I did mention sometime in early February of taking Malaysia Airlines more often now that they have joined oneworld Airline Alliance. What does joining an airline alliance means today? For the business traveller, this means ease of connecting on member airlines and greater ability to access lounges and fly on codeshare flights to a wider network of destinations that your preferred airlines does not fly to. And for the ‘elite’ members of that particular alliance, more recognition on airlines such as priority boarding, excess baggage and lounge access which can make travelling cheaper and more comfortable.
Two of Southeast Asia’s main airlines, Singapore Airlines and Thai Airways are part of Star Alliance. Thus this leaves Malaysia Airlines which has joined oneworld, while Garuda Indonesia indicated it will join Skyteam once its reorganization is complete. Alliances are one way to increase flight occupancy and thus improve loads and revenues for airlines. This could mean a make-or-break bottom line to airline revenues. However for this strategy to be successful, airlines in alliances needs to ensure the ability to offer similar privileges to frequent flyers from other airlines and allow them to accrue mileage on their frequent flyers, as otherwise there is no benefits for the frequent flyer to take the airline that just joined the alliance. It remains to be seen whether Malaysia will do that but a recent search in hipmunk (which happens to be my first go-to-point to search for airfares) shows Malaysia Airlines to have the cheapest fares out of Jakarta (CGK) to 2 tourist destinations, Sydney (SYD) and Tokyo (NRT and HND).
For fares to Sydney, Malaysia (MH) asks for $877 for a return flight, while Garuda (GA) wants $1066 and Singapore Airlines (SQ) asks for $1207 (a nearly 50% premium). Both SQ and MH requires transits at their respective hubs in Singapore and Kuala Lumpur respectively. While flights on SQ can be on the A380 so maybe that warrants a slight premium, but Malaysia operated an A330 which is also new and features nearly the same seats since we are talking coach or economy fares here. A 10% premium is perhaps the maximum I will ever take on an economy fare on the A380, and it is frankly losing any kind of novelty at this stage, and only the 787 would entice me, but at 40% premium it is a lost case anyway. Garuda, on the other hand asks for a nearly 22% premium, and it does operate its latest A330s as well, though offers the convenience of a direct route which I might be enticed if I value my time that much. Though the thought of transiting in KLIA for the first time is something that I would use my time for anyway. So Garuda is inadvertently placing its fares in the same premium bucket as SQ when it does not have an alliance or any sort of supremacy in branding. Another case of strategy gone wrong?
Next case in point is fares to Tokyo. Malaysia Airlines (MH) asks for $978, Korean Air seeks $1241, ANA asks for around $1376 to $1390, and SQ as for a whooping $1549. The only reason for that could be that SQ lands at Haneda which I value maybe at a 20% premium since transport to Tokyo is much easier and cheaper compared to Narita. But SQ is asking for a nearly 60% premium, at prices even higher than ANA. And what about Garuda? It doesn’t even register. Sigh I sure hope Garuda has more competitive fares in South East Asia.
The entry of Malaysia Airlines into oneworld, I surmise is going to hurt Singapore Airlines and Garuda Indonesia where it matters. As a transit hub, KLIA and Changi is close and even though Changi is an amazing airport, KLIA is not too bad on its own right. Not to mention Malaysia Airlines does have A380 themselves, and have revitalized their fleet to a similar quality. Premium passengers might still value SQ for their value-added service but are economy class passengers going to care that much beyond a certain threshold of comfort and safety in the flight? Another reason Malaysia Airlines have such lower fares than their counterparts could be due to intense competition from another Malaysian carrier – Air Asia which has long touted low fares from Kuala Lumpur. This has spurred price competition and allows MH to be more aggressive in revamping its hub strategy to draw international visitors from the rest of South East Asia. Looks like Singapore and Indonesia needs a great budget airline to spur their airlines to action as well…