Asia's Fare Wars

In Hong Kong, travel agents entice couples with Valentine Specials from Feb. 12 to 19. A romantic getaway to Paris for two on Cathay Pacific is sold at $1,035 -- that's 44% off the normal $2,328 low-season fare for two tickets. "I haven't seen these prices in 10 years," says Joseph Tung, executive director of the Hong Kong Travel Industry Council. "I don't rule out the possibility that fares may get even cheaper." Adds Johnny Choi of Qantas Airways in Hong Kong: "Now it's a Valentine's promo, next month it can be Mother's Day or Father's Day. We're fighting a war." The Australian carrier has halved return fares from Hong Kong to any city back home after cuts by Cathay, Singapore Airlines and China Airlines.

Are these fares really bargains? Yes, if you live in Hong Kong, since the SAR's currency is pegged to the U.S. dollar. But if your salary is denominated in, say, the baht, you would be paying more because of the steep devaluation of Thailand's currency against the greenback. Most international carriers operating from Bangkok have raised prices by an average of 1,000 baht to 2,000 baht. At the moment, travelers from Malaysia are also getting by-passed in the fare wars. The country has an air-ticket cartel operating under the airline industry's Market Development Program. Most major carriers -- 26 as of last count, but not, significantly, Singapore Airlines -- agree on one MDP price for each route.

If you have the money, though, February and March may be the best time to travel. "Flights would likely remain cheap between now and the Easter holidays [in April]," says Hong Kong's Tung. "Package tours are particularly good value. In normal times, a holiday to Europe or Japan will cost well over HK$10,000 [$1,294] per person. Now, a decent five-day trip is only HK$4,000 to HK$5,000." In Manila, a three-days-two-nights family package to Hong Kong on Cathay Pacific starts from $220 per person (Philippine travel agents price in U.S. dollars) -- and that includes hotel accommodation. Philippine Airlines offers a four-days-three-nights fare-and-hotel package to the SAR for $297 -- from $450 last year.

At the moment, Hong Kong is Asia's bargain center. "The number of inbound tourists has dropped significantly, leading to high-vacancy flights," explains Tung. "Filling planes is obviously the top priority of any airline, given Cathay Pacific's resolve not to cut frequencies and routes. The more tickets are sold, the more cost-effective the flights." They may not be profitable, but the losses are at least contained. Cathay is the key. In November, the Hong Kong carrier launched a two-tickets-for-the-price-of-one "Super Offer" from a number of cities to Hong Kong. "It brought over 70,000 visitors to the city," says Cathay spokeswoman Betty Law. Other airlines followed. "We would have lost market share," says Choi of Qantas.

Manila is another discount haven, at least in dollar terms. "Airline companies have been waging a price war even before the devaluation [in July]," notes Regaza, chief operating officer of Premier Travel. A carrier, United Airlines, has opted out -- it stopped operations in the Philippines this month. One reason for the price-cutting: the deregulation of domestic and international travel in 1995, which dismantled the de facto monopoly of former state-owned Philippine Airlines (PAL). New local airlines took off, including Cebu Pacific Air, operator of the 31-year-old DC-9 plane that slammed into a mountain Feb. 2. Now temporarily grounded, Cebu Pacific had dramatically reduced domestic fares, forcing PAL to do the same.

Another beneficiary of Philippine deregulation is Grand Air, which won the right to fly international routes along with fellow newcomer Air Philippines. Grand Air asks for $160 for a return flight to Hong Kong -- $30 less than Cathay Pacific. "Other airlines are slashing fares to remain competitive," says Grand Air marketing director Redj Kabigting. "For Hong Kong, there are Cathay, PAL and Emirates, among others. For Taipei, you have Eva Air and China Airlines." She also believes another round of discounts could happen if passenger loads remain light. Filipinos are not exactly lining up to buy tickets. "People are not in the mood to spend money now," says Regaza. The peso has depreciated more than 30% against the dollar since July.

Singapore has yet to see bargain-basement fares, though a few specials are surfacing. Travel agents there are touting United Airlines' two-ticket deals for economy-class return flights to Los Angeles ($715) and New York ($775) that are valid through April 30. Singapore Airlines is matching the offers, but only until March 31. Arthur Tan of travel agency Aviation Service, who calls the discounts "typical low-season stuff," does not expect more price cuts. Cindy Ng of Jetspeed Travel also believes current fares will hold steady or even increase if the economy, which has been affected by the neighbors' devaluation blues, improves. Prices typically change in June, with the start of the school holidays and the peak tourist season.

Of course, there is a downside for consumers. Sold tickets are often not refundable and dates cannot be changed. They are also valid for just seven to 14 days, instead of the normal three months to one year. And you must rush to buy them. A Hong Kong travel agent, for example, sent faxes Feb. 4 offering return flights to London on British Airways for $631. The deadline: Feb. 6. A BA ticket to the same city now goes for about $1,040, though prices at competing airlines are nearly half that. Be ready for inconvenient flight times. Morning departures to Europe from Singapore are cheaper than evening schedules -- you arrive at night, something many travelers don't want. Cheap flights leave on a weekday and are not very frequent.

Some of the really cheap flights can be costly in other ways. You can fly from Singapore to London and back on Malaysia Airlines for $480, for example, about half what other carriers charge. But you need to stop in Kuala Lumpur for a connecting flight -- and run the risk of being left behind if your plane is delayed. You would then need to stay overnight in Malaysia. "On cheap tickets, the airline will not pay for your hotel," warns Tan. A return ticket to Bali from Singapore costs $389 on Singapore Airlines. Indonesian carrier Bouraq charges just $240 -- but you have to rough it inside a vintage Russian-made plane. Still, bargains are bargains. You may not see these cut-rate prices again.

-- Reported by Law Siu-lan/Hong Kong, Wilhelmina Paras/Manila, Andrea Hamilton/Singapore and Michele Zack/Bangkok