How can AirAsia sell an international flight for $12?
And what does this mean for frequent flyers?
This morning, discount carrier AirAsia launched a sale on flights between Avalon (Melbourne's other airport) and Kuala Lumpur. For dates from December 2018 through to August 2019, seats are selling for just $99. (For the full range of fares, check out our travel team's full summary of the sale.)
What makes this really astonishing is that just $12 of this is actually the fare. The remainder comprises airport taxes and fees.
For your $99, you don't get any checked baggage, seat selection or meals. If you pay with a credit card, you'll also be hit with a $10 handling fee. It's still an insanely cheap fare though.
Obviously, there's no way for an airline to make a profit when it's charging $12 for an 8-hour international flight. So how is this sustainable? AirAsia is keen to promote the new route, which it launched earlier this year, and undoubtedly it will be seeing some subsidies and discounts from Avalon itself. But even that won't make a $12 fare viable, so what gives?
Firstly, AirAsia goes out of its way to flog you those extras like seats, meals and baggage. Here's what pops up as soon as you select a flight:
In this case, the $274 Premium Flex option serves a specific purpose: to tempt passengers to go for the $63.40 Value Pack. This is what's known as "decoy pricing".
Secondly, scoring your return flight may not always be as cheap. I did see lots of examples where the return to Avalon was a similar price, but there are dates where the price goes up.
If you're trying to build a points balance with Qantas or Virgin, then this might not seem much use to you even if you're based in Melbourne. However, it's worth bearing in mind that you could take a super-cheap flight to Kuala Lumpur and then switch to a reward flight to somewhere else. Malaysia Airlines is a member of the oneworld alliance and often has good rewards availability, so that's an option Qantas fliers in particular might want to consider.
Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on finder.com.au.
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