Singapore Airlines has come up with a campaign to discourage customers to seek cash refunds for cancelled flights and instead voluntarily opt for flight credits in exchange for bonus vouchers.
Singapore Airlines has reduced their flight operations by 96% and subsequently customers are entitled to cash refunds for their cancelled flights.
SIA has never refused these cash refunds, quite the opposite as described in their Refund & Waiver Policy the carrier published.
Offering refunds while not running any operations and not selling tickets that creates a cash crunch, precisely the reason why many carriers are refusing to process any cash refunds at the moment.
Singapore Airlines however got creative and is now offering affected customers a staggered bonus if they voluntarily forego cash refunds and instead opt for a travel credit.
We will award bonus flight credits to all customers who choose to retain their tickets as flight credits. This is our way of thanking them for their support during this challenging period. Based on the original cabin class of travel, they will receive the following bonus flight credits* when making a new booking with us:
- Economy Class : SGD75
- Premium Economy Class : SGD100
- Business Class : SGD200
- Suites / First Class : SGD500
Customers who opted to keep their tickets open due to the Covid-19 outbreak will also retain the value of the unused portion of their ticket as flight credits. They will also automatically qualify for the bonus flight credits.
Similarly, customers whose flights were cancelled by SIA or SilkAir will retain the full value of the unused portion of their tickets as flight credits. They will also be awarded the bonus flight credits when rebooking their travel.
This is definitely the right approach and similar to what cruise companies currently offer their customers of a cruise has been cancelled. Giving someone a reason to voluntarily keep a balance plus bonus with a company rather than just robbing them of their money cause much less animosity.
The difference here is that Singapore Airlines offers the bonus as a flat amount based on the ticket class and not as percentage based on the ticket value.
I’m not sure that someone who paid $4000+ for a long haul Business Class ticket is impressed by a $200 flight credit rather than getting the entire cash back right now.
This might make most sense for cheap tickets such as Bangkok-Singapore where round trips in Business can often be booked for $350-400 and Economy for ~ $150/rt. Getting 50% back in form of a future flight credit isn’t a bad deal.
SIA writes about actual CASH REFUNDS:
Refunds for Customers
Customers who meet the above conditions, but do not wish to keep the value of their tickets as flight credits, will be offered the option of a refund. Cancellation fees and no-show fees will be waived. Customers who used miles to redeem their flight tickets will have both their miles and taxes refunded. Those who purchased their tickets using a combination of miles and cash will receive a refund as well. They will not be eligible for any flight credits.
Our team will be prioritising the processing of refunds based on earliest scheduled departure dates. For example, departures scheduled for March 2020 will be processed first, followed by departures in April 2020.
That definitely sounds reasonable and is the right thing to do.
Airlines all over the world have come under fire for their refund policies to the point where both the EU Transport Commissioner and the U.S. Department of Transportation chimed in and reminded airlines that they owe people CASH refunds for flights the airlines cancelled.
The strategy of offering a bonus is definitely a good one but I find the tier system strange. Singapore Airlines should be interested in keeping as much cash as possible and someone with high value tickets won’t forego a cash refund for a tiny amount in relation to the ticket value. The opportunity cost makes the option unattractive.