‘LCCS FACE CHEAP FARE COMPETITION’
Full-service carriers’ rock-bottom offers pose problem to budget players to mount same routes
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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.