Asian airlines poised for hand baggage only fares?

27 Jun 2016 by Alex McWhirter
Will Asia’s conventional airlines soon follow their European and US counterparts in adopting HBO (hand baggage only) fares ? I ask, because, Taiwan’s China Airlines (CAL) has begun trialling lower fares for passengers prepared to travel without checked luggage. In other words, those passengers who are prepared to travel with carry-on luggage will be charged less. Initially CAL has HBO fares on its Taipei to Tokyo Narita route. But CAL plans to extend its new HBO tariff to other routes. China Airlines Judging by the situation elsewhere other major Asian carriers like Cathay Pacific, SIA and Thai Airways will follow in CAL’s footsteps. However, it’s very likely, as is the case with conventional carriers in Europe and the US, that Asian carriers will restrict HBO fares to local or regional routes. Yesterday [Sunday June 26], Singapore Airlines (SIA) asked its customers via social media as to whether they would prefer to check-in or carry-on one piece of luggage. The idea was to gain passenger feedback. Most customers said they favoured travelling only with hand luggage because of time savings, easier connections and the fact that there would be no risk of luggage going astray. But those against cited a more crowded cabin with one Asian female saying that she preferred to check her luggage into the aircraft hold because she would then be able to carry more duty-free shopping. Singapore Airlines Why are these conventional carriers considering going down the HBO route? Because the situation in Asia is similar to that elsewhere. The past few years has seen a major growth by Asian LCCs (low-cost carriers). They have stolen a significant market share from their conventional rivals. As in Europe, the LCCs were the first to offer passengers a lower price if they travelled without checked luggage. And in the dog-eat-dog of the economy class marketplace, it is the headline or lower price which entices customers. CAL is the instigator of HBO fares amongst conventional airlines inside Asia. With little if any publicity it began selling HBO fares branded “Economy Let’s Go” last month for travel commencing on July 9. CAL’s HBO fares are lower and those passengers who change their mind (before travel) can purchase a checked bag (up to 20 kgs) for US$30. In previous times, HBO fares would have been unacceptable in Asia. That’s because air travel was a formal affair and reserved for the middle classes. But as in Europe, the advent of LCCs has turned air travel into a mere commodity. And now Asian travellers are making more and shorter trips within the region. According to aviation consultancy CAPA, Taiwanese rival Eva Air “is cautiously watching the development and is eager to see whether CAL will continue with this offering.” However, as we have seen in both the US and in Europe, once one airline starts offering HBO fares, others will follow. They may follow in a matter of months or years but follow they must because no airline can afford to offer a cost advantage to a rival. As CAPA notes, “History suggests that once fare unbundling starts [i.e. HBO fares, charges for catering and so on]  there is no going back.”,
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