If there is one component of travel in Asia which has grabbed attention relentlessly throughout 2006, it has to be the low-cost carrier segment. If on one hand, the penetrative levels of LCC’s have forced the  traditional airlines to restructure their operations and address cost issues, on the other LCC’s have also contributed immensely towards the revival of the region’s tourism figures.

Even as LCC’s gain praise from several quarters, it was EyeforTravel’s Travel Distribution Summit Asia in Singapore this year which set the ball rolling with some engaging comments and insights from senior distribution executives from British Airways and Jetstar Asia. Speaking during this summit Mark Pavlides, GM Distribution Asia Pacific, British Airways stated: “There is a situation where both successful traditional and successful low cost carriers are able to co-exist. This is what has happened in Europe - growth of LCC’s have encouraged traditional airlines to look at their costs and also their customer offering. LCC’s have so far been unable to compete for all the customers the traditional carriers offer and likewise the traditional carriers cannot compete for all the LCC’s customers.”

On his part, Paul Daff, Head of Commercial, Jetstar Asia Airways and Valuair, during the same conference said the entry of LCC’s into the Asian region has seen a dramatic increase in passenger numbers through the stimulation of pricing initiatives, and the opening up of new routes. “This has had benefit for not only the traveling public but also to national economies. The Traditional carriers have been forced to adapt to a changing environment, but it can benefit everyone,” Daff said. As an exciting year comes to an end, EyeforTravel is already set to conduct the next edition of TDS Asia in Singapore on 13 and 14 March 2007. Session two on the opening day of the conference, will be about the impact of LCC’s on online travel and distribution. Akin to nature of the Asian market, low cost carriers too, have diversified models within the region and even within the same country. Speaking of India, GoAir’s Chief Commercial Officer Raj Halve, a confirmed speaker for the LCC session during TDS Asia 2007 says, “In addition to traditional channels like travel agents and airport counters / ticketing offices, GoAir also have adopted innovative distribution channels like the internet / cybercafes, call centres, PCO’s and m-Commerce (mobile commerce).” Just like the vast number of channels, the pricing strategy across them is equally as intriguing. For example, Sanjay Kumar, Vice President – Planning and Marketing, SpiceJet Limited, another confirmed speaker, on the issue of rate parity across the various distribution channels says, “We clearly look at the cost involved in each channel and work out our pricing accordingly. So far, we have maintained the same fare in the call centre as will be on the site. But very soon, we will create a pricing difference to this channel so that we can reduce the cost accordingly.”

Michael Verikios - Friday, December 15, 2006