Airlines may adopt 'wait and see' stand


  • Nation
  • Sunday, 23 Mar 2003

BY JANE RITIKOS and SIM LEOI LEOI

KUALA LUMPUR: The war in Iraq is not expected to have a great impact on air travel in the country and major airlines are likely to adopt a “wait and see” policy before deciding to revise their fares due to uncertainties over the duration of the conflict. 

The Transport Ministry, however, feels that the war may cause oil prices to go up and insurance companies may increase airline insurance premiums. 

It said airlines would wait for another week or two for the “dust to settle” before they could make any decision. 

Transport Minister Datuk Seri Dr Ling Liong Sik said the effects of the war had yet to be seen and flights to inter-Asia routes were operating as normal.  

SPECIAL GUEST: Dr Ling (front row, centre) at the Sheffield University graduation ceremony for Malaysian students in Kuala Lumpur Saturday.

“I believe the effects won’t be that bad ... to air travel as well as to shipping in the region,” he said. 

However, Dr Ling said the war might cause an increase in oil prices and insurance companies to increase airline insurance premiums. 

“International bodies, including the International Civil Aviation Organisation have held discussions with the major insurance companies to ensure the increase in the premiums is not to the extent of preventing the airlines from operating,” he said. 

Dr Ling, who is also Tunku Abdul Rahman (TAR) College council chairman, was speaking to reporters after attending the Sheffield Hallam University graduation ceremony for Malaysian students as guest of honour at the Shangri-la Hotel here yesterday. 

A total of 587 graduates from TAR College, who underwent a special top-up programme in collaboration with the university, will receive their scrolls during the two-day convocation.  

On Wednesday, Dr Ling said the Government would not hesitate to step in as “insurers of last resort” in order to get airlines off the ground should the industry get paralysed by crippling increases in insurance premiums on account of the Iraq war. 

Transport Ministry parliamentary secretary Datuk Donald Lim Siang Chai said the operating costs for airlines would increase if the war lasted longer than predicted by the United States, due to longer fly routes, rise in worldwide prices of oil and insurance premiums and a drop in passenger load. 

“But all the airline companies are still monitoring the situation and they are reluctant to take any drastic action now. 

“For instance, if Malaysia Airlines was to suddenly increase its fares, many passengers will probably opt for other airlines and they will start losing out,” he told The Star yesterday. 

The airline industry, he added, was unsure how to act as they did not know how long the war would last. 

“Besides, the pricing of international tickets is dependent on market forces and not government control. At present, that market is very cautious,” he said.  

Malaysia’s national carrier had already announced that four flights linking Cairo, Istanbul, Dubai and Beirut had been cancelled due to low demand.  

Asked if some airlines could use rising oil prices as a reason to increase fares for local destinations, Lim said the pricing for the domestic sector was controlled by the Government. 

“Any increase in these ticket prices will thus have to receive the approval from the Government,” he added.  

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