KUALA LUMPUR: The government has decided not to introduce ceiling price for airfares as it will bring detrimental effect to consumers in the long run.
Transport Minister Anthony Loke Siew Fook said a study undertaken by the Malaysian Aviation Commission (Mavcom) has shown one-way domestic airfares has been on the decline over the past few years.
"Average one-way domestic airfares in Malaysia have been declining over the past few years and we do not want to reverse the impact if we start to introduce ceiling prices for airfares.
"The ceiling price introduction will not only bring down airfares during peak season, but could potentially increase airfares during non-peak season — and we do not want that to happen,” he told a media briefing here today.
Average one-way domestic airfares in Malaysia have been declining to RM214 in May 2018 from RM251 in January 2011, Mavcom study showed.
The commission said out of the 46 domestic routes analysed, 39 routes had airfares during peak seasons with price multipliers of between 0.8x and 3.0x.
Price multipliers above 3.0x were observed during the Chinese New Year period on certain routes within West Malaysia, as well as, between West Malaysia and East Malaysia.
Mavcom said these are consistent with the dynamic pricing
practice adopted by airlines globally where airfares are set based on the demand and market conditions.
Therefore, Loke said the ministry, together with Malaysia Airlines, AirAsia and Malindo, has agreed to increase domestic flight capacity by 20 per cent during peak season, in an effort to bring down airfares prices during the period.
Loke said the plan will go on a trial stage starting next year during three festive seasons - Chinese New Year, Hari Raya Aidilfitri, as well as Pesta Kaamatan and Hari Gawai which falls on the same in East Malaysia.
He said the increase in capacity will be done for seven consecutive days before each festive day.
For Chinese New Year, Loke said the selected routes are Kuala Lumpur (KL)-Sibu, KL-Kuching, KL-Kota Kinabalu (KK), Ipoh-Johor Bahru (JB), JB-Sibu, JB-Kuching and JB-KK.
Tickets during the trial stage, when the capacity increase will start to kick in, will be available starting October.
For Hari Raya Aidilfitri, the selected routes are KL-Kota Bharu, KL-Kuching, KL-Alor Setar, KL-Kuala Terengganu and KL-KK.
Loke said the ministry will be closely monitoring the impact after the trial stage, and if it is not effective on bringing down airfares, the ministry will then meet industry players again to find another viable solution.