STREET WISE
It's often easier said than done
Penetrating new markets has never been easy. So it's not surprising that chicken exporters were frustrated by the Export Promotion Department's recommendation they try to enter new markets, especially now that the European Union is levying heavier duties on Thai chicken.
Many exporters also remember the difficult time they had doing business in Russia, an emerging economy that has attracted huge interest from across the globe. Unlike in Western countries, where sell/order forms are standardised and can be used all over the globe, Russia, which had been hidden behind the Iron Curtain for decades, had no such a thing. To sell something in Russia, Thai exporters had to buy export insurance to guarantee that they would receive money regardless of whether the importers they were dealing with actually existed - thus raising their operating costs and eating into profit margins. Exporting services, meanwhile, could not be easier. At least that's what Thai AirAsia thought when it entered Burma, a promising new destination for adventurous travellers. Thai AirAsia last week launched its first flight to Rangoon, the former capital city of the country. Operating from Bangkok and without setting up an office in Rangoon, the low-cost airline has to appoint sales agents to sell its tickets to Burmese and foreign travellers. It has 10 agents at the moment. Yet soon after the new service started, the airline got its first headache. We learned from a company executive, who preferred to speak anonymously due to the sensitivity of the issue, that instead of quoting low prices for tickets, the agents were actually bidding up the prices. Tickets that the airline normally sells for only US$20 (Bt750) are now going for $80-$100 (which is cheaper than Thai Airways International and Bangkok Airways). At that price, how will Thai AirAsia grow? For that price, a traveller could fly round-trip from Bangkok to Hong Kong. And right now, for only $9, we can get round-trip tickets for Bangkok-Singapore. After paying $100 for a round-trip ticket to Bangkok, a traveller could be forgiven for expecting standard onboard service. Guess again! Low-cost airlines don't offer such services. And while Thai AirAsia is scratching its head over what to do about the situation, it is expanding its service coverage to Mandalay. The airline now expects a similar situation once it hires more sales agents. The airline is praying the agents will eventually have to cut their margins and quote lower fares, sooner rather than later. Only then would it be able to sell tickets and not cause false hopes among travellers who expect the better services that low-cost airlines can't offer.
achara_d@nationgroup.com.
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