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Singapore - KL budget flights: pie in the sky - or pie in the face?

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Jan 16, 2008

KUALA LUMPUR, Malaysia (eTN) - Come February 1, low cost travel on a normal "shuttle" flight between Kuala Lumpur and Singapore will get even “cheaper.”

Predecessor joint venture carrier Malaysia Singapore Airlines (MSA) is on record charging just US$15 for a single journey on its midnight shuttle runs.

Will "loosening of the purse strings" by both governments now equal or overtake the '"pie in the sky” to rival the Taipei- Hong Kong hop, the world's busiest "shuttle"? Or, will it end up with some pie in the face for the aviation industry?

Despite offers of free seats to introduce the new service runs by nominated carriers from both countries, wise travelers know by now nothing is really free. After factoring in additional charges, the low-cost carrier business model will eventually pitch its pricing up to fifty percent of the fare on regular flights.

Tiger Airways began offering 15,000 free seats on January 7, following which it will be charging $157 for a return ticket, compared to normal shuttle flights, which cost about $280.

The other designated Singapore carrier, Jetstar Asia, is offering its "buy one, get one free" special for its 60 cents flights.

Malaysian carrier AirAsia, the only designated carrier from Malaysia, is offering 30,000 free seats. It has indicated it will be charging $45 for a single journey.

AirAsia, which has been granted two return flights daily initially, is looking at 20 return flights in five years.

Following initial confusion when according to Malaysian Transport Minister Chan Kong Choy, Singapore's Jetstar Asia is not allowed to fly on the KL- Singapore route "due to a clause in the Malaysia-Australia aviation agreement.” Singapore has now came out with its clarification Jetstar Asia is a separate entity from Jetstar Australia, which is owned by Qantas from Australia.

"Jetstar Asia is a Singapore carrier and is entitled to air rights from Singapore. My understanding is that Jetstar Asia has received approval from the KL authorities in this matter," said Raymond Lim, Singapore's transport minister.

"The Singapore joint venture airline is actually called Jetstar Asia Airways, which for branding purposes, is now marketed as Jetstar with the electronic ticket booking engine, using the same one as the Jetstar in Australia. It is just like AirAsia and AirAsia X."

Added Chong Phit Lian, CEO of Jetstar Asia, "I can't say for sure what is happening on the other side, but we know Jetstar Asia operates under the Singapore Air Operator Certificate (AOC) and we have been given the rights to fly on the route."

Initial confusion on terminals usage too, has now been sorted out. While AirAsia and Tiger Airways will stick to the low cost terminals, Jetstar will fly to the main terminals.

Gung ho AirAsia supremo Tony Fernandes, who has not wavered in his belief the route is the promised pie, has predicted it will be a massive market for the future. "It will be a high route. It's the only route that's had regression. Every other route has grown tremendously, but the KL-Singapore route has shrunk in what is a booming travel market."

"We hope to carry just under 250,000 passengers to start with, but grow very quickly to 500,000 passengers. In 2009, after the ASEAN Open Skies policy comes into effect we hope to carry up to 7 million passengers."

Coach operators which charge about $70 for a return ticket, and which together with the Malayan Railways (KTM) provide alternative transport between the route, does not see a price war or fight for market share of travelers.

"You must be two hours ahead of schedule at the airport," Kalaiyarasan, a coach operator told Singapore's Channelnewsasia. "Add 45 minutes for flight duration, and another 45 minutes to an hour travel time from KLIA to the city, plus taxi fares."

An aviation analyst at Standard & Poor's in Singapore said in an interview, Malaysian Airlines may end up the market loser as travelers are lured to AirAsia as a result of opening up low cost travel between Singapore to K. Lumpur, Penang and Langkawi. "Not in the near term, but in the long term. This is a watershed in the aviation industry, especially in view of the astronomical jet fuel price. "

Under a new agreement reached between the Malaysian and Singapore governments, both countries are allowed two additional flights daily in addition to the services operated by national carriers Singapore Airlines and Malaysian Airlines, starting from February 1.

Singapore - KL budget flights: pie in the sky - or pie in the  face?



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