Malaysia - A bumpy ride ahead as Malaysian airlines cut routes

Yem is getting married in September and has booked flights on AirAsia to London for his honeymoon.

A week ago he was horrified to learn that AirAsia X was cancelling its London route.

"This is really bad news for me. I've literally just booked return flights for my honeymoon.

"I really hope I get the upgrade (to another airline) for the dates I've scheduled, otherwise everything else with my hotel booking will be messed up. So annoying," he wrote under the name Emazinglyyem in the popular Thorn Tree travel forum.

Linda Aziz has been saving RM200 (S$82) each month to fulfil her dream of going to Paris and seeing the Eiffel Tower and the Mona Lisa.

She has saved RM2,200 already and was banking on a cheap AirAsia flight to get her there by the end of the year.

Two of her friends had flown on AirAsia from KL to Paris for RM610 and paid only ?120 (RM482) for the Paris-KL leg.

But barely a year after starting the route the airline is bidding adieu to Paris, citing soaring taxes (including the new Emissions Trading Scheme carbon fee tax), higher jet fuel prices, and a slowdown in demand for air travel from Europe due to the region's weak economy.

"Now I have to wait longer and save even harder to buy a ticket from another airline which is going to cost twice or three times as much. Or maybe I'll have to kiss Paris goodbye," she sighs.

Other than London and Paris, AirAsia has also decided to stop flying to Mumbai and New Delhi.

It has informed passengers who have already bought tickets for these soon-to-be cancelled routes that they can opt to cancel their ticket and get a full refund, re-route to another AirAsia X destination without additional charge or be transferred to an alternative airline to the destination they had booked at no extra cost.

Malaysia Airlines (MAS) has also announced recently that it would no longer fly to Rome, Buenos Aires, Cape Town, Johannesburg and Dubai. Two years ago, it stopped flying to New York.

MATTA's view

So what does all this mean to the Malaysian traveller? Are fares going to go up?

"Not necessarily so," says Malaysian Association of Tour and Travel Agents (MATTA) deputy president John Tan.

He says that while Malaysians like to fly direct to these destinations, they still have the option of taking alternative airlines such as Emirates, Etihad, Qatar, KLM and Singapore Airlines.

These airlines all fly out of Kuala Lumpur to the destinations above and the fares cost about the same as MAS'.

It may mean a longer flight because of extra stopovers, he says, and may "cause some inconvenience but it is not the end of the world" for the Malaysian traveller heading overseas.

Agreeing, Malaysian Chinese Tourism Association President Paul Paw says he is not worried about prices going up for these destinations because there are other competitors in the market.

He says this should keep prices in check and "you have the choice of flying to these places through Singapore, Bangkok, Hong Kong or Dubai."

But what MATTA's Tan cannot understand is why MAS is cutting routes which other airlines seem to find viable.

He cites the Kuala Lumpur-Dubai route as a clear example.

"Emirates has started flying its A380 airbus on this route to increase seat capacity because there is good traffic here.

Then you have Malaysia Airlines saying the route is not viable. How do you explain the irony?"

Tan says the "public is confused and travel agents are even more confused," and adds that the MAS and AirAsia route cancellations will only benefit alternative non-Malaysian airlines.

But what about AirAsia with its popular tag line "Now Everyone Can Fly"?

Surely the budget airline has created a niche market with rock bottom prices which are hard to match.

Tan disagrees.

He says although AirAsia is a budget airline, it does not necessarily mean its ticket price is cheaper than that of a full service carrier.

"When they market their tickets at the beginning, the price might be low. But you have to pay for food, drinks, baggage, seats, counter check in: all this adds up.

"A wise traveller should be open-minded and do his homework and check and compare prices," he suggests.

"He should not have the preconceived idea that because it is a budget airline it is cheaper.

"I flew (the full service airline) Garuda recently to Indonesia and the fare was almost the same as AirAsia's."

Concurring, Paw says only a limited number of AirAsia tickets are being sold at very cheap prices. From his experience, when you compare prices among airlines, Air Asia's is sometimes not the cheapest.

However, an AirAsia X spokesman says if travellers book their tickets early and pre-book food, drinks, luggage and other fees, tickets should work out to be 30% cheaper than on a full service airline.

"It is only when you buy the ticket close to the date that you are flying off that it will become more expensive," she adds.

As for the super cheap tickets to new hot destinations like Sydney for prices as low as RM199 one way, she says this is a marketing strategy.

"We are not making money with that price. It's just to introduce and promote the route."

In August last year, people were caught by surprise with the share swap deal between Khazanah Nasional Bhd (which prior to the swap owned 69% of MAS) and Tune Air Sdn Bhd (the major shareholder of AirAsia).

With the swap, Tune Air would hold 20.5 % stake in MAS. In exchange, Khazanah would have a 10% stake in AirAsia.

Higher fares

Some have started questioning the swap, asking if the deal is anti-competition and would result in higher fares for consumers.

While Tan and Paw say it will not result in higher prices for international flights, travel agent Jenny L. Shabudin on the other hand believes fares are definitely going to have to go up.

But she is quick to stress that this is nobody's fault. "We should not point fingers at anyone."

She attributes the problem to the global situation and downgrading of the credit ratings and economies of a number of European countries.

"Fluidity is gone and this year there are more costs involved because Europe has seen fit to raise taxes and introduce the ETS tax for airlines.

"Then there are also higher airport fees, fuel hikes, (and) higher cost for the crew so the overheads are all going up.

"No airline flying into Europe is going to be exempted. That's the reality. So each airline has to make their consideration and do their own costing. If they don't do this, they will be in bad shape.

"Who bears the brunt is you and I as normal passengers.

"This year people have to come to grips with where they travel, how they travel and whether they travel for pleasure," she says, adding that priority would naturally be given to other necessities of life than travelling for pleasure.

Jenny suggests that perhaps Malaysians could look at domestic travel as an alternative.

"How many of us have been to the Mulu Caves? And not just to Sabah or Sarawak but how about places in the peninsula itself?"

But this might not be a cheap option as well.

One of the things that has happened with the AirAsia-MAS swap deal is that domestic routes have also been cancelled, particularly between the peninsula and Sabah and Sarawak.

Before AirAsia came along, it used to be quite expensive to fly to Sabah and Sarawak, with tickets averaging from RM600 to RM800.

But once AirAsia came in, people could get tickets for as little as RM100 if they booked early,

And MAS, wanting to cash in on AirAsia's niche market, launched its own budget airline Firefly in 2007.

The two were in direct competition and travellers benefited big time from the attractive fares.

Things have since changed with the swap.

Firefly has cancelled flying to East Malaysia, thereby handing over the bulk of the budget sector to its former rival, AirAsia.

Sarawak Tourism Board CEO Datuk Rashid Khan says Firefly used to fly seven times a day between Kuching and KL using the jet aircraft.

With Firefly now out of the route, he says, it has left a big vacuum.

"Sometimes it is not just about price but the availability of seats has now become a challenge. And Firefly flights from Sarawak were flying into KLIA (not Subang) so there was also the convenience of the aerobridges too."

Shahanaaz Habib

The Star/Asia News Network

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