Sunday, April 05, 2009

Take-off treats for the recession

It's boom time for bargain hunters as the economic meltdown reveals a silver lining in the form of a fare war erupting between major carriers.

Sluggish ticket sales and rising operational costs have prompted some of the industry's biggest players to slash prices by nearly 20 per cent in the hope that consumer demand will surge over the next few months. These promotional deals extend to the summer, which is considered the most lucrative period for the travel industry as schools close for the season.

(SASAN SAIDI)


And even though the aviation industry waits to see lines snaking outside airline offices, passengers like US resident Jahanvi Thaker are not hesitating in milking the benefits of a bad economy and the oil-price shock.

Having booked herself and her two daughters for a three-week stay in Dubai last month, she couldn't be happier investing in this cost-saving vacation.

"In 2008, it cost two of us approximately $2,300 (Dh8,440) to fly down from Washington DC," says the 31-year-old. "Last month, I booked a Qatar Airways flight for three with our total airfare barely scraping $1,980. That's an extra person onboard and leftover money to spend."

There are many more stories like Thaker's; people who have waited for the dust from the economic crash to settle before they attempt to piece together a normal life, and maybe even find some away time to de-stress from the fallout.

In the United States the drop in airfares is transparent. Struggling to meet passenger occupancy ratios and cover operational costs, its aviation industry has emerged as the worst hit economy amidst the recession – much to the advantage of cash-crunched customers.

According to the Air Transport Association of America, the country's domestic travel industry has dropped 8.7 per cent compared to 2008. Flights to Europe and further afield to places such as the Middle East have dropped nearly 10 per cent.

The fallout is visible on routes such as the twice-daily Dubai-New York flight operated by Emirates Airline, which confirmed the worst with its dramatic announcement last month to replace its two double-decker Airbus A380s with the smaller Boeing 777s from June 1 as it struggles to fill seats.

"As the global economy has affected international air travel, this aircraft redeployment was based solely on a change in capacity demands," Emirates said in a statement. "When economic conditions improve, we anticipate demand will be restored on the Dubai-New York JFK service, at which time Emirates will certainly evaluate redeploying the A380 on this route."

But while major carriers shed bitter tears over their profit-loss statements, consumers are reaping the benefits.

For example, you save Dh1,300 on a Dubai-New York return economy class flight if you book for April via online travel provider Expedia.com. The website threw up fares priced around Dh3,100, as compared to the Dh4,400 average at the end of 2008, when Wall Street was still a respected address among capitalists.

Those heading for the United Kingdom can also strike lucky with discounted deals between Dubai and London. Once priced at Dh2,800, these have now been slashed by Dh900 for the period of May aboard Qatar Airways.

Short-haul trips have also been affected including Emirates flights on the popular Mumbai route. These have witnessed a price cut from the average Dh1,500 to the current Dh1,030 for economy travel during April/May.

"The current climate is such that you can now afford to book yourself for three or four short-haul annual trips at deep discounts," Housam Raydan, Group Communications Manager for Air Arabia tells Emirates Business.

The Sharjah-based budget carrier is currently promoting extended weekend packages to popular spots such as Bahrain, Beirut and Cairo. "With debt on the rise and a lack of job security plaguing many, people are unwilling to apply for extended holidays. But the drop in fuel surcharges has made it easier for families to afford a long weekend away on more short budget holidays."

For the month of April, Air Arabia's booking engine is pricing a three-night stay in Lebanon's party capital, inclusive of flight and twin-shared accommodation, at Dh1,434 per person, plus another Dh100 for transfers. With money leftover in your travel budget, club that together with a two-night anniversary getaway in Bahrain the following month for another Dh890, and you've got two trips for the same amount that you would have paid for one trip last summer.

Adding incentive to the killer travel discounts are the special deals on top of the low fares: From double and even triple elite-qualifying miles for frequent fliers, to US domestic carrier JetBlue's offer – similar to those made by some car companies – of a full refund if a customer is laid off before a trip. Closer to home is Emirates' lucrative Skywards offer allowing you to double and triple your air miles if you travel on select flights between now and June 30.

The combination of such heady deals spell the perfect ingredients for a bumper summer and industry experts are advising you to book fast before basic demand-supply economics come into play.

"There is a lot of excitement about summer holidays for international travellers," Zubin Karkaria, CEO and Managing Director (India & South Asia), Kuoni Travel Group, India, tells Emirates Business. "Travellers are looking at the situation as an opportunity to avail of the various innovative value-based packages, knowing that such deals were not available before and may not be available in future. "

Kuoni's SOTC Tours, currently rated the number one packaged holiday operator amongst Asians in India and the Middle East, are working to extend the airline benefits to its customers for the summer period. "The discounted fares on airlines, clubbed with dipping hotel costs has led SOTC

to pass pass on the benefits obtained from suppliers and partners to the customers in the form of attractive offers," says Karkaria. "In effect, prices offered in 2009 have dropped approximately 20 per cent drop for holidays in Europe and approximately 15 per cent for the Far East."

Tim MacDonald, general manager of Expedia.com, confirms the same, saying: "In some popular destinations hotel rates are down by over 20 per cent."

Now all that remains to be seen is if more passengers like Jahanvi Thaker are willing to take advantage of the rising buying power of the dollar for some fun in the sun during these trying times.

But if penny pinchers prefer to play it safe until the economy gains steam before blowing their discretionary incomes, it could very well mean continued headaches for airlines but cheap tickets for us.


Fare compare

2008 2009

Bahrain Dh1,000 Dh750

Beirut Dh1,900 Dh1,490

Cairo Dh1,940 Dh1,600

Istanbul Dh1,780 Dh1,440

London Dh2,800 Dh1,900

Mumbai Dh1,500 Dh1,030

New York Dh4,400 Dh3,100



All figures are averages based on week-long return flights, originating in Dubai for the month of April in economy class with major full-service carriers.


Tips for saving

1 Travel mid-week and avoid pricier Friday fares.

2 Experts say the cheapest fares are available on a Wednesday – three days after an airline releases their discounted fare and two days after other carriers attempt to match or beat it.

3 If looking for the best fare through an online travel provider, more often than not, you could bag a further discount if you book through the airline's website. And remember, budget airlines are usually never listed on travel search engines.

4 Airfare usually creeps up two weeks before the travel date. Either book a month in advance or, if your dates are flexible, two days before actual travel.

5 Stop accumulating those air miles and reward points for a rainy day. The economy has already rained on our parade.

6 Bag a bargain at your hotel by simply asking for it. With hotel occupancy rates down globally, many top hotels are open to discounts when asked. And sweeten the deal if possible with free meal for kids, free parking, spa credit…

7 Sign up for travel alerts on websites such as Expedia.com. If you aren't too fussy about your destination, pick the best deals and book fast before they sell out.

By Bindu Rai

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