Minimum air fares can be lowered further, say observers

PETALING JAYA - Certain fees can be waived and minimum fares lowered further to make domestic air travel cheaper, industry observers said.

"They (the Government) may just temporarily waive (fees such as) passenger security charges," said Maybank IB aviation analyst Mohsin Aziz.

Mohsin added that although other incentives could also be introduced, such as tax breaks on air travel, he conceded that such a move would be complicated and not that easy to implement.

One of the initiatives announced by Prime Minister Datuk Seri Najib Tun Razak was the increased promotion of domestic tourism through competitive air fares.

Malaysian Institute of Aviation Technology senior expert Ahmad Maulan Bardai said the Government could also reduce the floor fare of air tickets.

Although air fares were already de-regulated, the Government could lower the minimum price bar further, he argued.

Ahmad said this was possible as crude prices were at a five-year low, though he noted that airlines that previously hedged fuel at higher prices might not be able to lower their fares to a new minimum.

An airline observer who wished to remain anonymous said competitive pricing was already the status quo within the industry.

He said the Government could not just call up airlines and ask them to lower fares, adding that it was already a liberalised market, and fares had to be based on supply and demand.

In a related matter, Mohsin viewed the visa fee waiver for Chinese tourists as "mildly positive", adding that such a move had already been implemented by Malaysia's neighbours.

"It's a case of competition. Everyone wants a piece of Chinese tourists. Thailand did it more than two years ago, and so has Indonesia," he said.

AirAsia Bhd and Malaysia Airlines were unable to comment when contacted, saying that they need more time to provide a response.