[Update: SIA has reversed its decision and will not be levying credit card surcharges]
So, yesterday was fun. SQ announced its plans to levy credit card surcharges on certain types of tickets. I voiced my strong disagreement. The article was picked up on various platforms. The site got overloaded and went down for a while (methinks another server upgrade is in order). Man, who needs to feud with influencers?
There are some who took exception to the use of the word โdisgraceโ in my original article, believing it was an overreaction to what they saw as a small, limited impact fee. Iโll get to that in a minute, but thereโs one point I think necessary to highlight: when I wrote the original article, SQโs website was ambiguous about the surcharge, saying that it would apply to โcertain faresโ.

It was not until later in the day that SQ updated its site to clarify that only economy lite fares would be subject to the surcharge.

I have to admit that when I first wrote the article I was using the working assumption that all fares would be subject to this 1.3% surcharge, as was the case in Australia, for example. That would indeed be disgraceful, given that surcharges are hardly the market practice in Singapore (unless of course youโre benchmarking yourself to a budget airlineโฆ)
But given that we now know the surcharge only applies to the cheapest economy fares, does my conclusion change? I thought about it long and hard, and my answer is no. I still think itโs wrong for SQ to impose this fee, and hereโs why.
But itโs only 1.3%โฆ
Letโs ignore for a minute that a credit card surcharge goes against the terms of service of Visa and Mastercard. Letโs also ignore that levying a credit card surcharge is conceptually the same as asking customers to pay a โcashier surchargeโ in a grocery store to cover what should rightfully be the firmโs cost of doing business.
There are some who believe the whole hoo hah is much ado about nothing. Mark from The Shutterwhale is of the opinion that a 1.3% fee is โinsignificantโ, given that the base fare for economy lite is low, the fee paid will range between $1.79 and $13.36 and there are multiple ways of avoiding it.
Now, I have nothing but respect for Mark, but I disagree with him here. Mark is taking a utilitarian point of view, arguing that the fee, in the grand scheme of things, โisnโt a lot to pay since youโre already saving quite a bit on your ticketsโ (do have a read of his full article, the last thing I want is to take him out of context). I see this as a matter of principle more than anything else. In my mind, thereโs a very big difference between discriminating in product and discriminating in payment.
When SQ announced its fare bucket changes, I didnโt like that they took away free seat selection for economy lite passengers. However, I could still understand the general concept that customers who buy a more expensive ticket (economy standard, flexi) should enjoy certain incremental benefits (even if those benefits arose by virtue of removing the benefits of others rather than adding anything).
What I donโt understand is why someone who buys a cheaper ticket should be subject to an additional fee when paying for said ticket. The product you buy shouldnโt have any effect on the value of your payment medium. So Iโm buying a cheaper economy fare. Why should my mode of payment be worth 1.3% less than someone who buys a more expensive one? I mean, how is that any different from going to a restaurant, ordering the cheaper steak and finding out later that those ordering the cheaper steak need to pay a credit card surcharge?
Therefore, to those who say โitโs only 1.3%, donโt get your pantaloons in a twist,โ Iโd just as soon flip that argument and say โyes, itโs only 1.3%. So why pass that on to the customer?โ Letโs be honest and call this for what it is- a cynical attempt to get customers to pay for what should rightfully be the firmโs cost of doing business, done by a company which knows it can get away with it.
Where does it end?
As expected, the interweb is abuzz with very angry people blaming everything from corporate greed to โthe 70%โ (yes, that actually happened).
Perhaps it hurts the brand a bit, but I honestly donโt think that this, in and of itself, will cause customers to desert SQ in droves. But then again, thatโs exactly what I said about charging for seat selection.
The question then is- where does this unbundling stop? Voices out of Airline House suggest that that SQ is exploring all avenues to โoptimize revenueโ and โrebase costโ. What comes next? Baggage charges? Buy on board? Logically, there must come some discrete tipping point where even the most die hard of SQ loyalists make the switch to other airlines. I donโt know where that is, but SQ seems eager to test the boundaries.
No hard feelings haha! I guess weโll have to see how much Economy Lite fares differ from the existing โSuper Saverโ fares as well to take a more balanced standpoint. I see your frustrations with the state of unbundling though!
This article totally nailed it. SQ starting this price variation is a test on the price elasticity of their โlite fareโ product. Once they deem their product are relatively price inelastic to small changes, they will start charging this 1.3% everywhere else.
I think SQ could have tested the economy lite and other unbundling on Silk Air. That way they could have avoided hurting SQ brand.
โHow is that any different from going to a restaurant, ordering the cheaper steak and finding out later that those ordering the cheaper steak need to pay a credit card surcharge?โ
To be fair, some eatablishments (incl. retail) impose a min. spend amount before credit cards are accepted. This is also a form of payment mode discrimination. So if one ordered cheaper steak vs prime rib, there is a chance that the cheaper steak order be penalised because it doesnโt meet the min. spend.
the min spend is usually $20 for such establishments. i donโt think we have any SQ ticket at that price. if there is, iโll gladly pay the surcharge.
The point is in the analogy of the cheaper steak being discriminated and is not about SQโs prices, etc.
So if you ate a cheaper steak that costs $19 all-in, you canโt pay with credit cards because it doesnโt meet the $20 min spend, but a steak that costs $25 all-in can be paid with a credit card. Correct?
If you went to Lawry paid for a $200 steak and they charge you 1.3% surcharge and you walk down to Astonโs and they donโt do it. How would you feel?
Simple โ Donโt eat Lawryโs then! Because Astonsโ steaks taste far better and doesnโt incur a surcharge.
In a sign of things to come, CX now plans to charge for meals โ they are rolling out Buy on Board for economy.
Will be keeping a lookout for how SQ advertises its promo fares, whether it falls in line with Advertising Standards Authority of Singapore (ASAS)โs revised travel advisory (see https://case.org.sg/pdf/Revised_Travel_Advisory.pdf).
Unbundling is an irreversible (irresistable?) trend for airlines. How else can this play out? Pay to use the lavatory?
Latest update received 5mins back: โFollowing a further review, Singapore Airlines will not be proceeding with the implementation of the CCSF.โ
Seems to me that damage is done to the SQ brand. Not to mention the fact that they probably scaled back on the implementation after all this backlash. Now, I will always wonder when SQ will be trying to leech off economy passengers again.
Is this sarcasm or true
Miles hedgehog: Anon quoted from sales circular. A link to the CNA news was posted in another comment. ๐
Iโd agree on one thing: it simply confounds me why there is a discrimination of payment, as you put it. For a premium airline I donโt even understand this. Whatโs next, 50% surcharge if you pay your fares usingโฆ I dunno, red packet gift certificates? Why is there even a distinction about *how* you pay them in this digital age?
https://www.channelnewsasia.com/news/singapore/singapore-airlines-sia-cancels-credit-card-fees-9831474
even now SIA decided to cancel CCSF, but i think already hurt his branding
Power to the people. Maybe their CFO reads the milelion and saw all the angry comments
Milelion 1: SIA 0
SIA could force their pax to club baby seals (or otters for Singapore reality) and it wonโt affect their customer base โ herd mentality (for Singapore again) in action โ there are plenty of people who will select SIA regardless how they are treated.
And now theyโve done away with it altogether โ https://www.singaporeair.com/en_UK/sg/plan-travel/local-promotions/ccsf/
โWhere does this unbundling stop?โ
Well. Theyโve installed NFC in every economy seat for internet / duty free. Conceivably, other services could be on a pay -as-you-go basis as well.
they cancelled it, somebody must be getting scolded like hell right now.
Itโs so stupid