web Musings of The Global Traveller

Thursday, March 15, 2007

Singapore Airlines - oops they did it again, or show me the money

Just 2 months after a significant devaluation of their Kris Flyer frequent flyer program, and on top of big surcharges on paid fares on the new 77W flights (the new product), Singapore Airlines is again annoying some of their most valuable customers.

They have announced sweeping changes to the PPS Club qualification requirements and benefits in a double whammy that appears to be focussed on cutting costs instead of rewarding loyalty. Qualification is harder, so the ranks will be thinned, and the benefits have been cut back, reducing the incentives to qualify.

The PPS Club, for readers who may not be aware, is not a frequent flyer program in the normal sense, but rather a benefits package only awarded to passengers who fly Singapore Airlines a lot in first or business class. There are 3 tiers with the following qualification requirements (currently). For simplicity I won't go into the sector method of qualification which is broadly similar.

  • PPS - requires 50,000 miles within a year in Singapore Airlines first or business class (approx 3.5 round trips between Europe and Singapore in business class or 3 in first class).

  • PPS Solitaire - requires 500,000 cumulative miles in Singapore Airlines first or business class.

  • Lifetime PPS Solitaire - requires 1,875,000 cumulative miles in Singapore Airlines first or business class (yes that's right nearly twice the mileage required for lifetime status on United Airlines, American Airlines, etc and only in first and business class)

Clearly to qualify PPS you need to spend a lot of money on Singapore Airlines flights.

From 1 September, the new qualification will instead be based on revenue. Spend S$25,000 a year on SQ first and business class (excluding taxes and surcharges) and you get PPS. Spend S$250,000 within 5 consecutive years and you get PPS Solitaire. Lifetime PPS Solitaire will be closed - with existing members grandfathered.

Lounge and check in benefits have also been cut. PPS benefits will still be better than star alliance gold (eg Kris Flyer Elite Gold) benefits, but not by as much as currently.

The new rules will continue to reward high end business travellers based in Singapore or nearby, at the expense of nearly everyone else in the PPS ranks.

According to the Singapore Airlines spin, the rationale is that currently (1) PPS is too easy to attain for passengers flying frequently between Singapore and Bangkok and Jakarta, (2) the lounges are overcrowded and (3) it is unfair that some customers pay more to get the status than others.

In my view, (1) could have been solved by reducing the PPS earning rate for those sectors (similar to the reduced PPS earning on Kuala Lumpur flights), and (2) shows the lounges (especially at Singapore Changi airport) are too small and inadequate for the ongoing growth they have experienced. The third point is part of an ongoing trend for frequent flyer programs (FFPs) to start recognising revenue ahead of distance. So far this FFP revolution is occuring mainly in asia-pacific and europe.

It is amazing that an airline as successful as Singapore Airlines is in attracting profitable first and business class paid passengers, now decides that the customers are the problem! Instead of rejoicing at how well they have done, they seem to be cutting costs and squeezing every last cent they can. Is Singapore Airlines becoming too arrogant for it's own good?

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