Published December 1, 2008

S'pore-KL flights double, fares dive as full liberalisation starts

Budget airlines ramp up flights, SIA offers promotional fares

By NISHA RAMCHANDANI
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(SINGAPORE) The sky's the limit from here on for the Singapore-Kuala Lumpur (KL) route as full liberalisation kicks in today, which means that consumers will have twice as many flights to choose from and at more competitive prices now that the low-cost carriers are being given unfettered access.

On February 1, the route was partially opened up as a move towards freeing up capital city-to-capital city flights between Asean countries, and low-cost carriers from both Singapore and Malaysia have been operating a total of four daily flights on this route.

Jetstar Asia and Tiger Airways were running one daily flight each, while Malaysia's AirAsia was given the other two.

Jetstar Asia, which was previously operating seven flights a week, will now nearly triple its number of flights to 19 per week while Tiger Airways' chief Tony Davis said that his low cost carrier will be bumping up its Singapore-KL operations to between three to five times daily. Add Air- Asia to the mix and the three low cost carriers will collectively offer travellers up to 14 flights daily.

Meanwhile, Singapore Airlines (SIA), SilkAir and Malaysia Airlines (MAS) will operate 15 daily flights between Singapore and KL.

And given the year-end holiday season, liberalisation couldn't have come at a better time.



'Loads are building up during the month of December,' Jetstar CEO Chong Phit Lian told BT.

A round-trip ticket - including taxes and other extras - to KL in December on Jetstar Asia is going at just under $150, while a check on the Tiger Airways website showed that a round trip could run from $88 to $248, depending on flight timings.

In fact, the partial liberalisation has already seen the beginnings of a price war, as the various airlines have been offering a variety of promotions on the route.

Singapore Airlines (SIA) is offering a two-to-go promotional fare of $293 each, around 25 per cent less than the $400 or so it used to charge when the route was restricted to just SIA and MAS as part of a decades old air services agreement.

SIA reiterated that while the new entrants would cause yields to 'come under some pressure', past experience has shown that the volume of travellers will also grow.

'We have nothing to fear from competition, we champion it,' said Stephen Forshaw, SIA's vice-president of public affairs. However, he also pointed out that price is not the only competing factor.

SIA is expecting to fall back on other strengths - such as its network connecting 150 major cities as well as its ground services and loyalty programmes. 'This has been our long-term strategy and it will continue to be the way we operate in all our markets,' he added.

Still, the sharp increase in capacity on the route is also coming at a point when the aviation industry is battling a major crisis.

The International Air Transport Association (IATA) reported that air traffic for Asia-Pacific carriers contracted 6.1 per cent year on year in October, on the heels of a 6.8 per cent decline in September. Even capacity cuts of 2.3 per cent could not offset falling travel demand, bringing year-to-date traffic growth for Asia-Pacific carriers down to 0.3 per cent, second only to Africa in terms of weakest growth.

Commenting on the aviation industry as a whole, Giovanni Bisignani, IATA's director general and chief executive said: 'The slight slowing in the decline of passenger traffic is likely only temporary. While the drop in oil prices is welcome relief, recession is now the biggest threat to airline profitability.'