Rock-bottom airfares hurt airlines in long run


POSTED: Friday, August 28, 2009

I see with bewilderment that Mokulele Air has introduced a $299 (highly restricted) fare for unlimited travel good for all the month of September. It was promptly matched by Hawaiian and go! with a $24.99 fare per sector. This is obviously good news for the consumer and, whatever strategy there is behind this new low fare, it once again highlights the essence of competition.

And, as I have said many times before, I believe in competition. Competition is good for the consumer; it keeps prices in check and improves the quality of the product. But I just hope that this new reduction is just a temporary fare cut and not a fare war. Because as we all know, in a fare war there are no winners, only survivors. Consumer benefits will be temporary but, should competition be reduced or eliminated, they will have to pay back the money they have saved with interest.

Is this $24.99 fare realistic? I don't think so. Is it sustainable? Most definitely not.

The real way for an airline to compete should not be by throwing into the market those artificially low fares that smack more of an act of desperation than an intelligent marketing ploy.

They should compete with prices that are affordable, sustainable and with the innovation, quality and reliability of their service. That is to say, healthy competition without dumping prices.

Airlines should come to their senses and replace fare wars with fair wars. They can be competitive by implementing rigorous cost control and offer the public a clearer and comprehensible fare structure.

In this unrealistic scenario of illogical fare dumping, for some airlines this strategy could backfire and they could get seriously hurt from self-inflicted wounds.

As I said, in a fare war there are no winners, only survivors.

Franco Mancassola, founder of Discovery Air and Debonair Airways, also was vice president of international operations for Continental Airlines and World Airways. He lives in Hawaii Kai.