Thai Lion Air (TLA) on Tuesday unveiled an aggressive marketing strategy that should take Thailand’s heavily contested budget air travel market by storm and trigger a price war.
The powerful new player, backed by Indonesia’s giant Lion Group, is primarily seeking to undercut whatever Thai AirAsia (TAA), the market leader and TLA’s direct competitor, offers.
TLA is offering fares that make TAA tickets look expensive, with applicable conditions that appear merciless.
It provides perks that cost extra at TAA, like a free checked baggage allowance, while showering travel sale agents with the industry’s highest commission rates.
The lowest tier in the 15-class fare structure for a one-way flight from Bangkok to Chiang Mai, TLA’s first route launching on Dec 4, costs a mere 500 baht, all-inclusive of extras like passenger service charges (airport tax) and VAT.
That is even cheaper than an overnight coach fare, which goes for about 800 baht.
The highest tier of TLA’s Chiang Mai flight is about 3,000 baht, applicable to last-minute booking for most popular flight slots.
The lowest all-inclusive fares for one-way flights from Bangkok to Kuala Lumpur and Jakarta, TLA’s first two international routes expected to start on Dec 18, go for 900 baht and 1,900 baht, respectively.
Numpon Rungsawang, TLA’s sales and marketing manager, said yesterday that the aggressive pricing strategy is essential to get attention and quickly consolidate TLA’s position in the marketplace.
He insisted that the low fares are not a one-off promotion, a gimmick normally adopted by low-cost carriers, but are “prices posted every day both on the airline’s website and by travel agents”.
He said the company’s policy is to be as straightforward as possible in fare-setting, trying to avoid the much-complained-about “hidden costs” that certain budget carriers like to charge.
The executive was tight-lipped on the sales commissions given to travel agents, TLA’s main ticket distribution channel, but said the “double-digit” rate is the highest of any budget airline in Thailand.
Because the parent Lion Group has bought new aircraft by the hundreds and the jets are fuel-efficient and have better seating capacity, TLA enjoys cost advantages, said Tawan Thianthong, TLA’s director of engineering.
The airline’s “soft” market debut has made an impact, with some 20,000 tickets for the three initial routes sold.
“With our appealing fares and easy terms, ours should be selling like hotcakes,” Mr Numpon told the Bangkok Post.
TAA CEO Tassapon Bijleveld yesterday acknowledged that TLA would be a “formidable” competitor. “But as I have always been saying over the past 10 years, we will be the lowest-fare airline,” he told the Bangkok Post, suggesting TAA would attempt to match TLA’s offerings.