Air Asia's entry may stimulate competition on Dhaka-KL route
A Z M Anas | Thursday, 12 March 2009
Malaysian low-cost carrier Air Asia breaks into the Bangladesh market today, stoking fear that its entry could further undercut state airline Biman's stronghold on the Kuala Lumpur (KL) route, airlines officials said Wednesday.
But Bangladesh affiliate of Air Asia said that it would not seek to snatch away passengers from legacy carriers such as Biman and Malaysian Airlines as it targetted middle-class tourists, not labour traffic that accounts for 90 per cent of passengers of the Dhaka-KL route.
"It's a threat in the sense the market has not grown. Our market share can take a plunge," Abdullah Al Hasan, a general manager with Biman, said.
Mr Hasan, who oversees Biman's marketing division, said that Air Asia would "play with fares" but the national flag carrier would also face the new competition, employing different strategies.
The route, long dominated by Biman and Malaysian Airlines, is important for Biman that is one of the most profitable routes for the state-owned carrier.
Biman and Malaysian Airlines control a combined share of 70 per cent of the market, with GMG, Best Air, Thai and Singapore Airlines occupying the rest.
An estimated 10,000 passengers used to travel on the Dhaka-Kuala Lumpur route a week but that number has almost halved in last September as KL 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.
"It (Air Asia) will hit the price sensitive segment. But I don't think it will emerge as the strongest rival, given the track record of other regional budget carriers," the Biman official told the FE.
Sales head of Malaysian Airlines Kabirul Anam Khan also downplayed the fear, saying Air Asia's regional footprint expansion should not worry existing players as he said the market awaited "a healthy competition."
"Let the market decide on the fate of Air Asia. If passengers fly by the budget carrier, they must be aware that they will sacrifice certain things-no food on board, baggage fees and so on," Mr Khan said.
Biman, which swung to profits last fiscal, is in the middle of adding 10 new Boeing planes to its fleet by 2013 through to 2020.
The Biman official noted that the national flag carrier would fight with different strategies to maintain the current market share, having not worried about Air Asia's entry.
"We're not afraid. Many budget carriers began services in the past and later folded operations," he told the FE.
Chief executive officer of Air Asia, Bangladesh Noman Chowdhury said the airline would try to attract passengers with cheaper fares and other "attractive" facilities.
But Bangladesh affiliate of Air Asia said that it would not seek to snatch away passengers from legacy carriers such as Biman and Malaysian Airlines as it targetted middle-class tourists, not labour traffic that accounts for 90 per cent of passengers of the Dhaka-KL route.
"It's a threat in the sense the market has not grown. Our market share can take a plunge," Abdullah Al Hasan, a general manager with Biman, said.
Mr Hasan, who oversees Biman's marketing division, said that Air Asia would "play with fares" but the national flag carrier would also face the new competition, employing different strategies.
The route, long dominated by Biman and Malaysian Airlines, is important for Biman that is one of the most profitable routes for the state-owned carrier.
Biman and Malaysian Airlines control a combined share of 70 per cent of the market, with GMG, Best Air, Thai and Singapore Airlines occupying the rest.
An estimated 10,000 passengers used to travel on the Dhaka-Kuala Lumpur route a week but that number has almost halved in last September as KL 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.
"It (Air Asia) will hit the price sensitive segment. But I don't think it will emerge as the strongest rival, given the track record of other regional budget carriers," the Biman official told the FE.
Sales head of Malaysian Airlines Kabirul Anam Khan also downplayed the fear, saying Air Asia's regional footprint expansion should not worry existing players as he said the market awaited "a healthy competition."
"Let the market decide on the fate of Air Asia. If passengers fly by the budget carrier, they must be aware that they will sacrifice certain things-no food on board, baggage fees and so on," Mr Khan said.
Biman, which swung to profits last fiscal, is in the middle of adding 10 new Boeing planes to its fleet by 2013 through to 2020.
The Biman official noted that the national flag carrier would fight with different strategies to maintain the current market share, having not worried about Air Asia's entry.
"We're not afraid. Many budget carriers began services in the past and later folded operations," he told the FE.
Chief executive officer of Air Asia, Bangladesh Noman Chowdhury said the airline would try to attract passengers with cheaper fares and other "attractive" facilities.