Flight Centre Ends Singapore Airlines Contract Negotiations

Flight Centre Limited (FLT) has confirmed that it 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 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 claimed 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 1,000 Australian leisure and corporate travel outlets generated more than $300million in revenue for SIA.

By shifting potential SIA business to other airlines, FLT said it 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.”

Mr Turner stressed that FLT would not boycott 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.”

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