Should Singapore Air CEO take responsibility for flip flopping on credit card charges

It has been seven years since Singapore Airlines (SIA)’ CEO took the helm. The group’s recent fickle minded acts undermine public’s support.

By Joelyn Chan

Chief Executive Officer (CEO) Goh Choon Phong has been working for SIA group for the past 20 years. In 2010, He joined the board and took over from former CEO Chew Choon Seng. Under his leadership, the group has overcome challenges and survived the tough times. In 2016, CEO Goh had won the Dwight D. Eisenhower Global Innovation Award. He is the first Southeast Asian awardee. In a month alone, SIA has reversed two of its decision. This is unlike the usual well-thought execution of the company.

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

On 4th Jan 2018, SIA cancelled its bid to charge a 1.3% credit card service fee on outgoing flights from Singapore. SIA capped the amount at S$50 (US$38). The policy affected only the new Economy Lite category. The financial quantum and customer impact were relatively small. Even so, the news triggered a public outrage. To address the whole credit card service fiasco, CEO Goh stepped in. He said, “We have to accept that some things may not work.” “We have to show that if it doesn’t work, that we learn quickly, and move on,” he added.

It does not seem like SIA has learnt quickly from the January saga. On 1st February, SIA spokesman announced another reversal. It was a removal of auto-inclusion of flight insurance. For customers who had booked flights online, SIA will refund the flight insurance fee. The Consumers Association of Singapore (CASE) noted that travellers tend to overlook details. In the end, they may pay more for auto-inclusion options without realising. Although SIA is moving in the right direction, negative publicity will prevail.

The public is no longer as tolerant. Such reversals undermine the public’s love and support for SIA. Apart from SIA, there are so many alternative carriers. Customers will expect more and better customer service when they pay a premium. Otherwise, they could go for budget carriers. SIA seems to be trying hard to navigate well amidst the challenging times. It cannot afford further trial and error. It needs to review and define its policies with poise and precision. That will set it apart from budget carriers and competitors.

Hits and misses in CEO Goh’s tenure

When things go wrong, eyes will turn to the leader. Is it fair to hold CEO Goh accountable for the bad decisions? It could be a decision made by the board or chairman. Or, it could be a bold measure from its transformational plan.

As with all CEOs’ tenure, there is bound to be hits and misses. Not all decision will be well accepted. SIA’s first quarterly loss in March 2017 came as a surprise. The last lacklustre performance results occurred five years ago. The unexpected loss does not match well with the CEO’s previous confidence. How will investors trust a leader’s confidence if he does not produce results?

CEO Goh’s predecessor achieved consistent profitability throughout his stint. Ex-CEO Chew Choon Seng led the company through global crises. Crises include severe acute respiratory syndrome (SARS) crisis, recessions and oil price volatility. In comparison, CEO Goh’s achievements may not outshine ex-CEO Chew. Under CEO Goh’s leadership, SIA launched Scoot and signed multiple landmark contracts. Fortunately, the company was not left to stagnate.

Sources: The Straits Times, APEX

Crossing the seven-year mark

After a seven-year tenure, SIA’s previous CEOs handed the baton over. Ex-CEO Chew and ex-CEO Cheong Choong Kong moved on to chairman roles. They exited and handed over the company smoothly to the incoming CEO. CEO Goh may want to learn from them and leave his role while the company is still in good shape. It is always to leave on a good note.

Sources: APEX, SIA, Bloomberg, GIC, The Straits Times

For now, CEO Goh has a lot on his plate. In 2017, he took a new role – Chairman of the International Air Transport Association (IATA) Board of Governors. He also rolled out a three-year turnaround plan for 2017 to 2020. The plan included a new revenue management system, cabin overhaul and many more. There are high hopes for SIA to turn into a more nimble organisation with bigger growth plans.

Transformation plans are still in the early stage. Although there is good progress now, long-term results are uncertain. If SIA keeps reversing its decisions, it shows a lack of confidence in execution. It may do more harm than good if he steps down now. A poorly executed plan may beat having no plans. One thing for sure, SIA’s share price will be adversely eroded with news of its CEO being forced to leave. Perhaps, CEO Goh will step down after the ten-year mark. For now, it would not hurt if SIA looks out or starts preparing its next CEO.