SIA makes U-turn on credit card fee for flights leaving S’pore after backlash

SINGAPORE — In a U-turn, national carrier Singapore Airlines (SIA) has ditched its plans to levy a credit-card service fee on outgoing flights from Singapore, just a day after the news sparked a public backlash. 

In a sales circular seen by TODAY on Thursday (Jan 4), SIA said it will not go ahead with plans to put the fee in place after “a further review”. 

Pressed on why it made the about-turn and whether it caved in to public pressure, a spokesperson for SIA declined further comment.

Earlier this week, the airline said on its website that from Jan 20, customers who book tickets under its new Economy Lite category will be levied a credit-card service fee of 1.3 per cent of the total amount, capped at S$50.

It incurs “costs relating to the acceptance of credit cards” when customers choose that mode of payment, the airline explained. 

The news quickly sparked online furore, with one user pointing out that Prime Minister Lee Hsien Loong had been encouraging citizens to “go cashless”. 

Other users suggested that the move will see SIA “give away their business” to other carriers. 

SIA began charging a credit-card service fee for flights departing Australia in November 2016, and for those leaving Belgium, the Netherlands, New Zealand and the United Kingdom in April last year.

Economy Lite is the lowest of three new economy-class fare types the airline announced in December 2017 amid a review of its business operations.

Advance seat selection in economy class, which is presently free, will start at US$5 (S$6.65) per flight segment for those booked on Economy Lite fares from Jan 20.

TODAY previously reported that payment companies such as Visa and Mastercard prohibit merchants from passing on credit-card transaction fees to consumers, and the rules are stated in the contract between merchants and the acquiring banks, which process the credit-card payments.

However, enforcement action is set off only by complaints, and acquiring banks would serve errant merchants a warning letter based on consumer tip-offs. Awareness is low, however, among consumers that they can lodge complaints against firms which impose surcharges.

In 2012, Visa, Mastercard and the banks issuing their credit cards agreed to a multi-billion-dollar anti-trust settlement with United States retailers, allowing stores to charge customers more if they pay using a credit card.

Responding to TODAY’s queries, Mr Loy York Jiun, the executive director of the Consumers Association of Singapore (Case), said SIA’s decision was good news for consumers who may have been affected, as they can continue paying via credit cards without being charged an extra fee.

“However, as with all other business costs, these costs would eventually be reflected in the prices consumers have to pay in one form or another. Ultimately, it is the final price that consumers have to pay that matters, as compared to the value they receive,” he said.

“Case urges businesses to engage in fair and ethical business practices by providing greater transparency when levying fees on their goods and services.”