Two cents on KrisFlyer’s Devaluation (Effective from 23 March 2017)


Image from Singapore Airlines

Singapore Airlines KrisFlyer announced the following changes to flight redemption and they will be effective from 23 March 2017.

POSITIVE

No more fuel surcharges on SQ/MI redemption

The only positive from this round of changes. It is is a huge thing as Singapore Airlines charges an obscene amount of fuel surcharges, ranging from 100 SGD for short-haul regional flights in Economy to 600+ SGD for long-haul ones in First Class to North America. Good riddance.

NEGATIVES

Increase in the number of miles required (for the more popular destinations) & 15% discount for online redemption axed

Singapore Airlines has increased the miles required for the saver awards for the following zones in all classes except for Premium Economy:-

Zone 7 – Japan & Korea
Zone 9 – Australia (excl Perth & Darwin) & New Zealand
Zone 11 – Europe
Zone 12 – US West Coast
Zone 13 – US East Coast & Houston

Furthermore, with the elimination of 15% discount for miles required for online bookings, the miles required increase across the board.

ANALYSIS

1. What is the increase in miles?

Comparing the old award chart (including 15% discount) with the new one:-

The removal of online discount meant that the the awards increase by at least 17.6%. These are mainly the short and mid-haul flights. Travelers planning to go to Japan, Korea, Australia (excluding Perth & Darwin), New Zealand, Europe and USA will be the hardest-hit with increase as much as 30%.

2. What is the value of a mile now?

I have written a post about what is the value of a KrisFlyer mile in the past. After the changes, I want to find out whether the mile has devalued.

According to Singapore Airlines,

…while there will be an increase in the number of miles required to redeem for flights in certain zones, you can also expect to enjoy savings in the amount of cash you would need to pay for your redemption ticket due to the removal of fuel and insurance surcharges.

My question from the statement was whether the removal of fuel surcharges can compensate for the increase in miles required for award redemption. To find out, I decide to calculate the monetary amount that one mile can offset for a selected city in each zone based on SQ’s example below. The only difference is that I use the miles required for round-trip redemption. The fare is based on travel during the first week of September 2017.


*All monetary amount in SGD.

Aggregating the results from all the cities:-

Class of TravelOld OffsetNew Offset% Change
Economy1.69 cents1.97 cents16.1%
Premium Economy2.60 cents2.57 cents-1.0%
Business5.38 cents4.78 cents-11.1%
First7.06 cents5.99 cents-15.1%

From the calculations, for Economy class awards, the miles are actually more valuable with the new chart. However, the monetary value that they are able to offset is still rather low at less than 2 SGD cents per mile. One is better off to stay away from Economy class award redemption.

For Business and First awards, there is a 11% and 15% decrease respectively in the monetary value that one mile is able to offset. Nonetheless the monetary value of a mile is still at least 4 SGD cents per mile for Business award and almost 6 SGD cents per mile for First award; one should still absolutely go for them instead of Economy or Premium Economy awards.

For someone who is redeeming my miles for at least Business Class awards, the new changes thus render each mile at least 11% less valuable.

3. How does the new award chart compare to the Star Alliance awards?

With the elimination of the 15% discount for online bookings, the comparison between the new award chart and the Star Alliance award chart revealed some interesting opportunities:-

It is cheaper to book a Star Alliance award for the following awards:-

Business awards
1. Japan and Korea – 3,000 miles less
2. Australia (exclude Perth and Darwin) and New Zealand – 3,000 miles less
3. Europe – 5,000 miles less

First awards
1. Japan and Korea – 5,000 miles less
2. Australia (exclude Perth and Darwin) and New Zealand – 5,000 miles less
3. Europe – 7,500 miles less
4. US West Coast – 5,500 miles less
5. US East Coast – 7,500 miles less

Based on the above, one can save miles by simply adding an additional flight on a Star Alliance partner in an award.

For instance, an one-way Business-class award from Singapore to Munich with Singapore Airlines cost 85,000 miles. However, if you add an additional Lufthansa flight out of Munich (e.g. to Frankfurt or Zurich), the miles required actually decrease to 80,000 miles as the award becomes a Star Alliance award.

Do note that Singapore Airlines is still collecting fuel surcharges on flights operated by its Star Alliance partners. Thai and ANA seem to be only ones which don’t have fuel surcharges on their flights.

4. What are the alternatives beside KrisFlyer?

Cathay Pacific Asia Miles is the obvious alternative programme. I will have to think through how it compares to KrisFlyer (especially with the new award chart) and it deserves a separate post on its own.

CONCLUSION

While it’s always painful whenever there is a devaluation, Singapore Airlines’ latest changes weren’t as drastic as some of the other airlines. I believe that KrisFlyer will still remain as THE frequent flyer programme for Singaporeans for time to come.

Leave a Reply

Your email address will not be published. Required fields are marked *