Lufthansa and British Airways are testing a new class of airfare in Hong Kong, which may cut prices of regular economy-class tickets for flights from the city by nearly 50 per cent.
But there’s a catch: passengers will get no allowance for check-in luggage, board last, and forfeit selection of their seats, flight times or even carriers.
“We are asking the traveller to give us this flexibility and in return we give them a very attractive price. That’s how the deal works,” said Malte Haut, general manager for the Lufthansa Group’s three airline brands in Hong Kong, southern China and Macau, which include Swiss International Air Lines and Austrian Airlines.
Lufthansa – Europe’s largest airline in terms of passengers – and British Airways are among the first traditional carriers to alter their offerings with special discounts as passengers increasingly opt for low-cost fares and no-frills service.
Working alongside its Swiss and Austrian partners, Lufthansa wants its passengers to sacrifice flexibility – such as not knowing the exact airline or flight times until a few days before departure – to enjoy cheaper fares. The German airline giant is using Hong Kong as the first international market to test its concept.
In its trial programme, Lufthansa is offering a discounted one-way flat fare of HK$2,488 (US$317) to 13 destinations, including Barcelona, Milan and Venice.
Flights from Hong Kong to Lisbon under the scheme cost HK$4,976, but using the regular Lufthansa search function, the lowest price on the same selected date was HK$9,441.
British Airways is exploring additional enticements: lower fares for no checked-in luggage, boarding last, and seating choices left to the airline.
“We know that when our customers travel with us their needs vary from trip to trip,” the carrier’s chief commercial officer Adam Daniels said. “We need to ensure that the fares we provide reflect those differing needs so customers can select the best option for them on that occasion.”
Low-cost Norwegian Air Shuttle has emerged as one of the main challengers to traditional airlines, initially on transatlantic routes and now in Asia. Yet despite its popularity, Norwegian is under significant financial pressure amid heavy losses from its low fares and expansion.
US carriers have rolled out similar basic-economy fares, with a focus first on domestic flights while rolling out deals for flights to Europe.
Keen Hong Kong travellers stand to benefit from the higher number of cheaper long-distance flights.
Cathay Pacific Airways last month ruled out any immediate plans to introduce similar “basic- economy” fare deals that restrict typical booking options. But CEO Rupert Hogg noted customer behaviour had been “changing a lot” and forcing full-service airlines to reconsider conventional pricing models.
“People are travelling much more frequently and for lots of different reasons,” he said. “As people’s needs change and get more varied, clearly we will start looking at how best we can meet those needs.”
Polytechnic University aviation management professor Henri Hie believed established airlines including Air France, at which he formerly served as vice-president for Asia-Pacific, needed to be “very open-minded” in the current market.
With budget airlines flying long-distance routes more frequently and reaping greater success, he said, traditional carriers were starting to “follow” competitors’ offerings and travel conditions with “reactive pricing”.
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