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flee

Price war among airlines intensifying, lower fares seen

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PETALING JAYA: Price competition in the aviation sector is set to intensify moving forward, according to CIMB Research.


The research house believes that this could happen from the fourth quarter onwards.


“There are clear signs that competition will intensify in 4Q16 and 2017. The new Malaysia Airlines Bhd chief executive officer Peter Bellew recently said that MAS will have to address chronically-low load factors which averaged below 70%,” CIMB Research said.


“It will soon price 15%-20% of its seat inventory at lower fares, in an effort to wrest back market share.


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Good for consumers, we will see Idris Jala's era again with snack box and '5 star valued service'. Issue is will they even earn any $$ (at all) if all players go all out war.....

 

On a side note, I don't think MH should not touch the low realm market as it has been taken by OD and AK long ago. Why MH wants to meddle into the market when they got themselves burn so badly last time??

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Good for consumers, we will see Idris Jala's era again with snack box and '5 star valued service'. Issue is will they even earn any $$ (at all) if all players go all out war.....

 

On a side note, I don't think MH should not touch the low realm market as it has been taken by OD and AK long ago. Why MH wants to meddle into the market when they got themselves burn so badly last time??

The main reason why MH load factors are so low is because their product is no longer what it used to be and is inferior to that of its competitors. So fare cuts will only improve load factors (at the expense of yield) in the short term, if no improvements are made to the product.

 

What MH should do is to first improve the product, then offer discounts (for a short while) to invite people to sample their new and better product. If they repeat what they had done previously, it will be money down the drain and its competitors will also make losses.

 

That is what is known as irrational competition, where all involved will lose. While the consumers gain short term, they will also be losers in the long term.

Edited by flee

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Agree flee. MH should concentrate to total revamp their premium services (all classes), realign their capacity with current demand, mount more daily flights to certain destinations, have consistent cabin service, get rid of older B737NG, revamp lounge, make a good decent premium economy offering, roll out new branding, A & P, think of something to do with their A380 fleet, and their freight division.

 

Indulging themselves in low realm is just a tad too much for their full plate now. PB will instiling his LCC mantra all over, hopefully not.

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Indulging themselves in low realm is just a tad too much for their full plate now. PB will instiling his LCC mantra all over, hopefully not.

With their structure, it will be difficult to make any significant profits if they run it as a LCC.

They are also planning to relist in 2019 - so they do need a good profit record to excite investors.

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With fares over RM1k KUL-PEN-KUL for two persons on weekday quoted about 3 weeks before flight, my jaw dropped.

 

I took my money to AK for just over RM300 all in with 2 meals return.

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With fares over RM1k KUL-PEN-KUL for two persons on weekday quoted about 3 weeks before flight, my jaw dropped.

 

I took my money to AK for just over RM300 all in with 2 meals return.

Good on you. My company FINALLY allow us to travel on MH after being loyal to the red camp for donkey years. Traveling 4 pax to and fro KUL - BKI for 1182.96 early August. Booked 4 weeks in advance.

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