AirAsia vs Malaysia Airlines

KUALA LUMPUR, Feb 12 — If Malaysians were wondering how their airlines would try to fill seats in a slumping economy, a fare war has flared that will give them some insight.

Malaysia Airlines this week launched a 10-day travel fair, offering discounts of more than 50 per cent. A one-way ticket to Ho Chi Minh City from Kuala Lumpur can be had for as little as RM150. And for RM1,400, you can fly to Paris.

Not to be outdone, budget carrier AirAsia declared a day later that it would give away up to 500,000 free seats to destinations in Asia and Australia as part of a massive regional campaign “to support the continuous growth of the Asia-Pacific region as a premier tourist destination”.

Although the two carriers have previously fought promotional battles, these seem to be growing more regular as they resort to cheaper fares to persuade people to fly amid fears of a looming recession.

MAS once had an iron grip on domestic routes and the lucrative Kuala Lumpur-Singapore route, but AirAsia has chipped at this hold. MAS has also come under pressure from long-haul services to Australia, India, China and London, launched by AirAsia’s sister unit AirAsia X, but has fought back by offering what it calls “five-star service at affordable fares”.

AirAsia reckons market share is there for the taking in the global downturn, as travellers turn to budget carriers to save money. Besides its current 76 aircraft, it will take delivery of a further 14 planes this year, raising questions on whether it can fill them as other operators cut capacity in line with falling demand.

But AirAsia’s founder Datuk Tony Fernandes says the carrier’s decision to expand will pay off in the long run.

Its latest service — to Bangladesh’s capital Dhaka — will be launched in mid-March. And AirAsia, which was first to scrap fuel surcharges on all flights, has been quick to offer its customary RM99 one-way seats. Given the huge number of Bangladeshi workers in Malaysia, the route is expected to prove feasible.

Bargains aside, whether air travellers bite depends on how they perceive their job and financial security.

In the past, MAS travel fairs were a highlight for many prospective travellers. But a travel agent told BT the response to the latest fair was more muted “because of the economy and because some travellers are buying online themselves. Moreover, many would already have booked tickets on AirAsia’s previous promotions”.

Prospective travellers are also holding back in the belief that should the global economy continue to slide this year — as many suspect it will — there could be even better deals ahead, despite the MAS travel fair tagline of “Only the best fares. Only once a year. And only now”. — Business Times Singapore

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