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Miscellaneous

SQ Price Discrimination

Still on the topic of price discrimination, this time from the view of a consumer.

I’ve been searching hard for cheap airfares from Singapore to Canada for my exchange next year. However, so far I’ve met with much frustration, with all the fares w/ taxes for reliable airlines above S$2,000.

Probably the most ridiculous thing that I’ve encountered is that SIA’s airfares for SIN – YVR – SIN costs S$2,358 with taxes. However, a search on the reverse itinerary YVR – SIN – YVR on the same dates coughed up a fare of about S$2136 with taxes. These prices came right out of SIA’s online booking engine.

Why is it that flying SQ costs more from Singapore than from Canada? Taking into account higher living standards in Canada, shouldn’t fares cost more there? Also, being a flag-carrier for Singapore, shouldn’t SQ offer better deals from its home country?

Another issue that I came across is on student airfares. Many airlines offer attractive student fares for students from the airlines’ home country. However, SIA is one exception. While it does offer student airfares from Singapore to various destinations, the prices are oddly enough, higher than its promotional prices available to the general public. Even Cathay Airlines, a 5 stars carrier, offers very low fares for Hong Kong students.

It’s a shame that although Singapore Airlines is generally regarded as the world’s best airline, many Singaporeans like myself have never had an opportunity to board an SQ flight and experience the service that we’ve all heard so much about, because of its prohibitively high prices. Perhaps SIA should consider having better fares for students so that we can experience its services for ourselves and understand why we should be proud of our flag-carrier.

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Discussion

13 comments for “SQ Price Discrimination”

  1. Have you come across STA Travel? You might find some gems there.

    http://www.statravel.com/

    Besides the big ticket items, the small everyday stuff go a long way too. When I was a postgrad in Australia, these things helped cut down a substantial amount of my living expenses:

    1 Walk instead of driving or taking buses. In addition to savings, I was able to exercise and enjoy the environment and culture of the common folks there. I experienced things I would have missed otherwise.

    2 Study in the library or varsity premises instead of at home to save electricity especially for heating. I met and made many friends that way too.

    3 Cook instead of eating out or catering. My friends and I went grocery shopping every weekend and had potluck parties at home frequently. The only time I had a tequila was during a late night New Year celebration roaming downtown Melbourne with my friends.

    4 Borrow or buy secondhand – anything from books to winter clothing. The students union had a secondhand bookshop and a notice board for seniors to advertise their used books.

    5 Share an apartment instead of staying in the hostel. Not sure if this works in Canada.

    6 Travel with a big group and take turns to drive instead of joining tour groups or flying. It’s also better than backpacking on my own and staying in dormitories.

    7 Entertainment doesn’t have to cost much. I spent weekends at the seaside and strolling in the suburbs instead of going for drinks and to discos in town.

    Of course I had to constantly separate my wants from needs but those were the best varsity days of my life. Beats NUS anytime.

    I am sure your stay in Canada will be unforgettable too.

    Posted by shoestring | July 24, 2007, 5:42 pm
  2. It’s all about their market focus.

    SIA has never been one to cater to the needs of the cattle class, be they a budget traveler or the humble student. Instead, it has always aimed its product towards the corporate or high-income earners to maximize revenue.

    Posted by Anonymous | July 24, 2007, 10:29 pm
  3. Actually this is a very short-sighted strategy.

    Consider Citibank’s marketing strategy. They are focused on building relationships. In the past, they managed to get a lot of fresh graduates to sign up for credit cards. Now, 10 years or so down the road, they realised that the fresh grads of that time are now probably married with kids, so Citibank adjusted their reward programmes accordingly to cater to these clients.

    Now, Citibank is embarking on another initiative to lock-in clients while they are still students by providing the credit card with $500 limit.

    On the other hand, the myopic marketing people at SIA have been tweaking the elite/premium FFP criteria and rewards and making it less rewarding to fly SQ. Wonder what they are thinking.

    To me, it seems like SIA is using the 吊起来卖 strategy…

    Posted by mrbiao | July 24, 2007, 10:52 pm
  4. So you have spam? I submitted a comment a couple of times but it didn’t appear.

    Posted by shoestring | July 25, 2007, 3:52 pm
  5. whoops shoestring sorry the automatic spam filter had a false positive.

    Yeah, I tried STATravel. Turns out that whatever student fares they could provide, any other travel agent can also get because those fares are open for booking to all agents.

    So in other words, STATravel is really nothing than a normal travel agent that has its marketing guns turned towards the lucrative student travel market.

    For now, it appears that a better method to get discounted travel tickets will be to snag unwanted travel vouchers off auction sites at a discounted price and use those to book at the travel agent’s.

    I’ll probably be really frugal on the trip, cause CAD is very strong now, nearly as high as USD and Vancouver is not known for being cheap.

    Thanks for sharing your experiences shoestring, they’ll sure come in handy when for my planning!

    Posted by mrbiao | July 25, 2007, 5:00 pm
  6. That’s a pity. They used to pass some of the savings from their bulk discounts to students.

    If you are worried that the CAD is going to strengthen further, you might wish to consider putting your dormant funds for the trip in a CAD fixed deposit to hedge against further upside and to earn more interest. But there is a downside risk. I put mine in an AUD FD and benefited from the interest and AUD appreciation.

