Flag carrier Singapore Airlines and its regional arm SilkAir announced on Wednesday (March 1) the folding-in of fuel and insurance surcharges into its base fares, aimed at providing a simplified fare structure for its passengers.
The changes will be implemented progressively by region, starting from March 28 and is expected to be completed by May 2017, SIA said in a press release. “This will not result in immediate changes to ‘all-in’ fares, which will continue to be determined by market supply and demand,” the national carrier added.
Fuel and insurance surcharges will also no longer apply to KrisFlyer frequent-flyer programme redemption bookings with effect from March 23. Other changes to the KrisFlyer programme with effect from the same day include the removal of a 15 per cent discount for redemption bookings made online rather than via the call centre.
SIA’s move, according to analysts, is in line with similar initiatives around the removal of fuel surcharges announced by other international carriers in the wake of falling jet fuel prices.
“With the price of oil having now moved down back into a more ‘normal’ range, a lot of airlines have unwound their fuel surcharges, so in some ways this move by SIA and SilkAir is them joining in line with other carriers at a time when competition is high. Removing the surcharges makes their pricing more transparent, and in some ways easier to compare to other airlines that have either dropped the charges or rolled them into the base fares,” said Mr Ellis Taylor, Asia Finance Editor at FlightGlobal.
Passengers have been crying foul at the airlines as, despite lower fuel prices over the past two years, many — including flag carrier Singapore Airlines — had not lifted the fuel surcharges as quickly as when they were slapped on almost a decade back.
According to analysts, fuel hedges, where airlines have locked in higher prices for fuel, were the primary reason why some carriers were continuing with their fuel surcharges. Fearing that oil prices may start to rise again, several carriers retained the surcharges as a precautionary step given tickets are sold up to one year in advance.
SIA, however, said that codeshare flights operated by other airlines may still include the surcharges. Likewise, redemption bookings on flights operated by other airlines may still include surcharges. Adjustments are also being made to redemption award charts in the Saver category for selected zones, while those for other zones remain unchanged.