Published November 15, 2008

Airfares to KL in freefall

Airlines undercut each other to woo passengers as route opens up

By VEN SREENIVASAN
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THE Singapore-Kuala Lumpur route, monopolised for so long by the national carriers of the two countries which routinely charged return fares in excess of $400, is opening up with some aggressive promotions. Travellers are spoilt for choice.

Malaysia Airlines (MAS) has become the first to throw down the gauntlet, with its 'One Price, All Seats, All Flights' online promotion offering one-way, economy-class fare on its flights from Singapore to Kuala Lumpur for $89 nett.

MAS also dropped its fares for flights from Singapore to Penang, Langkawi, Kota Kinabalu and Kuching, offering similar $89 nett one-way, economy-class fares to these destinations. This represents a reduction of up to 78 per cent of the lowest normal online fares on these routes.

The move comes ahead of the liberalisation of the Singapore-Kuala Lumpur route from Dec 1, and services between Singapore and East Malaysia, which starts next week. Not to be outdone, Tiger Airways has charged into the battle with one-way fares between Singapore and Kuala Lumpur at $29 (RM69), all inclusive. AirAsia and Jetstar Asia have also launched a slew of additional services, beginning next month, between the two major cities. And flights between Singapore and the East Malaysian towns of Kuching and Kota Kinabalu begin next week.

Singapore Airlines (SIA) and SilkAir have launched promotional return fares to Kuala Lumpur at $293 nett, and to Penang at $313 nett. While these may still appear to be on the high side, they are a sharp markdown to what SIA, a premier airline, used to charge in the days when it monopolised the route along with MAS.

Meanwhile, Jetstar Asia's CEO Chong Phit Lian said that her airline had already been cutting fares on the route for several weeks.

'Yes, we have already started cutting fares to KL with everyday low fares,' she informed. 'But next week, we will embark on even more aggressive fare reductions on our website.'

AirAsia has been trying to out-manoeuvre its rivals by scrapping fuel surcharges (a move which will lop off $20 from ticket prices) in an effort to try to lure passengers.

In addition, the budget carriers are also offering several tens of thousands of 'free tickets' during the month of December to commemorate the further liberalisation of routes between Singapore and the Malaysian destinations.

All this comes after Malaysia and Singapore decided to fast-track their air connectivity by liberalising routes between Changi and several Malaysian destinations. This has resulted in a scramble by both legacy carriers and low-cost carriers to launch more flights and compete more aggressively for passengers.

In about three weeks, flights between the Republic and Kuala Lumpur are set to double to 29 daily as AirAsia, SilkAir, Jetstar Asia and Tiger battle it out against incumbents Malaysia Airlines and Singapore Airlines.

Interestingly, the fare battle comes as the global aviation industry - including Asia-Pacific carriers - is wrestling with the impact of a widening global economic slowdown.

In a statement issued yesterday, the Association of Asia-Pacific Airlines (AAPA) noted that passenger and cargo demand had already fallen dramatically in recent months, with expectations of a further deterioration during the first half of 2009.

'Oil prices are likely to remain subdued given continuing weak economic conditions,' AAPA said. 'This should enable carriers to keep fares competitive and help maintain travel demand at a time of diminished consumer confidence.'