SINGAPORE — Singapore Airlines (SIA) and SilkAir will introduce a new fare pricing structure from Jan 20 next year, amid the national carrier’s review of its business operations.

The new pricing structure will have up to three fare tiers for economy, premium economy and business classes. For suites and first class, there will only be changes to mileage accrual.

Economy Class and Business Class bookings will have three new fare types — Lite, Standard and Flexi — while Premium Economy will have two fare types, Standard and Flexi.

BAGGAGE ALLOWANCE

Economy Class travellers opting for Flexi fares will get 35kg of baggage allowance, up from 30kg for travellers on Lite and Standard fares.

SEAT SELECTION

Seat selection in economy class, which is currently free, will now cost from US$5 (S$6.73) per flight segment for those on ‘Lite’ fares if they wish to reserve their seat in advance.

Families with children 12 years old and under in the same booking will still get free standard seat selection, both airlines said in a statement on Friday (Dec 15).

Otherwise, seat selection will be open to all when online check-in opens 48 hours before flight departure.

Along with the new fare structure, SIA and SilkAir will also rename their seats. Preferred seats will be known as “Extra Legroom seats” and a new category called “Forward Zone seats” — located close to the doors — will be added and will also have extra charges pegged to these seats.

Extra charges will also apply to Premium Economy Class passengers booking Extra Legroom seats.

MILEAGE ACCRUAL

Economy Class passengers on Lite fares will earn 50 per cent of the mileage rate for their flight, while those on Standard fares will earn 75 per cent and 100 per cent for Flexi fares.

Meanwhile, Premium Economy passengers on the Flexi tier will see a 15 percentage point increase for their mileage accrual, from the current 110 per cent to 125 per cent. However, those who choose the Standard fare type within this class will see their mileage accrual drop to 100 percent.

Business Class passengers will also have a new mileage accrual calculation, with Flexi passengers getting 150 per cent per mile, while Standard and Lite passengers getting 125 per cent per mile.

Suites and First Class passengers on SIA will have 50 per cent more (200 per cent) KrisFlyer mileage accrual, up from the current 150 per cent.

Mr Greg Waldron, Flightglobal’s Asia managing editor said the change is a “modest” one and is unlikely to add too much a process in booking a flight.

“(It) looks to be targeting on membership benefits such as accumulating more air miles for certain categories. They could be getting people to move to the higher brackets in fare types by rewarding more miles. There could also be putting a focus more on membership rewards, as currently rewards for KrisFlyer elite silver includes advanced booking privileges such as fee waived for selection of seats.”

As to whether if the airline is replicating a Budget airline concept of self-selection for all segments of the flight from food to luggage weight before checkout, Mr Waldron said: "The Budget airline operates on a different model compared to SIA. For SIA you pay for everything including the baggage, food, and wine if you wish for it. The services you get from the staff will also not change. SIA will tread cautiously in these things, as they are focused on their branding.”

The fare structure overhaul comes amid headwinds for SIA, which embarked on a three-year transformation plan to fend off intense competition and aggressive low-cost carriers.

In November, SIA announced a S$1.15 billion overhaul to refit all its Airbus SE A380 jets across cabin classes, with luxury as its lynchpin.

On Thursday (Dec 14), SIA received its first A380 superjumbo featuring a new cabin configuration and products which will go online from Dec 18.

SIA CEO Goh Choon Phong on Thursday said on the sidelines of the Airbus A380 aircraft delivery that overcapacity remains a challenge in the industry.

After reporting a surprise fourth-quarter loss in May, SIA’s second-quarter net profit nearly tripled to S$190 million, buoyed by gains from its cargo business.

SIA said in a separate update on Friday its passenger carriage for last month increased 5.3 per cent compared to last year, against a 1.2 per cent increase in passenger capacity. Meanwhile its subsidiaries SilkAir and Scoot saw growth in both their passenger carriage and capacity growth year-on-year.

SilkAir’s passenger carriage was up 20.4 per cent year-on-year, surpassing capacity growth of 15 per cent, while Scoot’s passenger carriage growth was at 12.7 per cent, exceeding capacity expansion of 5.9 per cent.