Price Wars Among MAS - AirAsia - Firefly?

Will there be any air fare price wars among local aviation company, MAS-AirAsia-Firefly? If there is one and who will benefit from the fight?

If the price war really materialized, for sure it will benefit to air travelers who fly with them.



Read the following article from Business Times.

Firefly pledges 10pc lower fares

FIREFLY, the low-cost arm of Malaysia Airlines, wants to trump AirAsia Bhd at its own game, promising at least 10 per cent lower fares.

"The percentage will vary for each route, but passengers can expect at least 10 per cent lower fares than what is available now," FlyFirefly Sdn Bhd managing director Datuk Eddy Leong told reporters after unveiling the first of its Boeing 737-800 in Subang yesterday. Also present was Minister of Transport Datuk Seri Kong Cho Ha

The airline promises this despite the disadvantage of flying out of the Kuala Lumpur International Airport (KLIA) main terminal. It charges RM3 more passenger service charge, compared to the low-cost carrier terminal (LCCT) in Sepang for domestic flights.

"By paying RM3 more you get aerobridges, a more than decent airport, Express Rail Link service ... our survey shows that more than 95 per cent of passengers will still opt to fly with us," Leong said.

Firefly plans to operate only domestic flights in the near term. International flights are only expected to start once KLIA 2, the new permanent LCCT, is ready.

The budget airline is already in talks with airport operator Malaysia Airports Holdings Bhd about operating out of KLIA 2, once it is ready.

At a passenger service charge of RM51 for KLIA, and RM25 for the LCCT for international flights, it would be too expensive for Firefly to operate out of the main terminal.

Firefly also believes that the cost of using aerobridges, which comes up to 50 sen per passenger, is also too inconsequential to worry about.

"After fuel, maintenance cost and aircraft cost are the two major considerations for an airline. So with us being able to leverage on MAS' maintenance, repair and overhaul facility, and managing to secure very good (leasing and financing) rates for the aircraft, we have really managed to bring down costs," Leong said.

Firefly will receive seven B737-800s this year, two each in the first three quarters and one in the last quarter of the year.

All these aircraft are on a four to five-year lease.

Meanwhile, Kong announced that the ministry had a conservative target of seven per cent passenger growth across all airports in Malaysia for 2011.

In 2010, airports nationwide record 52 million passenger arrivals, a 15 per cent growth over 2009 numbers.