Price war looms as Tiger offers Thailand for 59 U.S.cents
Price war looms as Tiger offers Thailand for 59 U.S.cents
Bernice Han, Agence France-Presse, Singapore
A price war may be looming in Southeast Asia's growing budget carrier market after newcomer Tiger Airways announced it was offering a S$1 (59 U.S. cents) promotional fare to Thailand.
Competitors are confident of holding their own against the Singapore Airlines-backed no-frills airline, but analysts believe the industry is in for a major shakeout of fares once the initial promotional period is over.
"There will be some degree of cannibalization (poaching of rival airlines' passengers) at the start... but give it a few more months and airfares will have to sort themselves out," Sim Kok Chwee, a director with the Bangkok-based Pacific Asia Travel Association, told AFP.
Tiger Airways announced on Monday that a third of its tickets to Bangkok, Phuket and Hatyai would be sold for S$1, one way, in the first week of services. It is the lowest fare of any carrier in the region.
A return trip will cost S$2, excluding taxes, but the special rates are available only through the company website www.tigerairways.com, which began accepting bookings on Tuesday.
"We don't have any specific numbers right now but it has been overwhelming," the spokesman said of the public's response. "It's been phenomenally successful."
The promotional fare is available only for the first week of the carrier's maiden flights to the three Thai destinations, which are highly popular with Singaporeans and international tourists.
A Tiger Airways plane will undertake its first commercial trip on Sept. 15 to the Thai capital. The company will ply the ultra- competitive Singapore-Bangkok route three times daily.
The route is already being serviced by rival Singapore-based budget carrier Valuair and Malaysia's AirAsia. Full-service carriers Singapore Airlines and Thai Airways are also plying the route intensively.
On Sept. 22, Tiger will start its daily service to the southern town of Hatyai, followed by the resort island of Phuket a week later.
One more Singapore-based budget carrier, backed by Australia's Qantas and still not commercially branded, is set to launch services within the year to compete with Tiger Airways, Valuair and Air Asia.
Valuair said it welcomed the rivalry and was confident of holding its ground.
"We welcome competition which will help to grow the industry. More jobs will be created and more tourists will come to Singapore," spokesman Nilesh Pritam said.
"More importantly, once the hype is over, travellers will start making considered judgments about the airlines they want to fly with," he said.
A check with Valuair's booking website showed the carrier is offering a two-way return ticket to Bangkok for S$138. Seats on Valuair's Singapore-Bangkok routes are on average 75 percent taken up, Pritam said.
Unlike its main rivals, Valuair offers passengers light meals with refreshments, a 20-kilogram (44 pounds) baggage allowance and assigned seating ahead of boarding the plane.
SilkAir, the wholly-owned regional wing of Singapore Airlines unit that flies to 25 destinations including Phuket, told AFP that passengers can expect discounts of up to 40 percent during promotions on selected routes.
"We have in the past and will continue to offer value for money flights across our network," said a spokeswoman for SilkAir, which is not regarded as a budget airline because it offers meals and other normal services.
A round trip to Phuket on SilkAir is currently priced at 130 dollars, she said.
AirAsia declined to comment on Tiger Airways' S$1 fare when contacted.