of 33% and 19% for business/first saver respectively
  • Europe was the hardest hit region- if you wanted to go to Germany, Spain, the UK, Switzerland or France you’d be looking to pay as much as 45% and 30% additional for business and first class respectively.  Italy, the Netherlands and Denmark were relatively unscathed with only a 9% increase. This is probably due to the fact that at the time, such destinations were still being served by SQ’s old 777 aircraft with Spacebeds and not the full flat product. The whole point of this devaluation was to throw Krisflyer members a bone by opening up saver redemptions for the new cabin products, but making them pay more for it
  • North America also saw significant devaluations of 26-33% in business and 13-19% in first
  • Africa, the Middle East, Western Australia and ASEAN saw virtually no increases in award prices
  • The Star Alliance award chart was devalued as well
    • Economy Awards increased by 20-30K miles for long haul flights eg SIN-Europe/North America. Round trip Singapore to North America increased from 80K to 110K
    •  Business/first class awards for long haul flights eg SIN-Europe/North America increased by up to 55K miles. Round trip Singapore to North America increased from 140K to 195K

Did they say “enhance”?

Oh yes, yes they did.

We appreciate your invaluable feedback and are pleased to announce that we will also be enhancing our seat award redemption offerings. Currently Saver Award is only available for selected First and Business Class flights. With this improvement, you will be able to redeem Saver Award for First and Business Class on most flights, including First and Business Class on our B777-300ER flights; and Business Class on our A380 and A340-500 flights

2012 Second devaluation(?)

How much notice did they give?

None. Changes were announced on 28th November and immediately took place.

What did they give?

  • One of the things Krisflyer members had been hankering for since the product launched- Suites saver redemptions. Probably wrong to call this a devaluation

OLYMPUS DIGITAL CAMERA

What did they take?

  • Some standard and full awards for first class increased in price. I think it speaks volumes about how giddy everyone was that on the forum threads I can’t find anyone mentioning how much the awards increased

Did they say “enhance”?

Nope. Maybe they don’t use that term as much as we think.

2016 Devaluation

Singapore-Premium-Economy

How much notice did they give?

7 days. The devaluation was announced 17th May and changes took place from 24 May.

What did they take?

  • The ability to upgrade to business class from a full fare economy ticket. Upgrades are one cabin only- if the aircraft is Y/J/F you can upgrade from Y to J, but if it’s Y/PY/J/F, you can only upgrade from Y to PY, and PY to J
  • Full awards were removed. No tears were shed
  • Europe 1 and 2 were combined into a single zone. This had the effect of increasing the cost of award tickets in Business and First Class to Athens, Amsterdam, Copenhagen and Rome and moved the prices in line with the rest of Europe

What did they give?

  • Premium economy class was made available for saver award redemption

IMG_20160123_144830

Did they say “enhance”?

Nope. Although I’m quite sure they worked the thesaurus overtime.

Adding it all up- how does this devaluation compare to historical?

The 2012 devaluation was probably more severe than the one we just witnessed in that at the upper end, award prices went up as much as 45%. On the other hand, in 2012 there were other regions (eg South China, Middle East) that had no increases at all.

This time round every single award has increased (saver, standard, upgrade) simply by virtue of the fact the 15% online redemption discount is no more. Add this to the fact that we’re seeing some significant increase in long haul first and business class awards and I’ll say this devaluation feels a lot more painful than 2012’s.

What’s the silver lining here? I’ll give you a hint- it’s coming in October and it’s a double decker.  Yup- it’s SQ’s new cabin products that will launch this year.

Here’s my crazy theory- SQ wants to avoid the member backlash it got the last time round in 2007 when they barred Krisflyer members from redeeming SQ’s new cabin products at the saver level. So they’ve pre-emptively raised award rates ahead of this new product launch so they can make them available at launch for saver awards. This has the effect of removing some of the ill will the devaluation generates (unlike from 2007-2012 where KF members were left stewing at the fact that saver awards were not available for the latest cabin products). It’s clever, and I’m sure it’ll placate more than a few people.

But the flip side of the coin is this- for this strategy to work, SQ’s new cabin products need to be amazing. And I don’t just mean bigger TV screen, 3 more lounging positions amazing. I mean the kind of thing that sends a message to the ME3 and the rest of the pack that SQ is taking back its role as a leader in product innovation.

Many ideas have been put forth as to what the new products will look like. Few concrete facts have come to light. What I do know for sure is that this devaluation has set expectations in Krisflyer members’ minds about the new products, and October beckons. Get this wrong, and the mob will be at Airline House with pitchforks and torches. And I’ll never fly SQ again.

Ah, who am I kidding.

