Price wars?

The arrival of Virgin Airways in the region has raised the inevitable question of whether or not we will begin to see a price war on international routes.

  • E-Mail
By  David Ingham Published  April 11, 2006

|~||~||~|Most of us know, and have learned to begrudgingly accept, that we pay over the odds for air tickets here in the Middle East. Were I to buy a London-Dubai return flight in England, I could pay the equivalent of US $500 for it. Buy the ticket here in the UAE, however, and I usually end up having to pay double that. The arrival of Virgin Airways in the region has raised the inevitable question of whether or not we will begin to see a price war on international routes. Virgin brings with it a reputation for good service and value for money. The airline has set special introductory fares of around 2000 dirhams on its Dubai-London route, a sign, many hope, of things to come. Special introductory fares, however, are no indication of long term pricing policies. Will Virgin be able to keep up its low rates and does it really want to start a price war with Emirates and others? Probably not. The most important factor in the cost equation is fuel prices, which have rocketed in the last two years and have added significantly to airlines’ costs. At the moment, full service airlines simply don’t have room to move when it comes to cutting fares. We also have no idea what is said behind closed doors. Virgin is here with the support of Dubai’s aviation authorities, who may not take kindly to a new entrant undercutting the emirate’s own, very profitable flag carrier. Perhaps the most telling factor, however, is demand. Adding four Virgin flights a week to the Dubai-London route simply means adding extra capacity for which there is pent up demand. There is simply no need to reduce prices to attract customers. Rather than an all out price war, what we are more likely to see is a gradual softening of prices and the increasing use of special offers. Emirates has long since started offering one-off special prices on certain routes and offers discounts to members of its frequent flyer programme. Prices will only fall when the UAE gets to a stage where supply outstrips demand. Until that day, which may never come, we will continue paying too much for international flights.||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code