Jetstar Asia Airways Pte and Tiger Airways Pte have won the right to fly between Singapore and Kuala Lumpur, increasing competition on the route.
Singapore Airlines Ltd and Malaysian Airline System Bhd have dominated flights between the two cities.
Now the two Singapore-based budget carriers will be able to operate a daily flight each from February 1, Singapore's transport ministry said yesterday. Malaysia's AirAsia Bhd said on November 1 it expects to win approval to fly twice a day on the route.
The three new carriers may trigger a price war as they seek to end Singapore Air and Malaysian Air's three-decade-long dominance on the route.
AirAsia and Jetstar Asia have both said they plan to offer some tickets for about one-third of current fares.
Competition will increase and prices will come down, analysts said.
The impact to Malaysian Air and Singapore Air will be limited initially, because they still have the bulk of the passenger volumes, they said.
Singapore Air, Asia's most profitable carrier, operates 84 weekly flights on the route, while Malaysian Air runs 98 services, according to figures from the Civil Aviation Authority of Singapore.
Japan Airlines Corp, Asia's biggest carrier by sales, operates another 14 weekly flights.
Tiger doesn't expect "an enormous increase" in passengers, because it will operate only one service initially, Chief Executive Officer Tony Davis told Bloomberg News.
The carrier is 49 percent owned by Singapore Air.
Jetstar Asia's shareholders include Australia's Qantas Airways Ltd and Temasek Holdings Pte, the Singapore state-owned investment company.
Singapore Air shares closed 1.1 percent lower at S$18.10 (US$12.50) on the Singapore Stock Exchange yesterday.
Malaysian Air declined 1.2 percent to 4.90 ringgit in Kuala Lumpur, while AirAsia fell 1.1 percent to 1.89 ringgit.
A return trip on Malaysian Air between Kuala Lumpur and Singapore costs about 830 ringgit (US$250), according to the carrier's Website. Singapore Air's fare for the flight, which takes less than an hour, is about the same, according to its Website.
Open the route to low-fare carriers is in line with a plan by the 10-member Association of Southeast Asian Nations to liberalize aviation services by 2015 in the region, home to more than 500 million people.
(Shanghai Daily December 8, 2007)
