AIR ASIA Soars HIGHER; EXPECTED 67% PASSENGER Rise 2007; NEW Flights to CHINA, INDIA , PELAMBANG, PEKANBARU; MAS Fares Hike Irks TRAVELLERS
The CEO of AIRASIA has refuted talks that a low budget carrier has made fresh bids to fly to
AirAsia Bhd will not raise its air fares following the move by national carrier Malaysian Airline System Bhd (MAS) to hike fares on domestic routes.
The increase was unavoidable because of rising fuel prices for it to stay afloat. MAS managing director Idris Jala announced Monday that the airline's domestic fares for business class will be increased by 25 per cent and the economy class by 15 per cent effective Aug 15.
The fuel surcharge was also increased to RM15 effective Tuesday.
Many will fly budget airline AirAsia or travel by car, bus or train. This is welcoming news to most travelers as they can now rely on Air Asia for cheaper tickets. But for many at certain route sectors, there is no choice as Air Asia do not covered all the MAS routes.
AirAsia's has started operating all the 99 local routes under the Government¡¦s domestic air services rationalisation plan. The airline started flying to
read on for the details
AirAsia Says Passenger Numbers to Rise 67% in 2007
Updated : 04-08-2006 : Bloomberg Story By : Wahyudi Soeriaatmadja via www.biznewsdb.com
Aug. 4 (Bloomberg) -- AirAsia Bhd.,
The airline, based in Sepang, outside
”A large part of our growth is foreign tourists,'' Fernandes said. “Many foreigners are now using AirAsia as we market''
AirAsia, which last month agreed to buy 40 more Airbus SAS A320 planes for about $2.6 billion, is expanding its routes to win over passengers and keep its lead among at least 18 discount carriers in the region. The airline started flying to
AirAsia is able to speed up the introduction of new international routes after the government last month agreed to include the carrier in its bilateral talks for air rights.
The airline expects about 3 million passengers of the 15 million passengers will travel routes in
Fare buckeT' scheme for MAS Now one of the other problems is the MSS (Mutual Separation Scheme) whereby MAS is compensating employees leaving with golden and diamond handshakes (check the details at Lim Kit Siang Blog)
"We are very keen to go to Pelambang, PekanBaru, Sumatra to have a daily flight and increased frequency flying to Jogjarkarta"
AirAsia soon plans to introduce new routes in Indonesian cities including
Aside from the 40 Airbus planes, AirAsia also has an option to acquire as many as 30 more aircraft. The order is in addition to the 60 planes it placed in March 2005.
AirAsia has carried over 20 million passengers since it started operations five years ago, the company said in an e-mail statement today.
Updated : 02-08-2006 ;Media : The Star ;Story By : B.K. SIDHU
PM Datuk Seri Abdullah: "If MAS continued to offer low fares even after fuel prices had gone up, it would lose and that would put it in difficulty," he told reporters.
"I think MAS has done its homework and knew that the fare increase has to be done to avoid losses and other problems," he added.
So much for giving rival AirAsia a run for its money with competitive pricing.
Contrary to market perception that AirAsia would follow suit in raising its airfares, group chief executive officer Datuk Tony Fernandes said the no-frills carrier had no such plans, at least for now.
”We are not raising our airfares” Fernandes told StarBiz via SMS.
Yesterday was AirAsia's first day operating all the 99 local routes under the Government¡¦s domestic air services rationalisation plan. Asked how the airline managed day one with the increased number of routes, frequencies and passengers, Fernandes said it was “perfect”.
”We are thrilled and sales have never been better” he said.
While Fernandes may be delighted with the roaring sales the airline is experiencing, MAS is highly unlikely to out-price itself, given that it is after the same leisure and business travellers markets as AirAsia.
This is despite the MAS announcement on Monday that effective Aug 15, its weighted-average fares will be increased by 15% for economy class and 25% for business class for the 22 routes.
However, it was also reported that MAS would launch its cheapest domestic fares ever to be sold via its revamped online booking..
While MAS is keeping the final pricing close to its chest, the team working out the fares would likely come up with seven to nine buckets - seven for economy and two for business class. (Fare bucket refers to the allocation of a certain number of seats at a certain fare.)
A meeting to decide on the fares is likely to be held over the next few days and an announcement expected on Aug 15.
An analyst, who did his own math based on the proposed percentage rise, expects one-way economy airfare including taxes to
Fares for other routes such as KLIA to Johor Baru are likely to be RM207 (from RM167), KLIA-Kuching RM377 (from RM309), KLIA-Kota Kinabalu RM579 (from RM484) and
”MAS would start quoting domestic fares in seven fare buckets, emulating AirAsia¡¦s tactic for attracting public attention. Early birds would secure below-average fares while late bookings will be subject to higher-than-average farr” the analyst's report said.
The analyst noted that fares for bookings closer to departure dates would increase much more than an average 23.4% and the weighted average revenue enhancement was probably just over 13% because seat capacity would be cut.
