KUCHING: Scraping dynamic airfare pricing would be the wrong solution, as it would result in losses for everyone, according to an aviation analyst.
Daniel Mihar, who is affiliated with an investment bank here, came forward to defend the practice of dynamic pricing for airfares, arguing that it was a standard practice in the airline industry and crucial for maintaining profitability and sustainable operations.
“Dynamic pricing is a widely accepted mechanism for airlines to optimise their revenue and respond to fluctuating demand in real-time,” he said on Sunday.
“Scraping dynamic airfare pricing would be the wrong solution, as it is essential for the financial health of airlines, especially in a highly competitive market like Malaysia.”
Daniel Anak Mihar James comments came after former Bukit Mas MP Datuk Mutang Tagal last Friday (March 17) criticised the use of dynamic pricing by Malaysia Airlines (MAS) and its subsidiaries, MASwings and Firefly, saying it could have negative impacts on domestic tourism and national integration.
Instead of eliminating it, he suggested alternative solutions to address Mutang’s concerns, such as targeted subsidies for rural communities.
“Rather than eliminating dynamic pricing, the state government could consider offering targeted subsidies or vouchers to rural communities, or perhaps do away with some taxes, making air travel more affordable and accessible for them,” the analyst proposed.
He also highlighted that dynamic pricing benefits passengers by providing them with a variety of fare options.
“Dynamic pricing allows airlines to offer lower fares for those who book early, while adjusting prices for last-minute bookings based on demand,” he explained.
“This ensures that passengers have more options and flexibility when planning their travel.”
In response to concerns raised by Mutang, who is also the president of the Orang Ulu Chamber of Commerce and Industry, about the impact of dynamic pricing on rural air services, Daniel Anak Mihar James pointed out that subsidies provided by the Malaysian government could still help to keep fares affordable for rural communities.
“The government’s subsidies for rural air services will continue to play a crucial role in ensuring affordable access to air travel for these communities, regardless of dynamic pricing strategies.”
He concurred that easing the passenger cap as the pandemic situation improves could help address the challenges faced by rural communities and support the tourism sector in Sarawak.
“Lifting the cap would certainly help alleviate some of the difficulties faced by these travellers and boost the tourism sector,” he added.
“So, once more, let me reiterate that this factor (dynamic pricing) is absolutely unrelated to the concerns raised at all, it’s an entirely separate issue.”
The analyst also acknowledged the need for airlines to be sensitive to travellers’ needs during peak travel seasons and festive holidays.
“By adjusting fares based on demand, airlines can encourage passengers to book early or choose off-peak travel times, which can help to balance the load on flights and ensure smooth operations,” he added.
In October 2007, the federal government appointed MASwings to manage, operate, maintain, and provide Rural Air Service (RAS) through the signing of the RAS Agreement.
As part of this agreement, the cost for RAS operations by MASwings is fully subsidised by the federal government.
More recently, on January 4, 2019, the federal government signed a new agreement with MASwings – the Public Service Obligation Agreement for RAS (PSO for RAS).
The agreement is set to continue RAS operations in Sabah and Sarawak for a period of six years, from 2019 to 2024.
Currently, MASwings is providing services for a total of 40 routes in Sabah and Sarawak, utilising ATR72 and Twin Otter Viking Aircraft.
