SIA-MAB codesharing furore: Dealing with customers feeling ‘short-changed’

Singaporean netizens on Facebook have not been the most supportive of the recent expansion of the partnership between Singapore Airlines (SIA) and Malaysia Airlines (MAB), which includes the expansion of codeshare flights beyond Singapore-Malaysia routes and enhancements on the frequent flyer programme.

The announcement made last week, brought out the cattier side of netizens who were not keen on paying a premium price for an SIA ticket, and then heading on to fly with MAB which has seen some turbulent times in recent years. Earlier last month even, the Malaysian national carrier incurred the wrath of Defence Minister Mohamad Sabu when he saw his flight to London delayed and hence missing a meeting with the PM. Others netizens commented on the security aspect that they do not wish to have an SIA aircraft maintained by an MAB maintenance team. These comments were largely from netizens based in Singapore.

Bringing the brand equity conversation into the mix, one netizen commented: “Does Hermes collaborate with Bonia? Image takes a generation to build and a moment to squander. What happened SQ? Where are your better minds?”

MAB has made headlines for the past few months given the talks about the brand being being sold off, shut down or refinanced – despite the fact that MAB posted a 2% year-on-year increase in revenue for the first quarter of its financial year ended 31 March 2019. While it has no doubt made strides in regaining its popularity, it has also not yet been able to wash the stain of the disappearance of flight MH370 and the crash of MH17.

In a statement to Marketing, Bonsey Design’s regional chief operations officer Graham Hitchmough said that the level of online angst stirred up by the recent Memorandum of Understanding (MoU) announcement demonstrates the “loaded sentiment and sensitivities” that will need to be navigated by both parties.

“The heady combination of national pride and massively polarised brand value and perception mean that consumers are already geared to expect the worst of any partnership – a dilution of both national identity and quality standards,” he said. However, in reality, consumers should benefit from the partnership with increased routes and frequency and extended loyalty opportunities, Hitchmough added. Moreover, news of the codesharing relationship between SIA and MAB should not be new to frequent flyers.

Hitchmough added that with the partnership, the absolute priority for both parties will be to ensure clarity, transparency and responsiveness in dealing with the customer across all channels. This is because consumers will be waiting to jump on the first sign of confusion or a perceived slipping of standards, the accuracy of flight information and an unambiguous scheduling and pricing will be critical.

Most importantly, consumers cannot feel like they are getting less for their money, because there is no shortage of other carriers ready to take their business.
Agreeing with Hitchmough is Superunion’s head of strategy Ambrish Chaudhry, who said that customer reactions show the strength and trust in SIA’s brand. It is equity that has been earned over numerous years of “uncompromising focus” on operations and customer centricity.

According to him, consumers seem to perceive a mismatch in terms of premium and quality perceptions between SIA and MAB. “While there are probably pertinent business reasons for this code sharing agreement, customers are well within their rights to express their dissatisfaction. The key focus in instances such as this is communication,” he said. Chaudhry added:

SIA need to focus on proactively sharing the news of the code share with its customers and explaining how it makes things better for them.

This can be done through more schedule options, privileged treatment at Malaysian airports, an expanded frequent flyer programme and in some instances lower fares. Chaudhry added that transparency and a well thought through explanation of the code sharing would go a long way to bring customers on board.

Dominic Mason, managing director, Sedgwick Richardson also added that from a branding point of view, SIA will need to address negative perceptions arising from customers who feel short-changed and make the call whether these perceptions outweigh benefits from revenue and cost savings.

“Of course. If you pay a relative premium for any product or then you are right to expect a higher level of quality and an enhanced experience,” he added.

Also weighing in is Zayn Khan, Dragon Rouge’s CEO, Southeast Asia, who said after years of under-investment in brand and product and service quality, “there is no way” that a flying public will stomach SIA prices for MAB service, if indeed that is what this arrangement implies. He added:

MAB is not the brand it used to be, and it’s miles behind SIA. Pricing needs to reflect that.

MAB’s struggle sign of potential merger?

Analysts recently speculated that MAB struggling to stay afloat foreshadows the possibility of the airline merging with SIA. Quoting associate director at Maybank Kim Eng Securities, Mohshin Aziz, the South China Morning Post reported that in order for MAB to “thrive and survive”, it should “set national identity aside and merge with SIA”.

Commenting on the speculation, Mason said: “Code sharing is one thing but a merger is an entirely different proposition. The success of the SIA brand is built on a culture of service excellence and innovation over decades. A successful merger requires that culture to be evident across operations in Malaysia, something which will take decades.”

Bonsey Design’s Hitchmough said speculation that this agreement presages a full merger is “probably wide off the mark” and a huge amount of operational commercial and competitive efficiencies can still be achieved under the guise of the MoU. He added:

The reputational and regulatory challenges of such a move would be almost insurmountable.

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