Flight Centre Formally Ends Singapore Airlines Contract Negotiations

Flight Centre Limited (FLT) will continue to sell Singapore Airlines’ (SIA) fares but has formally ended 2009/10 preferred contract negotiations with the airline.

After four months of negotiations, FLT today advised SIA’s management that the airline’s preferred supplier agreement would not be renewed.

Managing director Graham Turner said FLT’s decision was based on unattractive contract offerings that would have led to uncompetitive customer offerings.

As a non-preferred airline, he anticipated SIA would lose more than half the business FLT previously expected to  generate for it during the 2009/10 financial year.

During 2008/09, FLT’s 1000 Australian leisure and corporate travel outlets generated more than $300million in revenue for SIA.

By shifting potential SIA business to other airlines, FLT expects improved profit under its new mix of preferred carriers.

“We would like to work proactively with SIA but unfortunately its final offer for 2009/10 was inferior to agreements that are in place with its major competitors in this market,” he said. “We have decided on this basis not to promote SIA as a preferred carrier.

“SIA’s use of fuel surcharges was also a factor, with these confusing and seemingly excessive charges now making up more than 30% of SIA’s base airfares. For a flight to London, SIA’s fuel surcharges are, in fact, among the highest in the world.”

Contrary to some industry suggestions, Mr Turner stressed that FLT would not follow the lead of India’s travel agents, who have boycotted Singapore Airlines.

“Our decision to walk away from a preferred supplier agreement with SIA will have no impact on our leisure and corporate travel customers or on our bottom line.

“Our 4500 travel agents in Australia are committed to ensuring that:

  • Our customers always get SIA if that is their preference
  • We will never be beaten on price and will beat any genuine quote from an airline, competing travel agency or website (subject to availability and based on Australian registered businesses and websites and for travel departing within Australia); and
  • We will support our preferred partner airlines wherever possible.”