Yesterday (1st Dec 2008) the Kuala Lumpur- Singapore air route was fully opened, with new services to East Malaysia also.
The route was originally dominated by 2 Singapore Airline (SIA) and Malaysia Airline (MAS) until the partial liberalisation in Feb'2008. Budget airline, including Air Asia, Jetstar Asia, Tiger Aviation, etc started to have a share of the lucrative route. Personally, I would think the airfare to go down further. This is supported by free market theory, where a new equilibrium price is going to be achieved subsequent to the changes on the market structure.
Restrictions on the supply of budget airline has been lifted, the changes in supply factor has shifted the supply curve and where would be the equilibrium price?
The liberalisation would definitely increase the mobility and business-flow in-between both countries, given that the low-cost carriers makes flying more affordable. As what Air Asia slogan is: ' Everyone can fly'.
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