Singapore Airlines A380 Suites – A Class Beyond First or a First Class Branding Debacle?

Recently, I had a very interesting email exchange with Anthony Prakasm, who lives and breathes aviation as much as I do, if not more. The conversation was about Singapore Airlines’ brand strategy for their new First Class Suites on board the A380 and whether that’s succeeded or not. Anthony had some very unique insights into the situation, and I asked him to share his views for SimpliFlying’s readers. I personally think he’s dead on target in his conclusion that SIA missed a trick or two in the execution of a seemingly great brand strategy. What do you think?
– Shashank
———

Singapore Airlines Suites –  A Class Too Far Beyond First

Singapore Airlines launched the “Singapore Airlines Suites” product in October 2007, in conjunction with the new on-board product launch that came with the A380. Featuring an “unparalleled level of luxury” in the “widest seat in the sky”, and sleeping on a “standalone bed that was not converted from a seat”.  The airline promised the Singapore Airlines Suites to be “truly a class that is yours alone”.

Regular First Class travellers who wished to travel on the SIA Suites soon found that they had to pay in the vicinity of 50% to 60% more for Suites. At the same, time, the number of Krisflyer miles one could accumulate was only 10% more than regular first class, and redemption availability for Suites was completely blocked. All SIA staff, including the most senior of management who were eligible for First Class were deemed ineligible for Suites.

“You’re Eligible for First Class, but not for a Class Beyond First!”

In October 2007, Suites for Singapore-London was priced at nearly S$20,000, and Suites for London-Sydney was priced at approximately 10,000 pounds. Several HR departments of companies, including civil service departments in Singapore, issued circulars or directives stating that “Since the Singapore Airlines Suites are a class beyond first, officers who are usually eligible for First Class travel will be ineligible for Suites”.  Evidently, HR departments were hard pressed to justify paying 50% more for senior management to take Suites.

Pushing your Passengers to a Class Beyond First – To Other Airlines

Using the Sabre Airport Solutions tool it can be learnt that, from Calendar Year 2006, till October 2007, SIA filled an average of 30 out of 36 First seats into London Heathrow each day. But from January to October 2008, SIA filled just 12 out of 36 seats a day to London. A drop of over 60% in just a year is alarming. This can’t be solely blamed on the financial crisis, as Lehman Brothers really failed in September 2008.

Analysing Emirates’ First Class loads to London, the number of First Class passengers they carried in 2008 compared to 2007 hardly fell, staying at around 40 to 42 a day! Were these SIA’s ex-First Class passengers going over to Emirates?

Maintaining the Brand Integrity of Suites – Let Them Leave Empty!

Throughout 2008, as loads in Suites plummeted to London and other A380 destinations, and for whatever reason, SIA refused to cut fares to match their competitors. There is no doubt that the SIA Suites is one of the best First Class products out there, but the 50% price differential to First Class made it difficult for companies and governments, both in Singapore and overseas, to justify purchasing Suites tickets for their very senior employees.

Great as it may be, the Suites product is exactly the same as the New Longhaul First Class product on SIA. The entire ground experience is the same, with the same check-in facilities, same lounge, same on-board cuisine and same arrival procedures as First Class passengers. It is hard to argue that a standalone bed and a semi-private cabin, or a 33% chance of landing the middle seats that turn into a double-bed is really worth the extra S$9,000 on a flight from Singapore to London.

SIA Relents Part I – Throw in a Free Stay at the Raffles

In May this year, SIA announced that passengers flying Suites from London, Paris, Tokyo and Sydney can enjoy a free night’s stay at the Raffles Hotel, with a complimentary chauffeur-driven service to the Raffles from Changi Airport. Still though, it is unlikely that many passengers from London would be willing to pay thousands of pounds extra for Suites, to enjoy a S$750 (320 pound) night stay at the Raffles Hotel.

SIA Relents Part II – 300%  miles for Suites, not just 160%

In June, SIA announced that Suites passengers would enjoy 300%  miles, instead of 160% miles. Perhaps this was SIA’s way of acknowledging that for paying 50% more than First Class, Suites passengers should be entitled to a little more than a 10% mileage bonus.

Publically available statistics and evidence still point to SIA struggling to fill Suites, while Emirates and Qantas regularly leave London, event today, with the majority of their First Class seats filled.

Suites – A Class Beyond First or a First Class Branding Debacle?

The entire experience surrounding SIA’s experience with its Suites branding demonstrates how an idea or a brand that seemed so revolutionary prior to its roll-out, can in reality backfire on a company. In wanting to place a brand premium on the product as “a class beyond first”, together with an expensive 50% price hike compared to regular first class, companies were quick to react to this and banned their staff from travelling in Suites altogether.
In an environment where companies are trying to cut costs, and where many airlines like Qantas and Emirates offer excellent First Class products in their A380 which include onboard bars and showers, and limousine ground transfers at each end (SIA lacks these), 60% of SIA’s First Class passengers in 2007 have either downgraded to Business Class, or switched to other airlines altogether.

In the past couple of weeks, “F” Class codes (which represent regular first class, not suites) were loaded onto the SIA inventory system for Suites-operated flights, though their availability is was blocked. For a couple of days in the week of 26 Jul, SIA’s website even returned Suites fares that were priced without a premium to First Class.

While frequent flyers thought that this reflected SIA’s management finally relenting on their policy with Suites, as of 2 Aug 09, the F fare codes have since been removed, and Singapore-London continues to cost nearly S$20,000.

After nearly two years of refusing to take any meaningful steps to regain their First Class marketshare on A380-operated routes, one would have thought that it is  better to be late than never. Alienating your First Class passengers should be the last thing any premium airline should aim to do, and it is a pity that SIA has done just that.

