KUALA LUMPUR, Sept 4 — The country’s three main airlines will increase flight frequencies during peak festive seasons to limit steep price increases, said Transport Minister Anthony Loke.
Loke said the agreement involving Malaysia Airlines Berhad, AirAsia, and Malindo Air will go on trial next year, based on the consensus formed around a Malaysian Aviation Commission (Mavcom) study showing fares during peak periods could spike as much as 600 per cent.
“The three airliners will increase its capacity to at least 20 per cent of existing scheduled flights during three festive seasons next year, which will be during the Chinese New Year, Hari Raya Aidilfitri, and the Gawai and Kaamatan season.
“This is the approach agreed by the three airliners in order to manage the price increase during festive seasons, instead of imposing a ceiling price,” he told a press conference at the Mavcom headquarters here, today.
Loke said suggestions for a ceiling price on flight fares during festive seasons were made during the recent parliamentary session, but the minister was concerned airlines could raise overall prices during the regular travel periods to compensate.
Citing Indonesia as an example of where maximum fare prices were imposed, he said this has been shown to be ineffective in achieving cheaper flight tickets.
“We are worried if we do a ceiling price, then the airline companies will place an average rate during festive seasons and this will impact the average rate during normal season,” Loke said.
The minister added that prices should be determined by the free market as much as possible, saying it was logical that prices will rise when demand exceeds supply.
He also added that flight fares have fallen on average over the years and said his ministry did not want to upset this trend.
Loke added that airlines could conversely insist on a base price if pushed to impose a ceiling for fares.
“What is the minimum price if we put ceiling price?” he said.
Loke said Mavcom will monitor the pilot programme over the three major festive seasons next year to determine if efficacy in limiting spikes in ticket prices.
If the mechanism proves to be unsatisfactory, he said his ministry would evaluate other options including introducing ceiling prices.
However, he stressed that Putrajaya did not want to intervene in the free market unless absolutely needed.
The increased flight frequencies will begin seven days before each of the three main festive period.
In the 56-paged technical paper prepared by Mavcom, it was found that average domestic airfares were on a downward trajectory since 2011.
However, four in five flights along domestic routes analysed were found to experience price increases of between 100 to 300 per cent during peak seasons.