SQ has devalued its Krisflyer award chart. Here’s what you need to know

(EDIT: In addition to this article you might want to check out some additional thoughts on the devaluation I published here)

Wow. Back when I wrote about the Krisflyer devaluation that took place in May of 2016 I confidently said the program was safe for at least another year, since no one would devalue a program twice in quick succession (To be fair, the May 2016 devaluation wasn’t really much of a devaluation; award prices largely remained the same (with the exception of the consolidating Europe into one zone))

Shows what I know. Here’s SQ’s 70th anniversary present to you, a surprise email announcing a devaluation effective 23 March 2017. The old award chart is here. The new award chart is here. To summarize-

The Good

  • SQ has removed its much maligned fuel surcharges from award redemptions. I nearly fell off my seat when I read this, because the cynic in me has always seen that as an easy money maker for SQ.

The Bad

  • Award prices are going up across the board (we’ll look at how much in the detailed analysis) and there is no longer any 15% discount for online redemptions

Detailed Analysis

What you need to realise is that this devaluation changes everything.

That sounds dramatic, but the fact is that the underlying math has changed, and now we need to reconsider a lot of the conclusions I’ve come to in other articles on this site. They’ll be updated gradually, but let’s do some analysis here first.

How much have award prices increased?

Standard awards, saver/standard upgrade awards and premium economy saver awards have not been touched in one sense, but in another they now all cost 15% more because of the removal of the online redemption discount. 

I’ve put together the new and old saver redemption rates for comparison-

click to enlarge

Observations-

  • Surprisingly, the awards that have gone up the most (in % terms) are Economy Savers to Japan/South Korea and Australia (ex Perth and Darwin) + NZ. These awards go up by ~30%.
  • But premium cabin awards to medium and long haul destinations have also been hit hard. Business and First Class to Japan/South Korea/Australia (ex Perth and Darwin)/ New Zealand/ Europe and the USA have all gone up by 25-30%
  • Short haul and China routes see the smallest increases- Business and First Class to South East Asia and China have gone up by 18%

A 30% increase is certainly not to be sniffed at, and it’s going to hurt those people who have been trying to save up for an award only to see the goalposts moved 30% further.

Why would SQ remove the online redemption discount? I’m sure the original reason for introducing it was because it costs less (in terms of customer service time and overheads) to issue an online award ticket than one issued over the phone. However, SQ’s crappy website meant that people had to call in to book the following types of awards

  • Upgrades that required waitlisting
  • Upgrading one leg after the first leg had been flown
  • Mixed cabin awards

In practice these would all receive 15% redemption discounts too because they couldn’t be done online. So perhaps SQ felt it was time to face that reality and simply stop discounting. Or perhaps the creation of a channel through which 15% discounts could be obtained created the idea in peoples’ minds that they should never be paying full price, even when they used the call centre for an award that could be easily ticketed online. It was probably easier for SQ to eliminate this altogether than have to deal with (admittedly unreasonable) customers like this.

That said, it would be unfair to straight away conclude that all Krisflyer award tickets are now “worse value” because we need to first consider the carrot that SQ has thrown us…

What are the implications of removing fuel surcharges?

Image result for Airplane refuelling

This has the potential to be a silver lining. I’ve said it before and I’ll say it again that fuel surcharges are the junkiest of all charges. They make absolutely no sense. It’s like a restaurant charging you separately for ingredients and saying your base price only includes the cooking.

I applaud SQ for removing fuel surcharges (the conspiracy theorist in me is now wondering if Singapore is going to introduce legislation ala HK, the Philippines and Brazil that outlaws fuel surcharges in the next few months…) because that’s the right thing to do.

The question then is- does the absence of fuel surcharges make up for higher redemption rates?

I’ve pulled out a few award bookings I made in the past few months to check the YQ (Fuel surcharge) component. Here’s what I found (fuel surcharges in SGD)

It seems that on long haul flights (SYD, JFK, IAH), the savings in terms of fuel surcharges do not offset the additional miles you need to pay. 

Take SIN-SYD for example. I now need to pay 16,250 more miles, for which i save S$195.30 in fuel surcharges. This values one of my miles at 1.2 cents, which is way below the 2 cent threshold. Same goes for JFK and IAH.

It’s interesting to note that for my Bali and Bangkok redemptions, I do get a bit more in the way of value per mile. I wouldn’t call this enough to make the increase less painful however, given that I don’t advise people to redeem miles for short haul routes.

Long story short- no. Fuel surcharges are annoying, but you don’t come out on top with their removal because the number of miles needed has increased.

Are premium economy redemptions now worth it?

IMG_20160123_144830

When SQ made premium economy saver redemptions available in May 2016, I said that they weren’t worth it because they cost ~80% the price of a business class award. Given the huge gap in comfort and the small gap in miles, I advised people to save up just a bit more.

Here’s what the ratio between premium economy and business saver awards is before and after the devaluation.

As you can see, it’s still not a good deal. Premium Economy awards still require 75-85% the miles of a Business award. I’d stay clear of these.

Are Star Alliance awards better value now?

Star Alliance awards were not touched by this devaluation, and they never had a 15% discount for online redemptions, thereby leaving the effective price the same.

