Fare-war heats up Dhaka-KL route after Air Asia's entry

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A Z M Anas
Malaysian Airlines has launched a fare-war on the Dhaka-Kuala Lumpur (KL) route, officials said Saturday, as it fights off competition from low-cost Air Asia to win back dwindling passengers.
The KL-based carrier has cut back ticket prices by at least 30 per cent to lure corporate travellers amid a fall in overall traffic in the key air route and intense competition from Asia's biggest no-frills airline, they said.
"A freeze on workers' recruitment and tight corporate budget have cut into demand for business travel. And we're paying the price," sales head of the airline's Dhaka office Kabir Anam Khan said.
"Global downturn has forced business people to be cost-conscious. Now people just travel if it can't be avoided. Everything depends on the decision of our headquarters whether we will reduce fares further," Mr Khan added.
The cut came less than two weeks after Air Asia --- the continent's top budget carrier --- launched its Dhaka-KL flights, offering fares 40 per cent cheaper than the legacy operators.
A Malaysian Air official acknowledged that its overall traffic has fallen by 20 per cent since the day Air Asia flew to Dhaka, impacting on its sales.
Air Asia operates 300-plus seater A-320 Airbus flights daily between KL and Dhaka, its 62nd destination.
Chief of Air Asia's general sales agent Enam A Chowdhury declined to comment.
Abdullah Al Hasan, a general manager with Biman, said Air Asia's entry to Bangladesh at a time of global aviation downturn is "a threat in the sense that the market has not grown."
Another Biman official said the state-owned carrier is considering a fare cut in the route to hold on to its market share.
Each week, an estimated 10,000 passengers fly between Dhaka and KL but that number dropped almost by a half in last September as Malaysia froze new recruitment of foreign workers.
Malaysia was the third largest employer of Bangladeshi workers last year, only after Saudi Arabia and the United Arab Emirates.
Malaysia announced stopped issuing new visas for foreign workers and cancelled some 55,000 visas for Bangladeshi workers early this month.
Even though labour traffic accounts for 90 per cent of passengers flying in the route, Malaysian relies heavily on leisure traffic and passengers bound for the Asia Pacific and the Fareast.
Biman and Malaysian Airlines, which control a combined share of 70 per cent of the market, are the two dominant players on the route. GMG, Best Air, Thai and Singapore Airlines share the rest.
Nazrul Islam, a director with the country's largest private carrier GMG, acknowledged that legacy carriers might face "short-term hurdles and market distortion" due to Air Asia's entry.
The future of the discount airline would be contingent on how long it could sustain its operations, amid poor track record of such regional players in the recent past, he said.
"Instead, we're worried about the Malaysian government's freeze on workers' recruitment. The current recession, not the entry of Air Asia," Mr Islam said.