Monday, March 10, 2008

Doorway to more arrivals in Asia with Low Cost Carriers

LOW-COST carriers (LCCs) in the region are being sought after by the trade in secondary destinations in Indonesia to help boost tourism.

In fact, some areas being served by full-service airlines are trying to seek out these airlines to increase tourism traffic. Bandung (West Java), for example, has enjoyed an influx of Malaysian travellers thanks to AirAsia’s twice-daily service from Kuala Lumpur. Ramza Travel and Tours Malaysia managing director, Ms Kay Azmin, said: “Bandung has become a must-visit destination for Malaysians and shopping is the number one attraction, followed by golfing.”

Triways Travel Network, Malaysia managing director, Mr Mohd Akil Mohd Yusof, said: “AirAsia had threatened to pull out because it wanted to change the aircraft from a Boeing 737-300 to Airbus 320, but the airport could not accommodate the big aircraft. In fact it had even announced the date of its last flight. In the end, however, not only did it decide to continue flying daily services, but AirAsia doubled the frequency (since the last quarter of 2007), simply because of market forces.”

Bandung-based Batik Holidays managing director, Mr Maktal, said: “The growth of the repeat travel market is huge. They know the destination well so not many need travel agents’ assistance. It may be bad news for us, but the truth is they are doing a great service to the destination. A Malaysian family can spend more than 10 million rupiah (US$1,099) on shopping alone.”

Surabaya has also experienced the benefit of LCCs in developing the regional inbound market, with AirAsia and Valuair connecting the city with Kuala Lumpur and Singapore. Aneka Kartika Tours and Travel, Surabaya product manager, Mr Adjie Wahjono, said: “We just had a request from a Singaporean agent to create packages that tie up with Valuair. The airline has approached agents to form a consortium and develop attractive packages to boost traffic to Surabaya. This is something we have not had for quite some time. The airlines, especially the LCCs, usually just sell tickets and some free-and-easy packages they create themselves.”

Enthusiasm in Jogjakarta

AirAsia’s four flights to Jogjakarta effective February 1 were received with enthusiasm by the Jogjakarta trade. The airline is using its 180-seat A320 on this route.

Also entering the market at the same time was Malaysia Airlines (MAS) with three flights per week using a 128-seat B737-400. While not an LCC, MAS also offered attractive prices the trade approved of.

Garuda Indonesia flew between Jogjakarta and Kuala Lumpur a couple of years ago, but could not sustain the service due to its pricing structure.

Pacto ASEAN business manager, Mr Irwan Raman, said: “Before the entry of these direct flights, Jogjakarta was one of the top three destinations for Pacto’s ASEAN (Singapore and Malaysia) market. About 90 per cent of travellers arrived via Solo. I think there is good potential to develop the Malaysian market as Jogjakarta gets direct access from two airlines at the same time.”

Pacto has come up with several packages including free and easy ones from US$51 and three-day/two-night packages from US$89.

Looking at these developments, the trade in Lombok – a destination which has been suffering from a lack of seat capacity from overseas – expects an LCC to start flights from Malaysia.

Sheraton Senggigi Resort general manager, Mr Masri, said: “We used to rely on the European market (which predominantly came via Bali). With the positive growth of arrivals in Bali recently, we expect our share also to increase. Unfortunately, the EU ban on Indonesian airlines has hampered this. Therefore, we are trying to diversify and get Asian markets (such as Singapore and Malaysia) to come. Recent fam trips and Lombok’s participation in the Malaysian Association of Tour & Travel Agents fair showed the interest for Lombok was there, but seat capacity was the issue.”

The only regional direct service to Lombok is from Singapore by SilkAir, three times a week.

Travellers from Malaysia take Garuda to Jakarta and connect to Lombok, but the connection is not convenient.

Merpati Nusantara Airlines has a Kuala Lumpur-Lombok service via Surabaya, but the airline’s interest seems to be in the labour market.

A&T Holiday Lombok CEO, Mr Awan Aswinabawa, said: “Lombok packages from Malaysia can be 40 per cent to 50 per cent more expensive than Bali packages, largely because of the air fares. How can we, as a new and less-known destination than Bali, compete this way? The (most) suitable service to Lombok should be by an LCC, both in terms of pricing and aircraft size, which our airport can accommodate.”

While the accessibility provided by the LCCs has brought about positive results in the destinations, the trade said a lasting success would require not only the effort of the airlines, but also from the stakeholders in the destination. Pacto’s Mr Raman said: “I know the airlines must have done their homework before they decided to fly, but seven flights (1,104 seats) to Jogjakarta a week needs everyone’s support to fill up.”

Source : TTG
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