MAS is reducing weekly frequencies from 1,783 to 1,182. The report said the reduced “system-wide capacity and the higher average domestic fares MAS (would impose) are clearly beneficial to AirAsia, as it can absorb the spill-over of passengers unhappy with MAS” price hikes and (AirAsia can) gradually increase its average fares.
However, it added: “MAS will also gain as the impact on the national carrier should be positive as lower frequencies and higher fares mitigate the domestic route losses, which MAS must consolidate from Aug 1”
That aside, Fernandes said the MAS proposal for a fare hike “only proves that for years AirAsia has suffered while MAS' domestic operations were paid for by the Government as their pricing was not commercial.'
”Now (that the 22 routes) are in their profit and loss, MAS has to be commercially (oriented). And that is great news for AirAsia because we can now truly grow as there is fair market competition.”
Shares in MAS gained three sen to RM2.83 while AirAsia edged up one sen to RM1.29 in yesterday’s trading.
Fare buckeT' scheme for MAS
Now one of the other problems is the MSS (Mutual Separation Scheme) whereby MAS is compensating employees leaving with golden and diamond handshakes (check the details at Lim Kit Siang Blog)
www.biznewsdb.com FOR a Malaysia Airlines once sinking deeper into the red, government price controls, particularly for domestic flights, were like a diver’s weight belt around an already obese waist. From Aug 15, economy and business class fares will be jacked up by 15 and 25 per cent respectively, to accurately reflect what it takes to balance its accounts this year and turn a small profit in 2007. AirAsia Plans Who wins in Malaysia-Singapore open skies pact? By Kang Siew Li AIRLINE passengers and An open skies agreement give airlines in the nations unlimited rights to fly between each other's borders. And check also the INTERVIEW Tonight (Aug 07 06, Monday)8.30 pm, TV3 with PM ABDULLAH; details at
and read the dissatisfactions in NST
MAS airfare hike given the thumbs down
SEPANG: The domestic fare hike by Malaysia Airlines (MAS) did not go down well with Malaysians.
They say they will fly budget airline AirAsia or travel by car, bus or train. They also think that it is unfair to pass the high cost of oil to the public.
MAS is raising its economy class fares by 15 per cent and business class fares by 25 per cent from Aug 15.
S.M. Rajah, manager of an IT company in
"The increase is steep. Who wants to spend so much to fly locally when alternatives are available?"
Rajah, who was at the KLIA to go to
Teoh Yang Ming, a goldsmith, said it was unfair for MAS to hike the fares so much to recover its losses. "They should not pass the buck to consumers."
Businessman Alwi Abdul Karim said he would switch to AirAsia to visit his son, who was studying in Bintulu.
"We used to fly MAS to visit him and vice-versa. Now, we have no choice but opt for cheaper alternatives."
Businesswoman Noorshilah Rusli is saddened by the increase and said she would look for cheaper transport.
"Such a drastic increase will hurt my pocket as I travel a lot around the country. Now, I will have to take AirAsia."
Ryan Song, marketing manager of a company in
He said the airline should justify the higher fares by offering better service and quality meals.
Retiree Diana Kok said the hike would affect the middle- and lower-income people.
"The rich will not feel the pinch. They can still fly on MAS," said the 65-year-old who had just arrived at the KLIA from the
Malaysian Association of Tour and Travel Agents (Matta) president Ngiam Foon said the higher fares would not have an adverse effect on MAS.
He said offers given by MAS from time to time would cater to those looking for cheaper travel.
NST Editorial: Room enough for two
Thus, after the much-needed and hard-won cost-cutting to get back into operational shape, the national carrier must count the Transport Ministry’s agreement not to interfere in the way it sets fares as a major and long-sought-for victory.
On Monday, as it announced a route rationalisation plan that substantially reduces its obligations to fly to every far-flung corner of the country, it duly exercised its new freedom — by raising ticket prices for the first time in 14 years.
The increases are far from arbitrary, however. Dearer oil, which has caused fuel surcharges to go up three times this year, was bound to pummel the consumer sooner or later, and airlines worldwide have got badly burnt by choosing delay in a vain attempt to hold on to passenger volumes.
Higher ticket prices alone aren’t going to solve MAS’s woes in the low-margin domestic sector. One of Idris’s predecessors, Tan Sri Abdul Aziz Abdul Rahman, told the NST that with load factors of up to 95 per cent required to break even, the super-frilly MAS wouldn’t stand a chance against its no-frills competitor, AirAsia.
A rejigging of costs to prices could sweeten the numbers, but Idris’s no-nonsense management team will have to rely even more on their flag-bearer’s built-in advantages, such as "weather-proof access to aircraft, allocated seats, more legroom and free refreshments on board".
For AirAsia, the Transport Ministry’s removal of MAS’s "floor price" brought on an intimation of any budget carrier’s worst nightmare — a price war. Monday’s announcement, however, showed how such worries are moot, for now if not for the long haul.
