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Singapore Airlines’ bid to upgrade programme: A move to fill Premium Economy?

But some say it may lower public's image of airline's exclusivity

Earlier this month, Singapore Airlines (SIA) quietly launched its bid-to-upgrade programme, called mySQupgrade, joining dozens of international airlines in allowing customers to bid for upgrades to higher-class seats.

Bidding is now available by invitation only and for upgrades from economy to premium economy class on select bookings made from Singapore.

SIA says the invitation to bid is not limited to members of its frequent- flyer programme, KrisFlyer, and that it plans to progressively extend the programme to bookings made from other countries.

For now, customers with an eligible booking made from Singapore will be e-mailed an invitation to bid seven days before their flight. They can then place a bid within the minimum and maximum bid value assigned to each flight.

Customers are charged only if their bid is successful and will be notified of their winning bid 48 hours before departure.

SIA says the invitation and success of a bid are subject to factors such as seat availability and are at the airline's sole discretion.

However, some travellers view mySQupgrade as confirmation of the rumoured poor sales of premium economy-class seats. SIA's premium economy fares have often been criticised by customers in online forums such as SQTalk and flyertalk.

A return economy ticket from Singapore to London in September costs about $1,622, while the premium economy ticket for the same flight is $3,457. This is about half the price of a business-class seat, which costs $6,840for that flight.

A spokesman for the airline says it launched mySQupgrade to give customers another avenue to enjoy the enhanced travel experience. Qantas, Etihad and Cathay Pacific airlines also offer bid-to-upgrade programmes, which have been around for the past five years.

Lawyer and KrisFlyer member Yu Herng Lim, 26, says: "It is a good initiative and I feel it is the way forward for consumers to upgrade their class of travel at a lower cost."

As for the perception that premium economy seats do not sell well, SIA says it is seeing particularly strong demand for premium economy on long-haul routes and that the class has generally received positive feedback.

The airline spokesman says the pricing of seats is dynamic and based on supply and demand. "There are significant differences between the seat products and the benefits of travelling on economy and premium economy classes, which justify the difference in cost," he adds.

Still, some travellers are sceptical. Mr Aaron Wong, 28, management consultant and founding blogger of The MileLion, a website about frequent-flyer and miles credit card programmes, says SIA is notoriously cautious about devaluing its premium cabins through upgrades.

"When I'm travelling on my own dime, I just care about getting there cheaply. The comforts offered in premium economy, such as champagne and wider seats, are not enough to sway me. I think many travellers feel the same."

Also, he adds, premium economy does not offer some features that business travellers value, such as lounge access and priority immigration.

The premium economy class, introduced in August last year, comes with a seat that is either 18.5 or 19.5 inches (47 or 49.5cm) wide and can recline eight inches, compared with an economy-class seat which is 18 inches wide and has a six-inch recline.

Assistant Professor Terence Fan, who specialises in air transport at Singapore Management University, says airlines have a fundamental problem of perishable inventory.

"Once the door of the aircraft closes, the unsold seats cannot be sold again. Bid-to-upgrade programmes are a way for airlines to entice customers to pay a bit more before the flight departs."

He points out that it is notable that SIA chose a bid-to-upgrade programme instead of offering customers a set price to upgrade model. "It's not only a way for them to fill empty seats and get an extra dollar, but also to survey how much people are willing to pay while also discreetly reducing the prices of premium seats."

The downside, he adds, is that it may lower people's image of the premium airline's exclusivity.

Mr Anurax Lian, 40, an IT consultant and frequent flyer with SIA, views bid upgrades as a questionable sales tactic.

"By offering bids to upgrade, you devalue the product by quite a fair bit and it's not fair to the customers who are paying full fares.

"It's a sign of the failure of premium economy, which is a neither-here-nor-there product. It's premium, but not really premium," he says.

A version of this article appeared in the print edition of The Sunday Times on July 24, 2016, with the headline 'Bid for an SIA seat upgrade'. Print Edition | Subscribe