TWO weeks before all barriers are lifted on the Singapore-Kuala Lumpur route to allow low-cost airlines free access, the big boys are slashing fares by up to 60 per cent to retain market share.

Malaysia Airlines fired the first salvo on Friday with its offer of $172 nett for a round-trip fare - $89 out of Singapore and RM199 out of KL.

Singapore Airlines will release tickets at $293 next week, the airline told The Straits Times.

This adds to a slew of other promotions and deals offered by Singapore's Tiger Airways and Jetstar Asia, as well as Malaysia's AirAsia.

The low-cost airlines which entered the Singapore-KL market in February - with restrictions on the number of flights they can operate - are boosting capacity from Dec 1.

While the price war spells good news for consumers, industry observers note that the deals coming at the year-end peak suggest airlines could be worried about too many seats flooding the market.

From Dec 1, travellers will choose from 29 return flights a day - about 10 more compared with the number now being operated.

SIA, SilkAir and MAS will operate a total of 15 services while the three low-cost carriers will do up to 14 a day.

MAS senior general manager for sales Bernard Francis admitted that maintaining healthy loads will be a challenge.

He told The Straits Times: 'We believe in liberalisation but filling up four million seats a year can be very challenging. If we do not do anything we will lose money on the sector'.

The decision to lower fares by more than 60 per cent is to 'stimulate travel demand, and to encourage more travellers to choose Malaysia Airlines' he said.

The airline is also offering its $89 deal for flights out of Singapore to the Malaysian cities of Penang, Langkawi, Kota Kinabalu and Kuching.

Tiger, Jetstar and AirAsia will start flying between Singapore and East Malaysia from later this month.

Liberalisation on the Singapore-Kl sector is a reality today because the Singapore and Malaysia governments agreed in November last year to lift all restrictions on the route as part of a wider move to liberalise the skies above Asean.