Tuesday, October 14, 2008

Low-cost carriers still see strong demand

The global financial crisis may be depressing demand for air travel but low cost carriers say they have yet to see a slowdown in forward bookings.

“Forward bookings are still strong and up to today we have not seen any drop in daily sales,” long haul low cost carrier AirAsia X chief executive Azran Osman Rani told StarBiz.

Azran said AirAsia X was in fact, expanding and would begin launching flights to London by March and selling the tickets by November this year.

Sister airline AirAsia Bhd is also doing well with its bookings.

Azran Osman Rani

AirAsia regional head of commercial Kathleen Tan said forward bookings were very healthy.

She said as companies cut back on their travel budgets, the next best alternative was low cost travel and AirAsia would benefit as it had the capacity to serve more people.

Singapore’s budget carrier Tiger Airways spokesman Matthew Hobbs reportedly said the airline’s bookings were up.

“Forward bookings show that people are still booking and they are still travelling but they are looking for the best price,” Hobbs said.

Even Europe’s biggest low cost carriers - EasyJet and Ryanair - say they will benefit from the economic storm.

“We’re clearly winning market share from our competitors,” said EasyJet’s chief executive Andy Harrison. “In a world where all you can see in the papers today is about the credit crunch and cutbacks, you can see that EasyJet is doing incredibly well.”

Ryanair said last week passenger numbers rose 20% in September while British Airways reported carrying 5.6% fewer travellers in the same month.

Global premium carriers have reported a slowdown in passenger traffic especially for their first and business classes and predicted difficult times ahead.

But Malaysia Airlines senior GM network and revenue management Datuk Bernard Francis said the carrier’s forward bookings were still steady and at encouraging levels.

He said the airline would promote low fares online and it regularly reviewed its fares versus its full service competitors to maintain fares at levels attractive to the customers.

Fare was only one component of its product, he said.

What mattered more was the total offering, which included seamless connectivity and interlining, travel with code share partners, more baggage weight allowance, frequent flyer programs and airport lounges to influence the customer to fly with them.

Cathay Pacific recently said it was hard hit by the crisis and registered a significant drop in the number of first and business class travellers.

British Airways has warned of a drop in passenger demand for its most lucrative sector, the premium class market, and even Emirates, a premier carrier, has witnessed weaker demand.

So far 28 airlines have gone bankrupt, and more are expected to fail.

Demand for premium travel is expected to continue to fall as companies hurt by the credit crisis trim travel budgets.

Crude oil prices have fallen by 47% since its July 11 peak of US$147.27but air travellers have yet to see a correlating drop in air fares from the premium carriers.

The only respite is a drop in fuel surcharge by some airlines.

Premium carriers have cut routes and frequencies but they would onlycut fares if they were desperate for business, an analyst said.

Source : STAR
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