    While waiting for term to start, I worked as a full-time real estate agent for one month and earned a couple of thousands in commission. But that may be difficult for you to do part-time.

    I understand what you are going through but you appear to have a good fighting spirit. It will only make you stronger.

    Posted by shoestring | July 26, 2007, 11:35 pm
  7. It is not uncommon that airfares vary across countries or even among cities within the same country. It depends on the competition between the citypairs, goverment regulations that prohibit foreign airlines from setting a higher prize than national carrier, commercial agreements between carriers etc. for e.g it is cheaper to buy airtickets out of Thailand via Singapore to US/Europe vis-a-vis Singapore direct to US/Europe.

    It is not right to say that SQ practice prize discrimination. And further more, SQ is a public listed company and it competes head on head in the commercial airline market. SQ does not receive any protection from the government as in other countries whereby the national carrier is protected by their governments. Singapore is an advocate of open skies and does not believe in protecting the interests of the national carrier. Even the government’s policy is that the airport comes first before national carrier and that is why they have been luring foreign airlines to operate to Changi with lower landing and parking fees compared vis-a-vis SQ. The issue of discounted student fares, some airlines offer such programs, like QF, MH, CX etc. They do enjoy subsidies from the goverment and several forms of protection.

    If you are shareholder of SIA, would you like SIA to make the maximum profit or would you like SIA to do national service? As any succesful business entity, SIA goes to make the maximum revenue out of the seats on the airplane. This, they achieve by employing highly sofisticated revenue management tools, which allocate seats to passengers who pay the most revenue. If you have a passenger flying from say Vietnam to Singapore and flying onward to Canada and he is willing to pay $500 more for Singapore to Canada, definetely SIA will give the seat to that passenger.

    Posted by ash | July 27, 2007, 11:52 am
  8. shoestring >> Nowadays the most reliable investments I find are to ‘tikam’ at IPOs. Nearly all of them rise on the first 2 days of listing and its a sure profit but so far I’ve had no luck with so many applications!

    CAD has been rising furiously for the last few months, quite a headache really. It’s just as expensive as USD is now, and I think things in the US also cost cheaper than they do in that part of Canada.

    Now I think my best strategy will be to save on big ticket items, such as winter jackets (S$100 – $200+++) and suitcase ($100+). I guess these things do add up to quite a lot so better to ask around and borrrow. Besides, after I come back from exchange I won’t know where to keep them.

    I toyed with the idea of becoming a part time insurance agent some time ago but I think it’s too cumbersome when you have to maintain the ongoing responsibility for clients.

    Thanks for the encouragement and tips everyone, I really appreciate it!

    Posted by mrbiao | July 30, 2007, 5:33 pm
  9. ash>> You seem to have a good insight about the aviation industry. Good points you made, and thanks for enlightening me on the considerations going on inside airlines’ managements.

    My understanding of price discrimination is that the airlines choose who they want to sell tickets to at what price… so I believe it is a question of fact rather than ethics. The fact that all airlines have different pricing for 1, 3, 6 and 12 months return air tickets is proof enough that they practise price discrimination.

    They know that leisure travellers would not pay a lot to go on vacations, so they price short term return tickets at very attractive rates. They then price 6 and 12 months tickets at “normal rates” of up to nearly double the “promotional rates”, as they know that these travellers have no choice since buying 2 promotional fares is still more expensive than buying say a 12 month return ticket.

    It’s true that airlines have to be profitable and answerable to shareholders. I agree that certain countries have been losing lots of money keeping their highly subsidised airlines afloat. Even Boeing and Airbus are money losing entities kept afloat by the US govt and EU!

    However, as far as profitable airlines are concerned, shouldn’t they give something back to the society on the whole by providing more attractive student and senior citizen fares that they can more than afford? Cathay Pacific has this written on its website:

    “Hong Kong has been home to Cathay Pacific Airways for 60 years. So we understand the future of our great city very much depends on the new generation. To help your children get a good education and achieve their dreams, we’re offering you Overseas Student Packages.”

    This is what I mean in a nutshell. Corporate citizenship. It’s also a form of service to the nation, no? And it really doesn’t cost much to do it (not money losing, just slightly lesser profits on a very small market segment)

    Posted by mrbiao | July 30, 2007, 5:47 pm
  10. try cathay + get student rate – use an agent.. will be surprised if you cannot get below 2000 + tax – lots of HK flights to Vancouver and back – sg-hk flights are cheaper….

    Posted by cheers | July 30, 2007, 10:05 pm
  11. Try North-West Airline. The price should be the most competitive.

    Posted by Macnichi | July 31, 2007, 2:45 pm
  12. mrbiao,
    little did many people here remember that the airport is built using taxmoney, and then run as though entirely privatisated with maximum profit maximization. But who are the largest shareholders in airport ? It is none other than the public ! Because the public taxmoney is used in build terminal, buy airplane, etc

    Indeed, only in Singapore in the world, is gov able to exploit and take advantage of its people ! Talking about democracy and justice and equity, pure hogwash !

    Posted by bigmac | August 20, 2007, 3:04 am
  13. Now the airport is really going to be privatised. I wonder if the new corporate entity will buy-out from the govt and pay back taxpayers’ money or will they just conveniently take over?

    Posted by mrbiao | September 5, 2007, 12:55 am

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