Biman joins discounters' league on Dhaka-KL route
Friday, 10 April 2009
A Z M Anas
State airline Biman has jumped on the discount bandwagon to cushion against intense competition, worsened by sapping demand for air travel on Dhaka-Kuala Lumpur route, officials said Tuesday.
After launch by Malaysia Airlines last month, officials said, the national flag carrier entered the fares war, cutting back on ticket prices by at least 10 per cent in a sale that would last "until further notice."
Last month, Biman's nearest rival Malaysia Airlines made a deeper cut as much as 25 per cent in ticket prices in a clear attempt to head off competition from low-cost Air Asia.
"We're having a tough trading environment. This year's outlook is really dismal," Md Shahnewaz, sales head of Biman, said.
"Our average load factor on Dhaka-KL route took a major dive in March. Freezing new hiring by workers is the major reason behind the steepest drop-off in passengers' movement," he added.
Biman's latest offer came less than a month after Air Asia -- the continent's top budget carrier -- launched its Dhaka-KL flights, offering fares 40 per cent cheaper than the legacy operators.
Despite the tough revenue environment, the Biman official noted it is "on track to make some profits this year," due mainly to a slump in oil prices, which accounted for 55 per cent of the airline's expenses until last July.
A Malaysia Airlines official said his airline was feeling the chill as its average load factor slid to 60 per cent in March, down from 70 per cent in January and February.
"Passenger load factor took a sharp dive last month. Until February this year, our traffic was not so bad," the official, who is not an authorised spokesman, added.
Biman officials said KL route was top five profitable routes for the carrier, which racked up profits of Tk190 million in the fiscal 2008. "But this is highly unlikely the route will see profits in near future."
Officials said global downturn coupled with manpower recruitment suspension has put a damper on air travel.
Another Biman official acknowledged that Asia's biggest no-frills carrier is snatching away its passengers with its low-fares strategy, impacting on Biman's sales.
Air Asia operates 300-plus seater A-320 Airbus flights daily between KL and Dhaka, its 62nd destination.
In a recent interview, Abdullah Al Hasan, a general manager of 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."
Each week, an estimated 10,000 passengers fly between Dhaka and KL but that number dived 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.
In early March, Malaysia stopped issuing new visas for foreign workers and cancelled some 55,000 visas for Bangladeshi workers.
Biman and Malaysia Airlines, which control a combined share of 70 per cent of the market, are the two dominant players on the route. GMG, Thai and Singapore Airlines share the rest.
Best Air, a privately owned Bangladeshi carrier, suspended its Dhaka services to KL International Airport, one of major aviation hubs in the Southeast Asian region.
State airline Biman has jumped on the discount bandwagon to cushion against intense competition, worsened by sapping demand for air travel on Dhaka-Kuala Lumpur route, officials said Tuesday.
After launch by Malaysia Airlines last month, officials said, the national flag carrier entered the fares war, cutting back on ticket prices by at least 10 per cent in a sale that would last "until further notice."
Last month, Biman's nearest rival Malaysia Airlines made a deeper cut as much as 25 per cent in ticket prices in a clear attempt to head off competition from low-cost Air Asia.
"We're having a tough trading environment. This year's outlook is really dismal," Md Shahnewaz, sales head of Biman, said.
"Our average load factor on Dhaka-KL route took a major dive in March. Freezing new hiring by workers is the major reason behind the steepest drop-off in passengers' movement," he added.
Biman's latest offer came less than a month after Air Asia -- the continent's top budget carrier -- launched its Dhaka-KL flights, offering fares 40 per cent cheaper than the legacy operators.
Despite the tough revenue environment, the Biman official noted it is "on track to make some profits this year," due mainly to a slump in oil prices, which accounted for 55 per cent of the airline's expenses until last July.
A Malaysia Airlines official said his airline was feeling the chill as its average load factor slid to 60 per cent in March, down from 70 per cent in January and February.
"Passenger load factor took a sharp dive last month. Until February this year, our traffic was not so bad," the official, who is not an authorised spokesman, added.
Biman officials said KL route was top five profitable routes for the carrier, which racked up profits of Tk190 million in the fiscal 2008. "But this is highly unlikely the route will see profits in near future."
Officials said global downturn coupled with manpower recruitment suspension has put a damper on air travel.
Another Biman official acknowledged that Asia's biggest no-frills carrier is snatching away its passengers with its low-fares strategy, impacting on Biman's sales.
Air Asia operates 300-plus seater A-320 Airbus flights daily between KL and Dhaka, its 62nd destination.
In a recent interview, Abdullah Al Hasan, a general manager of 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."
Each week, an estimated 10,000 passengers fly between Dhaka and KL but that number dived 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.
In early March, Malaysia stopped issuing new visas for foreign workers and cancelled some 55,000 visas for Bangladeshi workers.
Biman and Malaysia Airlines, which control a combined share of 70 per cent of the market, are the two dominant players on the route. GMG, Thai and Singapore Airlines share the rest.
Best Air, a privately owned Bangladeshi carrier, suspended its Dhaka services to KL International Airport, one of major aviation hubs in the Southeast Asian region.