‘LCCS FACE CHEAP FARE COM­PE­TI­TION’

Full-ser­vice car­ri­ers’ rock-bot­tom of­fers pose prob­lem to bud­get play­ers to mount same routes

New Straits Times - - Business | News -

BILQIS BAHARI

KUALA LUMPUR bt@me­di­aprima.com.my

LOW air­fares from Kuala Lumpur to Lon­don of­fered by full ser­vice air­lines are pos­ing a chal­lenge to bud­get car­ri­ers to mount the same route.

Ac­cord­ing to in­dus­try an­a­lyst, these fares would not help low­cost car­ri­ers (LCC) to fly the same KL-Lon­don route eas­ily as his­tor­i­cal fig­ures have shown that bud­get air­lines need to of­fer around 30-50 per cent cheaper fares than full ser­vice air­lines to en­tice trav­ellers.

Should LCCs plan the same route, it would have to of­fer fares from RM1,199.50 if it wanted to of­fer 50 per cent cheaper fares than Malaysia Air­lines’ (MAS) RM2,399, for ex­am­ple, May­bank In­vest­ment Bank Bhd avi­a­tion an­a­lyst, Mohshin Aziz told NST Busi­ness.

“The pri­mary and per­haps the only rea­son why peo­ple take LCC on long-haul is be­cause they are on a tight bud­get.

“Given that the full car­ri­ers’ fares are al­ready rock bot­tom, LCCs them­selves can’t go much lower as it will be well be­low their costs,” said Mohshin, adding that he does not forsee fares go­ing be­low RM2,000.

Malaysia’s long-haul LCC, AirAsia X Bhd planned to re­sume its KL-Lon­don flight next year us­ing the new Air­bus A330-300 neo air­plane.

AirAsia X’s chief ex­ec­u­tive of­fi­cer (CEO) Benyamin Is­mail said in Jan­uary this year that the next im­me­di­ate des­ti­na­tions for the com­pany af­ter it re­ceives the new planes would be Lon­don and Paris. The new long-range wide­body planes are slated to be de­liv­ered from next year on­wards.

AirAsia X had sus­pended flights to Lon­don and Paris in 2012 due to high fuel prices and weak de­mand. In­stead, it in­tro­duced more flights to Asean, Aus­tralia and North Asia over the years.

The air­line had re­cently in­tro­duced its first United States des­ti­na­tion, Hon­olulu, Hawaii, from Osaka, Ja­pan, with fares from as low as RM499 one-way start­ing June 28 this year.

On pric­ing struc­ture, MAS has been of­fer­ing ex­cit­ing re­turn fares from RM2,399 to Lon­don from KL on its su­per-jumbo plane, Air­bus A380.

Bri­tish Air­ways had also re­cently of­fered re­turn fares from as low as RM2,588 from KL to Lon­don. Checks by NST Busi­ness this week found Emi­rates Air­lines, Turk­ish Air­lines, Sin­ga­pore Air­lines and Oman Air of­fer­ing air­fares from RM2,258 to RM2,610.

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