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Airlines Plead for Low Costs

Posted on: Sunday, 18 September 2005, 12:00 CDT

Perhaps it is to be expected that when a bunch of budget airlines get together for a convention, the talk centers on saving money and fighting red tape.

At the World Low-Cost Airlines Congress on Thursday, held at the RAI conference center here, Tony Fernandes, chief executive of AirAsia, said that dealing with Asian governments had been three and a half years of "a living nightmare," but that the airline is growing rapidly nonetheless. AirAsia is based in Malaysia. It operates 53 routes around Asia and is expected to add about 10 over the next year.

Fernandes said AirAsia had achieved some marketing coups. During the SARS epidemic, the airline tripled its low-fare advertising rather than cut flights. It became the only airline with healthy growth during the epidemic. "If you put a fare low enough, they'll risk their lives," he said. Fernandes also showed a newspaper advertisement that brought both laughter and groans from the audience. Three beautiful, smiling flight attendants dominate the billboard, which says, "There's a New Girl in Town. She's Twice the Fun at Half the Price." In the background is the skyline of Singapore with the Singapore International Airlines building deliberately removed from the scene. Fernandes was one of many speakers at a meeting that often took on the air of an old- fashioned religious revival, in which airline executives were the preachers and the suppliers who depend on them were the congregation. The chief executive of Ryanair, Michael O'Leary, railed at European Union rules that he said threatened the existence of low-cost airlines, like regulations on passenger compensation for canceled flights and requirements for airlines to pay for mobility of the handicapped in airports.

"These regulations do nothing for customers," he said. Ryanair has the best lost-bag record in the industry, he said, and it would harm the low-fare industry if it were forced to pay for hotels and other amenities for passengers on the few canceled flights. "Get over it," he said. "Your ticket only cost you $20."

Tickets for the event cost more than 2,000, or $2,450, a person, and many companies paid far more for exhibit booths. Those prices, and the fact that more than 500 paid to attend, show how the low- fare industry is booming, despite high oil prices. And despite O'Leary's prediction almost three years ago that there would be a market shakeout and a spate of low-fare failures, it was clear that all these carriers about 30 in Europe alone are growing and making money. "The European consumer would crawl naked over broken glass to get low fares," O'Leary said. Talk of money at times grew blatant. Stefan Vilner, the president and only full-time employee of the European Low Fares Airline Association, drew groans and laughter with a pitch for suppliers to join his association, whose 11 members include Easyjet, Ryanair, Air Berlin, Sky Europe and Hapag-Lloyd Express. "When we buy something, we look at the list of association members," he said, smiling. The food was far better than on any airline and free. At a vendor booth promoting airline food for sale that is cheap but allegedly delicious, the counter was filled with hundreds of glasses of red and white wine, Champagne, and orange juice.

Speakers from other continents gave presentations that often sounded like those of their European counterparts: enthusiastic that the low-cost concept is catching on fast, but complaining of problems with government regulation and airport attitudes. Gidon Novick, commercial director of the first African low-cost airline, Kulula, of South Africa, said that airport managers in his country did not grasp the concept of making deals on access charges. But he said they talked proudly of having Kulula as a new airport user.

Source: International Herald Tribune

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