Thursday, September 07, 2006

Cheaper Flights?

Will Malaysia and Singapore strike a deal to liberalise the popular but expensive KL-Singapore air route? Talks are still going on following the well-publicised meeting of the transport ministers of the two countries earlier this week.

Whatever the outcome, it is blatantly clear that the move is long overdue as the route is effectively monopolised by Singapore Airlines (SIA) and Malaysia Airlines (MAS). They have both fixed high prices -- at more than S$300 for a confirmed round-trip ticket -- to the detriment of consumers.

The two airlines have managed to keep prices high despite the growing number of budget carriers -- Malaysia's AirAsia, Singapore's Tiger Airways and Australia's Jetstar -- in the region since 2003.

This is because MAS and SIA have a virtual monopoly on the KL-Sing route as a result of a 32-year air services agreement between the two countries. According to an earlier report in The Straits Times, this restricts competition on the route, leading to SIA and MAS operating eight out of 10 flights, or 154 out ofthe 184 flights a week.

Whatever the outcome of the current talk, the point will be moot come 2008. Why? This is because the KL-Singapore sector will have to open up anyway by then under the Asean open skies pact. Of course, Malaysia could still resist the Asean spirit, as it did in the automobile sector. Malaysia was tardy in opening up its car sector under the Asean Free Trade Agreement, or Afta, in the bid to protect national carmaker Proton.

But there is less need to be protective of MAS as its role is gradually taken over by Tony Fernandes' pace-setting AirAsia. Following yet another restructuring of MAS, AirAsia has taken over most of the domestic routes -- long deemed unprofitable by MAS despite heavy government subsidies.

Another ramification is the potential demise of many buses plying the 320-km Singapore-KL route, if Tony could deliver his promise to price the airline seats cheap. He can always price his seats cheaper than the national carriers but can he price them lower than buses? It's not so easy although there will be a limited number of headline-grabbing cheap air tickets for the 45-min flight. It's another story when you try to book them! Will dwell on AirAsia's plus and minus points on another day.

Another interesting scenario is the possibility of a bullet train service from KL to Singapore, which could cut travel time to just 90 minutes. This will be a lot faster than going by road (3 to 5 hours) or trains operated by Keretapi Tanah Melayu (6-8 hours). Again, it's not so clear if the two governments can strike a deal for the project by Malaysia's YTL Corporation.

Whatever the outcome of all the plans, the two governments must do more to make it easier for the citizens of the two countries to travel seamlessly between Malaysia and Singapore. The current situation is less than satisfactory to accommodate the high traffic volume.

The heavy traffic in the KL-Sing sector reflects the closeness of the people in the two countries despite differences between the two governments.


tony said...

i hope francis doesnt build the freaking train. we all can kiss goodbye to the budget airlines and the gorgeous minah stewardesses.

Francisca said...

fast trains are better and safer than planes. Amen.