Tuesday, May 27, 2008

Airlines amid fuel price hike

[This is a serious, business-oriented post.]

As oil price soars, which airline, do you think, will fare better, MAS or AirAsia?

MAS is a ‘full fare’ airline. AirAsia is a no-frills, budget airline. At first, I thought budget airlines would weather the storm better, as passengers cut back on their spending. However, a market analyst is more pessimistic with regard to AirAsia. His rationale is that AirAsia depends on leisure and budget travelers who are price-sensitive.

In other words, leisure travelers will cancel their plans or choose nearer destinations. Business travelers, who make up bulk of the passengers of MAS, will find it more difficult to make adjustment. Furthermore, business travelers usually can’t book their flights months in advance, so there is not much saving should they choose AirAsia.

Of course, not all of MAS's passengers are business travelers. Some leisure travelers who originally plan to fly to Europe may, due to high fuel surcharge, choose nearer destinations in South-east Asia or China. This is where we see the battles of the two airlines.

Tony Fernandes remains combative, but he may have had many sleepless nights by now. If you hold the shares of MAS or AirAsia, you may have sleepless nights too.


  1. I hope this battle will get more serious. We can gain more. Hehe

  2. I think they have their own different markets. There are still people who prefer convenience to budget and vice versa.

  3. $200 + $20 versus $600 + $20.

    In relative terms, the former will hurt more. 10% increment compared to 3% for the latter.

    But no worries, nobody can stop Tony Fernandes from ruling the air. =p

  4. regardless... i just hope the battle will benefit us consumers...

  5. che-cheh, zewt
    I hope they don't cut cost on maintenance...

    Yes they have different markets, but overlap to certain extent.

    I don't want anyone to rule the air.

  6. WoHhh that's scary

    does that means that if i want to travel..i should book my tickets before the prices soar sky high??

  7. huei
    I think the "everyone can fly" era is coming to an end. You may want to fly for 'the last time' before you no longer can afford it...

  8. This may bring down the air fares discrepancy between the two airlines.

  9. agree with you.

    btw on sidetrack, mas launched some great deals recently for the budget travellers - i think thats a good move. act the more competitors, the better i guess :)