SINGAPORE Airlines (SIA) has done a turnaround and decided to honour the hundreds of underpriced Business Class tickets mistakenly sold at Economy Class prices in Australia.
This reversal comes after the airline last week said that affected passengers would either have to downgrade to Economy, obtain a refund or pay the fare difference to retain their Business Class seat.
A computer glitch resulted in some 400 passengers booking these premium seats for about 1,200 flight segments from Australia to Asia and Europe at bargain rates. The flights have been from Dec 8 onwards. A segment refers to a single section of a ticket's itinerary, meaning that Singapore-Perth, for instance, would be counted as one segment.
SIA did not release the value of lost revenue arising from the blunder, but the amount could be well over US$1 million, say industry insiders.
According to reports out of Australia, the price difference between the Business and Economy fares in some cases could work out to as much as US$4,200 each since a Business Class seat typically costs multiple times that of an Economy ticket. For instance, an Economy fare between Sydney and Singapore for travel this month on SIA could work out to A$1,700 (S$1,860), while a Business Class ticket could come to around A$4,400.
Travel agents in Australia sold the Business Class tickets at a fraction of the usual cost after fares were inaccurately loaded onto a global booking system (GDS) due to a computer error. However, SIA's initial stance that passengers would have to make up the difference reportedly did not go down well with travel agents Down Under, who would have had to recover the costs from their customers.
"Singapore Airlines was alerted on Nov 29 to an issue which saw Business Class bookings able to be made at an outdated Economy Class fare level. This was due to a booking sub-class recently being reassigned from Economy Class to Business Class," said the airline in a statement on Monday, apologising for the inconvenience caused.
"Corrective action was immediately taken to address the issue. Investigations continue to be carried out to determine the root cause of this issue."
SIA, which will be getting in touch with travel agents and affected passengers, added that it wants to avoid any disruption to its customers' travel plans. Travel agents in Australia, such as Flight Centre, welcomed the announcement, according to reports out of Australia.
Though the mix-up - which comes just ahead of the year-end peak travel season - will not have a significant financial impact on the airline, it is nevertheless unwelcome publicity for a carrier which is grappling with other issues ranging from dealing with cut-throat competition to turning around loss-making subsidiary Tiger Airways. The latter remains its biggest challenge.
"Tiger will further drag down SIA's results in the next few quarters as we think Tigerair will still be making losses on low yield environment," said OCBC Investment Research analyst Eugene Chua.
Still, shares in SIA - which have trended upwards in recent weeks - closed at S$11 on Monday, two cents higher.