A price war has broken out among airlines on the Dhaka-Kuala Lumpur route, a development which analysts say would have a negative impact on the local airline industry.
“One after another airlines are slashing fares on this route — it’s a price war out there. Although great for passengers, it’s going to wreak havoc on local players like United Airways and Regent Air,” said Kazi Wahidul Alam, editor of The Bangladesh Monitor, a travel journal.
Regent Air recently entered the route, a lucrative one for airlines due to the presence of around seven lakh Bangladeshi expatriates in Malaysia.
The airline set Tk 27,500 as the starting fare for a round trip, which prompted United Airways to cut its fare to Tk 26,750 from Tk 30,810.
And from August 28, Malindo Air, a Malaysia-based airline, is joining the rat race with a round trip fare of Tk 21,000. Around 1,600 passengers can be carried from Dhaka to Kuala Lumpur daily then by the carriers.
Biman Bangladesh Airlines and Malaysian Airlines, too, operate on the route; round trips with them cost Tk 35,230 and Tk 33,000 respectively.
Meanwhile, Biman has offered two tickets for the price of one for roundtrips on the route, as part of a promotion scheme for Eid-ul-Fitr.
“We are aware of the increased flights to Kuala Lumpur — and the reduced fares. Biman will, of course, be adjusting its fares too,” said Kevin Steele, managing director of Biman, adding that competition is good for the customers and is “not an issue” for the carrier.
But Tasbirul Ahmed Choudhury, managing director of United Airways, said the price competition is not healthy for long-term viability. “It would be almost impossible to survive at such low rates for the local airlines.”
He is, however, hopeful that United would be able to ride the price cut on the Dhaka-Kuala Lumpur route. “We now carry a significant number of passengers from Kathmandu to Kuala Lumpur via Dhaka — it will offset the fare cut.”
United Airways, which has been operating daily flights on this route since December 2009, now aims to double the flights from September to minimise overhead costs. “The more flights we run, the less is our operating cost.”
Biman’s Steele also agrees with Choudhury. “We are looking to operate large-sized aircraft on the route, which means our cost per seat is lower than some of our competitors. We can still make profits.”
The number of passengers travelling to Malaysia has been increasing fast, with average occupancy being 70 percent. Last year, some 80,000 tourists from Bangladesh went to Malaysia, according Chandran Rama Muthy, chief executive officer of Malindo Air.
But the number would be around two lakh if the business travellers, students and labour segment are counted, said Alam of The Bangladesh Monitor.
“The Bangladeshis are among the top five nationalities to sign in for the Malaysia MY Second Home (MM2H) programme, which makes this route an important one for us,” Muthy said.
MM2H is an international residency scheme enacted by the Malaysian government to allow foreign nationals to stay in Malaysia on a long-stay visa of up to 10 years. To date, some 6,000 Bangladeshis have taken up on this scheme, according to the Malindo Air CEO.
suman.saha@thedailystar.net
Source: The Daily Star