What are your thoughts about where SIA’s A380 suites can go next? What can they do immediately to cover their tracks? Let’s discuss in the comments or over on Twitter (@simpliflying)

Recommended Posts
Showing 14 comments
  • Oussama Salah
    Reply

    Suites in the Sky, I wonder if anyone has surveyed the market for these super luxurious spaces on a commercial aircraft. I would have thought that in this case the competition is no longer the Legacy/Service airlines. but Business Jet operators.
    I have always thought that for people who valued their privacy a business jet would be a better solution. Spending 10 or 12 hours in a Suite on an airplane is akin to being punished.

  • Web 2.0
    Reply

    In response to customer demand, bed seats with more personal space in Business Class, plus enhanced private suites for First Class passengers. Web 2.0

  • David Parker Brown
    Reply

    This is a very interesting concept.

    I think another perspective to this are the folks that are still spending a lot of money for typical first class, but not feeling they are getting “the best.” A lot of people in that position are used to getting the best and paying for it. If it were just advertised as a First Class upgrade, instead of a whole different level, it wouldn’t be as big of an issue.

  • Christophe
    Reply

    Hi,
    Just back from SIN to CDG today by SQ334 operated on A380-800 in economy class. Regarding your thoughts on the suites class, just one point to add : if you compare the price of a first class ticket CDG SIN return on AF 10.5 k€ and for the same date with SQ suite classe 8.9 k€, the suite offer makes sense and I guess that top French executive travelling F on AF might be tempted to switch to SQ suites.
    Regards. Christophe.

  • benedict wong
    Reply

    People are willing to pay whatever price it is if they think they're getting value. In this case, majority of First Class regulars on SIA do not see the value of the Suites to justify the price tag. If SIA really want to position the Suites as “a class beyond first”, they have to add more values to further differentiate the Suites from everything else customers can get on the rest of the plane/pre-boarding/post-boarding.

  • Samuel
    Reply

    Singapore Airlines ALWAYS has the highest fares

  • micheldefays
    Reply

    Excellent synopsis of the SIA Suites pricing experiment. Pre-introduction pricing and market research were obviously flawed. Raising the price gradually from an “introductory low special premium” to a level the market will pay (until sales peak) would have been a smarter approach and would not have resulted in SIA denying itself the sales it lost forever to “HR policies” and “government guidelines”. SIA has entered the world of luxury products and NOW knows that Ferrari and Chanel dont price their products according to the same rules Kia and Avon, but according to “as much as the market will bear”, …and not a penny more.
    -Michel Defays, KNM Aviation Servcies Corp., Toronto

  • Markham McGuire
    Reply

    This was a fantastic analysis. You offered some really incredible insight into business strategy as a whole. SIA really needs to throw their premium clients a bone here. Seriously, a one-night stay in a hotel? Oh come on, even William Shatner at Priceline can cut me better deals than that. How about a 4 night stay, Monday-Thursday…. for a client paying upwards of $14000 USD for a ticket?

    SIA has provided absolutely no meaningful incentives aside from the suite itself, which is hardly 50% better than first-class. If SIA wants to compete with Emirates in the future, I believe a shift in management is necessary.

    SIA is in some trouble here.

    They're about to post a full-year loss of over S$159,000,000.
    ….
    Last year they posted a net profit of S$324,000,000.

    Come on SIA, pull it together!!!

  • Markham McGuire
    Reply

    This was a fantastic analysis. You offered some really incredible insight into business strategy as a whole. SIA really needs to throw their premium clients a bone here. Seriously, a one-night stay in a hotel? Oh come on, even William Shatner at Priceline can cut me better deals than that. How about a 4 night stay, Monday-Thursday…. for a client paying upwards of $14000 USD for a ticket?

    SIA has provided absolutely no meaningful incentives aside from the suite itself, which is hardly 50% better than first-class. If SIA wants to compete with Emirates in the future, I believe a shift in management is necessary.

    SIA is in some trouble here.

    They're about to post a full-year loss of over S$159,000,000.
    ….
    Last year they posted a net profit of S$324,000,000.

    Come on SIA, pull it together!!!

  • oussama
    Reply

    In a way it is a class beyond first class, but it also resembles a very extravagant and lavish solitary confinement cell. I think the Emirates product is less extravagant but more practical (at least the lounge bar is, until someone is injured during turbulence). SIA should reconfigure their aircraft and split the space between their current and original First Class. In other words cut your losses and move forward

  • Varun
    Reply

    Well, it seems that it was simply a strategy which back-fired. SIA must have thought that all the High level corp travellers and Govt. officials would shift to the class beyond first. If it would have worked, they would be laughing their way to the bank today, But, since their strategy did not work. They probably should: 1) Provide better on ground service like limo pick-ups & drops. Speed Check-Ins on the ground. 2) In Air: a socializing place like a bar. 3) Actively market to their First class Frequent Fliers by providing next to free upgrades. 4) Stop marketing it as beyond first class cause it creates a mental bridge which is tough to cross. Similar to shifting to Business from Economy, from Business to First and First to Beyond Firrst!

pingbacks / trackbacks
  • […] the universe and everything – SimpliFlying: Singapore Airlines A380 Suites – A Class Beyond First or a First Class Branding Debacle? – A Gonzo Journal: A Fantastic Music Website, Truly […]

  • […] Joel] – mrbrown: To be good Singapore DJ, you must have American accent, issit? – SimpliFlying: Singapore Airlines A380 Suites – A Class Beyond First or a First Class Branding Debacle? – A Gonzo Journal: A Fantastic Music Website, Truly Amazing – Otterman speaks…: When does […]

Leave a Comment

Getting Next Post...
website by siddatwork.com