Dogfight over budget airfares

Airline ticket prices in Southeast Asia have fallen below bus fares, with a one-way ticket between Singapore and the Thai resort city of Phu...

Airline ticket prices in Southeast Asia have fallen below bus fares, with a one-way ticket between Singapore and the Thai resort city of Phuket advertised for as little as 17 U.S. cents.

But, just as most people will never get to fly at such impossibly low prices because of an array of hidden costs ranging from airport taxes to service fees, some airlines trumpeting the deals ultimately may not survive the price war.

8216;8216;Not everyone is going to make it,8217;8217; said Chris Sanda, an associate director of equity research at DBS Vickers Securities in Singapore.

Last week, no-frills airline Thai AirAsia Co. offere done-way flights between Singapore and Phuket at 29 Singapore cents 17 U.S. cents for the first 3,000 seats. The price did not include taxes and fees of about S61 for insurance, a fuel surcharge and airport taxes. The tickets were snapped up within 2 days.

Tiger Airways 8212; a venture between Singapore Airlines Ltd. and the founder of Irish discount airline Ryanair 8212; started the price war last month with one-way S1 fares to Thailand for a limited period, which when added to taxes and fees, amounted to S62.

Singapore Airlines, the world8217;s second-most-valuable airline, is offering return fares between Singapore and Bangkok ranging from S178 to S268 each, compared with its normal ticket price of S358.

8216;8216;Definitely, people who want to be in this airline business need to have the stomach for it,8217;8217; said Patrick Gan, CEO of Tiger Airways, which launched its inaugural service last week.

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The budget airline of Australia8217;s Qantas Airways Ltd., which has yet to be named, also plans to begin flying from Changi.

No-frills Malaysian airline AirAsia Bhd has applied for a licence in Singapore even though its Thai venture with Shin Corp., Thai Air Asia, flies between Thailand and Singapore.

Discount airlines are making it easier for Southeast Asia8217;s 500 million people 8212; commanding a gross domestic product of 700 billion 8212; to take to the skies.

Because they encourage intra-regional tourism, which governments are keen to promote, they are pressuring countries to revise international landing rights pacts and drawing support from government investment vehicles. 8216;8216;Basically, it8217;s just serving the national interest. The government wants to develop low-cost carrier industry,8217;8217; said an industry analyst.

8212; Reuters