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Friday December 16, 2005

Tourists to be hit with new prices come Jan 1.

BY WONG SAI WAN

KUALA LUMPUR: Malaysia Airlines will again be increasing its fares, and this time even tourist-class travel will not be spared.

The increase, described by MAS as a necessary move to mitigate increasing costs, is between 5% and 14%, depending on destination and time of travel. The new prices are effective from Jan 1 next year to Jan 1, 2007.

However, the national carrier did not raise fares to certain price-sensitive destinations like Chennai.

The airline has also done away with certain special fares for groups, including the popular “group of four” offer.

On Nov 1, MAS increased its fares to the United States by between 48% and 167% resulting in its fares being the most expensive among regional airlines on this lucrative route. It used to be the cheapest.

MAS has designated the fare increase according to three periods – low, peak and super-peak – with the increases rising as the season gets busier.

A spokesman for the airline confirmed the increase and said the revision was “necessary to mitigate increasing costs”.

It is understood that MAS felt that its fares were below the value of the “five-star” service and timing of flights

offered. “We have priced the products in line with our value proposition and have taken careful consideration to remain competitive,” said the spokesman.

Sources said the revision is part of the airline’s new management strategy to get MAS back into the black.

MAS reported a net loss of RM648mil for the first six months of the year and analysts are predicting the airline would post losses of RM792mil for the full year.

For next year, they have changed their projections from a net profit of RM211mil to a net loss of RM112mil.

The travel industry was briefed on the increase on Wednesday.

Many agents were taken aback by the fare revision, as this is the second time in two months MAS had announced a price increase although the previous one on Nov 1 affected only first and business classes.

“Already the increasing fuel surcharge has made travel more expensive and with this new price, we will have to work harder now to meet our sales target,” said one director of a travel agency.

Another travel agent complained that most companies had already drawn up their sales target and budgets for next year.

“We now have to do it all over again,” she said.

However, MAS believes that the price increase would not affect its sales.

“In any case, customer preferences and decisions are not based on fares alone. It involves other equally important ‘convenience’ variables like flight timings, frequencies, type of aircraft and connections.

“Based on the above, we have well-priced ourselves in our home base,” said the airline spokesman.

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