I wrote an article not too long ago comparing the cost of Star Alliance awards to Krisflyer awards. That obviously needs to be reworked, and the revised working is very interesting

click to enlarge. The % in the last 6 columns refer to the premium (in miles) that you are paying for redeeming via *A as opposed as to via SQ

It is now cheaper to redeem Star Alliance partner awards than Krisflyer awards for certain locations.  Ignoring fuel surcharges for a moment (some partner airlines will charge them, others will not)

  • Singapore to North America in F: 112,500 miles with *A vs 118-120,000 with SQ
  • Singapore to Europe in F: 107,500 miles with *A vs 115,000 with SQ
  • Singapore to Europe in J: 80,000 miles with *A vs 85,000 with SQ
  • Singapore to Australia in F: 75,000 miles with *A vs 80,000 with SQ
  • Singapore to Australia in J: 55,000 miles with *A vs 58,000 with SQ
  • Singapore to Japan/S Korea in F: 60,000 miles with *A vs 65,000 with SQ
  • Singapore to Japan/S Korea in J: 40,000 miles with *A vs 43,000 with SQ

That’s a really, really interesting dynamic change, because I always assumed SQ was actively trying to encourage people to redeem awards on SQ metal rather than *A metal (to avoid having to pay *A partners a reimbursement fee). And now that SQ doesn’t even collect fuel surcharges on award tickets, does the elimination of more miles from their balance sheet outweigh the potential higher volume of cash outflow to *A partners for award redemptions?

More thoughts on this later. In the meantime I’d strongly consider you to think about a Star Alliance award if you cannot find saver space with SQ. It’ll be a good time to try some different products. 

Conclusion

I’ve always felt SQ’s award chart was much “better” compared to those of competitors because award costs were much lower. That evidently needs a rethink. SQ rightly pointed out that the last devaluation took place in 2012 and to their credit they didn’t try to spin this as an enhancement, but it does seem a bit on the nose to do this in the year they’re celebrating their 70th anniversary.

I will have a lot more to write about this in the days and weeks to come, I’m sure. How does this affect the valuation of a mile? Should you start looking at alternative programs like Asia Miles?

If you have an existing award ticket, my advice to you would be to hold on to it, because I don’t think when you factor in the additional miles required you don’t come out on top by saving fuel surcharges.

Breathe people. Breathe.

Lifemiles increases award cancellation fees by up to 4X

So file this one under “why we can’t have nice things”. Everyone’s favourite South American airline, Avianca, has quadrupled the cancellation fees for Lifemiles award tickets.

As per OMAAT, Lifemiles now charges up to US$200 to cancel an award ticket, versus US$50 before. You can read more posts about this on the FT thread and this Aussie FF thread.

Ben at OMAAT suggests that there are 2 scenarios

  • If your award ticket is within 1 region (eg start in North America, end in North America), your cancellation fee is US$50
  • If your award ticket goes from 1 region to another (eg start in North America, end in Singapore), your cancellation fee is US$200

That said, other people are reporting different- user Tokyoite on FT reports that this varies by cabin class as well.

The logic I see so far is that,
– cancel fee varies between F , J and Y redemptions.
– intra-region is USD 100/ticket/person to refund. as per the site (F & J award)
– inter-region is USD 200/ticket/person to refund. as per the site (F award. J is USD 100)

– Existing tickets are not affected (tickets still show USD 50/ticket).
– Call-center is still clueless and they still say USD 50/ticket

Here’s my experience with some dummy bookings-

  • SIN-SFO in Business Class, US$200 refund fee

  • SIN-JFK in First Class, US$200 refund fee

  • SIN-BKK in Business Class, US$100 refund fee

  • SIN-PER in Business Class, US$200 refund fee

  • SIN-NRT in Business Class, US$100 refund fee

It appears I’m getting something closer to Ben’s experience. However, it’s not strictly the case that inter zone awards always get a US$200 refund fee- Singapore and Japan are in different zones (South and North Asia) as per the LM award chart, yet my cancellation fee is still US$100.

The best advice I can give you is to be aware of these changes and always check what the cancellation fee is before you book (if you hover your mouse over your itinerary the fees for changing/cancelling will appear.

The important thing is that it appears tickets issued before this change will have the original US$50 refund fee honored, at least based on anecdotal reports I’m reading on the forums.

The funny thing about Lifemiles awards is that traditionally they’ve been cheaper to refund (US$50) rather than change (US$150). With this new development it would be cheaper to change rather than refund. I’ve never actually tried changing a date with the call centre before but I can imagine that will be all sorts of fun, given their reputation for competence.

Suffice to say, this doesn’t make Lifemiles a terrible program overnight, but it does mean you’ll want to think carefully about booking “just in case” awards. When the cancellation fee was US$50, it was still justifiable to snap up an award you saw, with cancellation being a (potentially long) phone call and US$50 away. Now that the fee is US$200 the dynamic changes a bit.

By the way, if you want to buy Lifemiles, you can follow this link and get a 140% bonus (buying at 1.375 US cents per mile) when buying miles. You need to register by 27th Feb and buy by 28th Feb.