Win-win as KL-Singapore air route opens up
Travellers, budget carriers and long-established airlines will
all be winners when the Singapore-Kuala Lumpur air route opens to
competition on Friday, analysts and industry players said.
Jetstar and Tiger Airways will get one daily flight each while
Malaysia’s AirAsia will operate two flights starting on Friday.
Agreement by Singapore and Malaysia to free up the sector is
long overdue and will result in huge spin-offs not just for the
tourism industry but also for the wider economy, they said.
“Finally, allowing new entry, where obviously the upside
benefits for consumers and the respective economies are so great,
it is hard to overstate its importance,” Peter Harbison, executive
chairman of the Sydney-based Centre for Asia Pacific Aviation
(CAPA) consultancy said.
“This (has been) one of the most obvious bastions of
protectionism in the region,” he said.
A CAPA study showed the sector is grossly under-served and will
grow threefold within two years of full liberalisation as fares
tumble and the new entrants roll out initiatives to draw
passengers.
Budget carriers have set the tone for competition by offering
deep discounts - including some seats priced at zero dollars before
taxes - to inaugurate their new services.
Singapore Airlines (SIA) and Malaysia Airlines (MAS) have
charged almost 450 Singapore dollars ($A360), including taxes, for
a round trip on the 55-minute flight.
“Conservatively, traffic on this route will more than treble
within two years of being fully opened up,” Harbison said.
Authorities announced in November that budget carriers will be
allowed to service the route with four daily flights starting
February 1, a move that broke 35 years of SIA and MAS dominance on
the route.
“My prophecy is that everyone will win,” said Tiger Airways’
chief executive Tony Davis.
“What you will see is the market will grow enormously and you’ve
seen that in other parts of the world… and that’s good for the
tourism industry,” he said on the sidelines of a regional low-cost
airline conference last week.
Tiger is 49 per cent owned by Singapore Airlines, while Jetstar
is the budget offshoot of Australia’s Qantas Airways.
By December the route will be fully liberalised under a pact by
the 10-member Association of Southeast Asian Nations (ASEAN) to
remove all restrictions on passenger flights between regional
capitals.
Malaysia and Singapore are members of ASEAN.
AirAsia’s chief executive Tony Fernandes, who battled for six
years to have the sector opened, said the two flag carriers have
nothing to fear from the new competition.
“I don’t think either of them will be hurt because some people
will only want to fly premium airlines, so we are introducing a new
market,” said Fernandes.
He said that in the same way there is “a budget hotel and a
Ritz-Carlton … there is a big enough pie for all of us.”
Fernandes, widely credited with kick-starting low-cost travel in
Asia with the launch of his carrier in December 2001, rated the
Singapore-KL sector liberalisation as one of his greatest
triumphs.
“Yeah, maybe, probably,” he said, pausing momentarily before
replying.
“On February 1, I think really is a liberation day for the Asian
aviation industry,” Fernandes, 44, said recently in Singapore.
The two incumbents are gearing up to defend their turf by
expanding an existing codeshare agreement to include all services
between Singapore and Kuala Lumpur starting on Monday.
It will give travellers a choice of 13 flights on the two
carriers daily.
Malaysia Airlines has expressed disappointment at the route’s
opening up to competition.
However, a top Singapore aviation official said the KL-Singapore
shake-up would likely set the stage for further competition in the
region’s skies.
“This is a global trend… it’s a wave that will sweep the
entire region,” said Yam Kum Weng, a senior director for air hub
development with the Civil Aviation Authority of Singapore.
AFP
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Monday, January 28th, 2008 at 12:14 am under