Even with maximum liberalisation, full-service carriers would have to be unscrewed bolt by bolt and rebuilt from wrought iron before they can come close to the fleet-footed nimbleness of the likes of AirAsia. For the time being, the division of the market between it and MAS looks just about right.
Aug. 2 (Bloomberg) -- AirAsia Bhd.,
The airline, based in Sepang, outside
AirAsia is able to speed up the introduction of new international routes after the government last month agreed to include the carrier in its bilateral talks for air rights. International air traffic in
``It has opened up a whole list of possibilities for us and we're excited,'' Fernandes said. The government has given AirAsia ``routes that we never dreamt of getting before.''
The move by the Malaysian government came after it removed the floor prices for Malaysian Airline on some domestic routes, which allows the carrier to offer cheaper fares, a move opposed by AirAsia.
The government has approved the two
Singapore-based discount airline Tiger Airways Pte flies to
AirAsia is still considering flying to
``There's a huge potential for AirAsia there,'' Fernandes said today, declining to say if he is reviving efforts to fly to
AirAsia is negotiating with Malaysia Airports Holdings Bhd. for ``substantially lower'' airport landing and parking charges at the low-cost carrier terminal in Sepang, he added. Passenger service charges and airport taxes for domestic passengers should also be cut, he said, without elaborating.
AirAsia agreed last month to buy 40 more Airbus SAS A320 planes for about $2.6 billion and has an option to acquire as many as 30 more. The order is in addition to the 60 planes it placed in March 2005.
The airline may exercise its option to buy the additional 30 planes soon, Fernandes said. ``In our planning, we believe we can absorb those 30 very quickly,'' he said. The airline doesn't have enough planes to immediately start flying to the two
The airline is ``comfortable'' with its current fuel surcharge, until fuel prices rise to $100 a barrel, he said.
Jet fuel traded at an average of $85.39 a barrel in
As budget airline AirAsia Bhd prepares to make a fresh attempt to secure landing rights in
However, travel professionals are divided over the move towards opening up
Former MAS managing director and chief executive Tan Sri Dr Abdul Aziz Abdul Rahman said he is against
Abdul Aziz believes that Singapore Airlines (SIA) will syphon away passenger traffic from
In addition, Singapore has open skies pacts with countries such as the United Arab Emirates, the US, Australia, New Zealand, Brunei, Chile and Peru, unlike Malaysia.
"With the open skies pact with
On allowing low-cost carriers (LCCs) such as AirAsia to operate the Kuala Lumpur-Singapore route, Abdul Aziz said it will likely result in MAS losing three-quarters of its passengers to AirAsia.
"This will make MAS even more miserable," he added.
Malaysian Association of Tour and Travel Agents (Matta) immediate past president Tunku Iskandar Tunku Abdullah said he favours open skies between Malaysia and Singapore as it would help sustain and increase the flow of Singaporeans to Malaysia.
"Right now, the airfares between
"The consequence of this is more and more Singaporeans will opt to travel to other cheaper destinations such as
"Thus, a liberal aviation policy is necessary for our tourism industry because 60 per cent of our arrivals into
Tunku Iskandar also believes that MAS will be able to compete with AirAsia.
"MAS provides frills and has to position itself at a different level. It should focus on the business and higher-end traffic between
"It is not going to compete with the holidaymakers because it is going to lose out anyway. There will be reduced number of people flying to
Air France-KLM country manager Estee Ng sees passengers benefiting from an open skies agreement between
However, an unlimited open skies arrangement with
"Such a pact would strengthen Singapore's aviation industry because foreign airlines that are already operating in Singapore can equally capture Malaysia's business from Singapore as there would be a good feeder service then," she said.
Ng said, however, it could work a different way.
"If Malaysia were to package itself right, it could in turn attract more foreign carriers into Malaysia and those carriers don't have to go to Singapore because then you have so much connections into Singapore. It is also cheaper to operate in
"But this will be a difficult task because
On opening up the Kuala Lumpur-Singapore route to LCCs, Ng said there will be an impact on network carriers like MAS and SIA.
"But so far, we (full service carriers) have learnt to co-exist with the LCCs," she added.
FOR a Malaysia Airlines once sinking deeper into the red, government price controls, particularly for domestic flights, were like a diver’s weight belt around an already obese waist.
From Aug 15, economy and business class fares will be jacked up by 15 and 25 per cent respectively, to accurately reflect what it takes to balance its accounts this year and turn a small profit in 2007.
Who wins in Malaysia-Singapore open skies pact?
By Kang Siew Li
AIRLINE passengers and
An open skies agreement give airlines in the nations unlimited rights to fly between each other's borders.
And check also the INTERVIEW Tonight (Aug 07 06, Monday)8.30 pm, TV3 with PM ABDULLAH; details at
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