Airlines. Baring low-fare facts.
FOXTROTSFox – sly. Trots – left-leaning (Trotsky) plus its more insalubrious meaning. Foxtrots – leading the industry in a dance.
2006 November 10
Airlines. Baring low-fare facts.
It is not only in the hotel business where I am extremely knowledgeable. This erudition also extends to the airline business. And, in particular, low-fare airlines (LFAs) and how the hotel business can gain from them.
With the arrival of LFAs, I see a major change in the way the airline business runs in
Asia, and by consequence a new series of opportunities for the hotel business.
The kicker is the launch of Air Asia flights Singapore-Bangkok in mid-February. Fares on the route for advance bookings (usually two months, but shorter for off-peak flights) is US$35 one way. More LFAs will follow. And even if most of them lose a lot of money and go out of business within two years, they will still have caused change.
Most hoteliers will say that travellers who are booking such cheap flights are not likely to be their customers. In fact, Air Asia makes similar statements, saying its customers are those who would otherwise take the train or bus.
Both are wrong, or rather not completely right. LFAs do attract customers who would not otherwise fly (Air Asia slogan is ‘Now Everyone Can Fly’), but they also attract ‘regular’ travellers.
Those that when the fare is US$200 round-trip will travel once or twice a year, will fly 5/6 times if the price is US$70. Plus, travellers will decide more often to take a quick breakaway at these prices. For
Singapore residents, for instance, it can become a choice between a weekend in Bintan, or a weekend in
Bangkok.
And for hoteliers, the business flow is not necessarily into lower-priced hotels. Some will take a cheap flight and stay in the best hotels – and more so for those travellers that are taking a break.
But there is a danger for the hotels because this business will also bring a new type of transaction – ‘dynamic packaging’. DP is travellers putting together their own packages on the internet – partly because they want the flexibility of, say, cheap airline, costly hotel, one dinner, one breakfast, one river cruise, and airport meet-and-greet.
Fortunately for hoteliers, I have produced a comprehensive and award-winning (eventually) manual on Travel Marketing In The Internet Age, US$1000. This is due to be published soon; the date will be finalised when somebody sends the money.
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