SINGAPORE (Feb 12): Singapore Airlines hit some unexpected turbulence in recent weeks when it attempted to impose charges for credit card bookings for flights out of Singapore and automatically add travel insurance to tickets booked on its website unless customers specifically “opt-out”. In the face of fierce criticism, it quickly back-pedalled on both initiatives.

“We have to accept that some things may not work,” CEO Goh Choon Phong told reporters at a recent event. “We have to have a mindset change to fail fast.”

Yet, the speedy retractions are also worrying, says Aaron Wong, a management consultant who founded the travel blog The MileLion and has written extensive, analytical posts on SIA’s moves. “How quickly [the initiatives] were announced and later retracted suggests it wasn’t thought through. It’s a reflection of an organisation’s insular thinking, the fact that they seemed almost surprised by the reaction. Wouldn’t it have been the first thing they considered?”

Wong is not unsympathetic towards SIA’s need to expand its revenue base, though. He believes some of the changes, such as encouraging frequent flyers to spend their miles, might well be good business decisions. Charging passengers for seat selection is understandable, because passengers have a choice of paying or not paying. But levying credit card charges on bookings and automatically including travel insurance with the purchase of a ticket are entirely different. “It’s an unnecessary way of antagonising customers,” Wong says. “It’s ironic for a company that’s been so cautious about brand management.”

So, have these recent events hurt SIA’s brand image? “In any market other than Singapore, it would have,” Wong says. He believes premium cabin customers are largely unaffected by the changes, and people in Singapore would still choose to fly SIA, if only because an alternative may not match up. “For better or worse, I think that SQ has figured out that they’ve built a [tremendous] buffer of goodwill around a great product for the past 70 years.”

But what can SIA do to grow its business without taxing the goodwill of its customers? How can it balance its obligations to both customers and investors?

“The one thing that SIA has not harnessed for more business value is its valuable SQ brand,” says Lawrence Chong, CEO of Consulus, an innovation consultancy that specialises in business transformation. He points to Banyan Tree Holdings as an example of a company that has realised that its brand is capable of creating value beyond its original core business. “They harnessed it to enter related business categories and stopped owning hardware.”

With the rise of low-cost carriers as well as Middle Eastern and Chinese airlines, SIA now faces intense pressure on profitability in the aviation sector. “They are maxed out, so these penny-pinching approaches have to come in. But if they dare to take the brand beyond aviation, the sky is the limit,” Chong says.

Some brands have already moved beyond their traditional business. Japanese minimalist homeware retailer Muji is opening hotels in China; internet giant Alibaba Group Holding is now operating a supermarket chain. “If the SIA brand stays in the premium lifestyle space, from luxury hospitality to residences and food, it would be an exclusive lifestyle experience that only SIA can deliver,” Chong says. “If you can deliver great service, food and beverages in a tight space for long hours at 39,000ft in the air, with the staff still smiling and responsive, you can certainly do well on the ground.”

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