DAMMAM, 22 June 2003 — Several airlines, mainly those operating on Asian sectors, have increased their fares as peak season approaches.
Many airlines have reached an agreement between themselves for a unified fare for Asian and some European sectors. These airlines have expressed their resolve to abide by it.
In the past, many airlines such as Saudia, Gulf Air and Air-India signed similar deals on a common fare structure but unfortunately those understandings did not last long and each of them blamed the other for breaches.
Industry pundits say that the Asian sectors are one of the most lucrative and business-generating sectors, which is why many airlines vie for them.
There are more than four million Asian expatriates in the Kingdom. To gain more passengers, these airlines resort to undercutting and as a result the fares are brought down drastically.
The Presidency of Civil Aviation (PCA) has warned against undercutting on many occasions and in the past took punitive measures against those airlines and travel agencies which were guilty of the practice. But, a shrinking market led to complacency in PCA’s attitude and as a result, it became a free-for-all situation, mainly on the Asian sector.
Airlines agree that in order to provide cheaper fares, they have to compromise on quality of services.
“The operating cost is already very high at King Fahd International Airport and if fares are cut drastically, then the revenue yield comes down alarmingly and there is no option but to reduce the quality of service,” said the manager of an airline operating on the Asian sector.
The King Fahd Causeway gave yet another dimension to the problem-riddled air industry. Many airlines either cut back their flights from Dammam or stopped operations from there completely.
The airlines cite high operating costs as reasons for cutbacks or phasing out operations. Those airlines carrying passengers via the causeway offer relatively cheaper fares but in the process deprive the PCA of millions of riyals in airport tax.
The industry says that the opening of domestic routes to other private airlines will pave the way for healthy competition. Although the airline industry is not optimistic about the volume of traffic during the summer break, it insists that the accord will stay and as a result there will be higher revenue yields compared to previous years. Booking for various sectors in Asia is still open and the predictions are that this year there will be fewer travelers than last year.
