Dubai-Europe air prices fall, but fare war ruled out

Cyprus Air has slashed the cost of its flights to Europe from Dubai - but other airlines say they are not anticipating a price war and do not intend to follow suit.
The Cypriot airline is offering return fares to all its European destinations, including London, for Dh1,600, with a second "companion" ticket available for Dh1,200.
The prices are Dh750 cheaper than the company's lowest offer last year, despite a rise in fuel prices which has caused all airlines to charge an extra Dh50 fee to passengers to help salvage profits.
Cyprus Air business class ticket prices from Dubai to Europe have also been cut from Dh5,000 - which was last year's price - to Dh3,000, and passengers are being offered a free night's stop-over in Cyprus on the way to Europe and on the return journey.
Stavros Kyprianou, Cyprus Airways Gulf and Middle East Chief, said the deals - which run until 31 March 2001 - would not generate a price slashing war among Dubai's smaller carriers, but admitted the changes have been made as a reaction to other companies' cost cutting practices last year.
"Last year, other companies did slash their prices and we stood our ground, but were badly affected by it," he said.
"This year, we've decided to cut our prices because we lost the market and we need to get it back. We are still charging the Dh50 fee for fuel in the ticket price though."
He explained: "We are a small operation in Dubai, with only two flights a week operating from the emirate. This means we only have a small market anyway, and will not pose a steep competition in the face of other airlines.
"The deal isn't permanent and we are not offering it during the Christmas and New Year season, which runs from December 15 to January 10. Economy class tickets will increase in price by Dh200 during this period."
Zulsiqar Ali Khan, Pakistan International Airlines manager for Dubai and the Northern Emirates, said: "We cut our prices to Europe last year to Dh1,390, but we won't be doing the same thing this year despite what other companies do. Fares to Europe currently stand at Dh2,000 and they won't be changing.
"The reason is that if you cut prices by 30 per cent, you have to make up for that in passenger traffic, and there simply isn't the business at this time of year.
"It can also have long term effects, because if prices go that low, it's not profitable and it's difficult to raise them again. Customers want the same deal next time they fly, and go elsewhere when they find prices have increased.
"What all we small Dubai carriers need is to be part of a yield improvement committee like the major carriers, because things need to be regulated in order to create healthy competition."
Joanne Mitchell, Sales Manager for Alitalia, agreed with Khan.
"October and November are a slump time, and it's a period where a lot of airlines tend to panic and cut prices. However, business does pick up again during the holiday season, so bringing down prices is not necessary."
She added that fuel prices in particular were already badly affecting business, and making it difficult to bring down fares.
"At the moment, fuel prices are crippling airlines and even the major carriers are screaming about the cost of fuel. Considering a surcharge of Dh50 has been introduced to help companies with profits, it doesn't seem sensible to cut things even more."
Arijit Munshi, Corporate Consultant for KLM, said larger carriers would also remain unaffected.
He explained: "These smaller airlines' prices are not regulated, because they do not form part of the Yield Improvement Committee. They are third tier carriers because their fleets are small and their operational expenses are low, which means they can offer very cheap prices.
"An average return flight in low season for large carriers, is set at about Dh3,450. We have different schedules, and larger networks to maintain, which is why costs are higher.
"However, we also cater to a different market and carry lots of corporate traffic, which is not the case with the smaller airlines because they can't offer an everyday service. In this way, their price cutting does not affect us."