Guy Betsy.. are you the aviation expert in this report...!!! Your timing is uncanny!
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Golden route for all?
New warmth could open Singapore-KL route to budget carriers
Thursday • October 7, 2004
Tay Tsen-Waye
[email protected]
LONG accepted by the aviation industry as a no-fly zone for airlines other than national carriers Singapore Airlines (SIA) and Malaysia Airlines (MAS), the lucrative, high-volume Singapore to Kuala Lumpur (KL) route is now within the sights of budget airlines.
On Tuesday, during a visit to KL, Prime Minister Lee Hsien Loong spoke candidly about enhancing ties and exploring new opportunities with Malaysia.
The aviation sector was cited as one area that would benefit from increased cooperation between the two countries.
Said Mr Lee: "There is opportunity for the industry and for the two countries, because the more linkages between the two countries, the greater the benefits for tourism and business."
Although no details were forthcoming, Malaysian Prime Minister Abdullah Ahmad Badawi added that his government would allow the countries' airlines to talk to each other and find ways and means to collaborate.
And by pledging to expand aviation ties, a new optimism, albeit a cautious one, is resurfacing in the fledgling low-cost carrier (LCC) market.
It is no secret that Singapore-based LCCs have been eyeing Malaysia as a destination, with KL being one of the most sought after spots.Newest budget entrant, SIA-affiliate Tiger Airways, which started daily flights to Bangkok, Hat Yai and Phuket last month, has said it would be interested in Malaysia as part of its expansion plans.
First off the low-frills mark in May, Valuair has referred to Malaysian destinations as "real hot routes". The airline said it is keen to fly to KL, Penang, and cities in east Malaysia.
But industry players note that it would be futile for new airlines to apply for air rights between Singapore and Malaysia, given the "protectionist" air service agreement between the two countries.
While no one really knows, most assume that SIA and MAS own all existing air rights and hence, no LCC "dares to" or "talks about" applying for one, said a source.
Managing director at Sydney-based Centre for Asia Pacific Aviation Peter Harbison agrees that airlines assume they would be "turned down".
"I'm not quite sure which side — Singapore or Malaysia — has the greater reluctance (to open up the skies) to other airlines. Certainly, it's a very good route for both SIA and MAS," Mr Harbison said.
Indeed, the KL to Singapore route is the fourth busiest in the region with 1.9 million passengers. And considering that return fares from Singapore on SIA can cost more than $300, the question is not when, but why either carrier would want to relinquish its monopoly.
"What it tends to be is that the airlines make strong representations to their respective governments to keep the route to themselves, because it's obviously lucrative," said Mr Harbison. "Any route today in the world where you've only got one or two carriers operating with nobody else allowed is going to be attractive."
"It's an ideal route for LCCs. One, it's a point-to-point, and the other is that it's also a connecting route for passengers who want to go onwards from Singapore or KL to Europe or Asia," he added.
While industry observers welcome more airlines to ply the Singapore-KL path, they say it is too early to tell if Mr Lee's comments necessarily equate to a green light being given any time soon.
"I'm not sure a political statement like this would lead to more flights by other airlines," said Mr Nicholas Ionides, regional managing editor of the Flight Group. "But Singapore and Malaysia have clearly realised that LCCs contribute to and are good for the economy."
Said a Valuair spokesman: "We're happy to note that talks are underway to boost air cooperation between the two countries. Any enhanced cooperation will boost tourism in the two countries."
If the Singapore-KL route is thrown open to LCCs, Mr Wong Soon Hwa, chairman of the Singapore chapter of the Pacific Asia Travel Association, says SIA and MAS would need to reduce the number of daily flights to and from the Malaysian capital to remain viable.
"There are lots of flights now, but they are not fully utilised throughout the day," he said. "If SIA wants to increase the load factor, it can always look at creative pricing, like making fares during the non-peak times of the day cheaper."