Should Singapore Air CEO take responsibility for flip-flop on credit card fees

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It has been seven years since the CEO of Singapore Airlines (SIA) took over the management. The group’s recent inconsistent actions are undermining public support.

By Joelyn Chan

General Manager (CEO) Goh Choon Phong has worked for SIA Group for 20 years. In 2010, he joined the board of directors and succeeded former CEO Chew Choon Seng. Under his leadership, the group overcame challenges and survived tough times. In 2016, CEO Goh won the Dwight D. Eisenhower Global Innovation Award. He is the first winner from South East Asia. In just one month, the SIA reversed two of its decisions. This is different from the usual well thought out execution of the business.

The two decision reversals could be just the tip of an iceberg

On January 4, 2018, SIA canceled its offer to charge a 1.3% credit card service charge on flights departing from Singapore. SIA capped the amount at S $ 50 (US $ 38). The policy only affected the new Economy Lite category. The financial amount and the impact on customers were relatively small. Still, the news sparked public outrage. To address the entire credit card services fiasco, CEO Goh stepped in. He said: “We have to accept that some things may not work.” “You have to show that if it doesn’t work, you learn quickly and move on,” he added.

It doesn’t appear that SIA learned quickly from the January Saga. 1st February, the SIA spokesperson announced another reversal. This was a removal of the automatic inclusion of theft insurance. For customers who have booked flights online, SIA will reimburse the cost of flight insurance. The Consumers Association of Singapore (CASE) noted that travelers tend to overlook details. Ultimately, they can pay more for the auto-inclusion options without realizing it. While the SIA is moving in the right direction, negative publicity will prevail.

The public is no longer so tolerant. Such reversals undermine public love and support for the SIA. Apart from SIA, there are many alternative carriers. Customers will expect more and better customer service when they pay extra. Otherwise, they could go for low cost carriers. SIA seems to be trying hard to navigate well in the midst of tough times. He cannot afford more trial and error. It must review and define its policies with aplomb and precision. This will set it apart from low cost carriers and competitors.

Successes and failures in CEO Goh’s tenure

When the going gets tough, eyes turn to the leader. Is it fair to hold CEO Goh accountable for bad decisions? This can be a decision made by the board of directors or the president. Or, it could be a bold step in his transformation plan.

As with all CEO mandates, there are bound to be hiccups. Not all decisions will be well accepted. SIA’s first quarterly loss in March 2017 was a surprise. The last poor performance results date back five years. The unexpected loss does not match well with the CEO’s previous confidence. How will investors trust a leader if he doesn’t deliver results?

CEO Goh’s predecessor achieved consistent profitability throughout his tenure. Former CEO Chew Choon Seng led the company through global crises. Crises include the Severe Acute Respiratory Syndrome (SARS) crisis, recessions and volatile oil prices. In comparison, CEO Goh’s accomplishments may not surpass former CEO Chew. Under the leadership of CEO Goh, SIA launched Scoot and signed several landmark contracts. Fortunately, the business was not left behind.

Sources: The times of the straits, MOUNTAIN PEAK

Crossing the seven-year mark

After a seven-year term, the former CEOs of SIA have passed the baton. Ex-CEO Chew and ex-CEO Cheong Choong Kong have moved on to chairmanship. They got out and smoothly handed the business over to the new CEO. CEO Goh may want to learn from them and step down while the company is still in good shape. It is always to start off on a good note.

Sources: APEX, SIA, Bloomberg, GIC, The times of the straits

For now, CEO Goh has a lot to do. In 2017 he took on a new role – Chairman of the Board of Governors of the International Air Transport Association (IATA). It also put in place a three-year turnaround plan for 2017-2020. The plan included a new revenue management system, cabin overhaul and many more. There are high hopes that SIA will transform into a more agile organization with bigger growth plans.

The transformation plans are still in their infancy. While there is good progress now, long term results are uncertain. If SIA keeps going back on its decisions, it shows a lack of confidence in the execution. It could do more harm than good if he quits now. A poorly executed plan can beat the absence of plans. One thing is certain, the share price of SIA will be eroded by the announcement of the forced departure of its CEO. Maybe CEO Goh will step down after ten years. For now, it wouldn’t hurt if SIA was monitoring or starting to prepare its next CEO.


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