SIA's New Net Fare Contracts Net Nothing

<B> SIA's New Net Fare Contracts Net Nothing</B>

By Gerardine Donough-Tan

Singapore Airlines' net fare contracts for multinational companies and local conglomerates with huge travel budgets have yet to make an impact, according to industry sources and end users.

Some said SIA had not studied carefully the ramifications of its own resources and that the announcement was premature. Meanwhile, expansion of airline alliances and offers from other carriers have mitigated the initial sting.

Amoco Chemical's Asia-Pacific regional manager Joe Low said he makes four transpacific trips a year. His sales team travels extensively too, albeit regionally and in economy class. "What are the qualifying criteria for net fares? Perhaps SIA considers our volume too small. Amoco's recent acquisition by British Petroleum and the possibility of combined buying may now interest SIA," he said. "Although American Airlines has offered a very attractive scheme, I am a Priority Passenger Scheme Club member and loyal supporter of our national carrier. However, given the current situation, we will have to evaluate the most beneficial options among airlines."

SIA declined to elaborate on its corporate net fare policy and the number of companies signed up so far. However, travel sources said the minimum annual expenditure required was $306,748 (S$500,000) and discounts varied by sectors and seasons. Corporations and travel management companies are now allowed to pool purchasing in order to qualify.

A company manager said although these fares exclude 9 percent of agent commissions and overrides, the overall cost must be calculated. "We have to see what service fee our agent will charge. Some agency fares are just as competitive and currently we get rebates on commission. We need to study the options using other airline alliances and have yet to take up SIA's offer,"she said.

Although codeshare travel on Singapore Airline's alliance partners is counted, SilkAir routes are excluded.

Said one travel planner, "multinational companies with operational headquarters and regional offices in Singapore could otherwise combine long-haul and regional travel on SIA and SilkAir. Overseas, the two carriers are sold as one but sadly, not in Singapore.