Overbooking by cruise operators and airlines: Consumer watchdog to engage STB, CAAS

More than 100 customers could not board the Genting Dream cruise ship on Sept 4 due to overbooking. PHOTO: SHIN MIN DAILY NEWS

SINGAPORE - Singapore's consumer watchdog will engage the Singapore Tourism Board and the Civil Aviation Authority of Singapore to address concerns about overbooking by cruise operators and airlines.

This comes after more than 100 customers could not board the Genting Dream cruise ship at the Marina Bay Cruise Centre on Sept 4 as the trip had been overbooked.

On Tuesday, the Consumers Association of Singapore (Case) president Melvin Yong told The Straits Times that it has received three complaints related to overbooking so far this year.

There were two such complaints in 2020 and 2021 combined.

Mr Yong had on Sunday called for the authorities to consider regulating how affected customers should be compensated following the latest incident, saying it was a good opportunity to review the practice of overbooking.

He said on Tuesday that with travel picking up since the Covid-19 pandemic, problems related to overbooking may become more of an issue as demand outstrips supply.

He added: "As a practice, overbooking is not uncommon, especially in the tourism sector. But the compensation offered by service providers may not address the concerns of consumers who have specially taken leave and expect to have a good vacation with their families and friends, or those who are travelling for specific purposes such as attending an important business meeting or a special occasion."

Mr Khelvin Xu, a partner at law firm Rajah & Tann Singapore who specialises in commercial litigation, said compensation for consumers affected by overbooked flights, cruises or hotels would typically depend on the terms and conditions they agree to when booking.

He added: "Even if the traveller thinks he is entitled to more compensation than is offered, it may not make practical sense for the traveller to seek legal recourse against the provider, given the difficulty of quantifying the loss suffered, and since it may not be cost-effective when considering the legal costs involved."

Mr Yong also said that without regulation on overbooking and compensation, affected travellers have to rely on the terms and conditions stated by service providers, or on insurance coverage, which may not be entirely in their favour.

But tourism experts are cautious about regulating the practice.

Said Dr Michael Chiam, a senior tourism lecturer at Ngee Ann Polytechnic: "Due regard and consideration have to be given to business operations and business viability as well.

"If it is regulated, it will pose an additional cost burden to the operators. Regulations should be the last resort since the current practice has been working well for all stakeholders."

Mr Christopher Khoo, managing director of hospitality consultancy MasterConsult Services, said that given the number of people affected by the Genting Dream case, it could have been an anomaly resulting from a mistake.

Mr Khoo, who said he is aware that some airlines overbook their seats by 3 per cent to 5 per cent, added that operators make calculated decisions when accounting for overbooking, adjusting the percentages in certain months when they do not expect a lot of no-shows.

According to the International Air Transport Association's website, overbooking allows airlines to offer consumers cheaper fares and more options.

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A spokesman for Singapore Airlines told ST that it occasionally overbooks some flights to account for some customers who cancel their bookings or do not show up for a flight even though they have confirmed bookings.

Said the spokesman: "This allows us to accommodate more of our customers who would like to fly on popular routes.

"While we are not able to get into specific detail, we would like to assure our customers that this is managed very carefully using our internal data algorithms.

"As a result, we are generally able to accommodate or make alternate arrangements for customers who have a confirmed booking."

Mr Khoo said that while it may be easier for airlines, hotels and car rental operators that practise overbooking to provide alternative arrangements at short notice, it may be more difficult for cruises to do so.

On the issue of providing compensation to affected customers, Mr Khoo suggested that associations of the various travel services set up guidelines for members to adhere to.

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