HK Express boss says long-haul LCCs financially viable

The CEO of Hong Kong budget airline HK Express, Andrew Cowen, says he does not think the fixed assumption that low-cost long-haul-carriers (LCCs) are financially unviable is correct.

His comments come as Singapore-based LCC Scoot began operating its new four-times-weekly Singapore-Athens route earlier this week, using a new B787-8 Dreamliner it received last month. Meanwhile, the UK-based arm of budget carrier Norwegian announced in April it would begin non-stop flights between London and Singapore starting this September.

Speaking to Business Traveller Asia-Pacific, Cowen said: “It is certainly true that the long-haul LCC pioneers have struggled with profitability, but that was true for the short-haul LCC pioneers also, who took some years to refine the LCC business model.

“There are vast numbers of price-sensitive travellers who enjoy travelling on low-fare, short-haul flights and have the desire to travel further, if only they could find lower fares and the ability to shape their journey to suit themselves with the choices LCCs provide.”

In the past, flights exceeding eight hours have tended to be seen as a “no go” area for low-cost models. Scoot’s new Athens service takes 11 hours 30 minutes, while Norwegian’s upcoming Singapore service is expected to take 12 hours and 45 minutes, according to The Independent.

Back in March, Qatar Airways CEO Akbar Al Baker said the threat from low-cost LCCs is short-term, stating: “It doesn’t work. They will not succeed.”

Meanwhile Malaysia Airlines boss, Peter Mellew, said that low-cost LCCs will always be small-scale, and that any increase in the price of oil will cause them difficulty. “It consumes vast amounts of column inches in the newspaper because if people advertise these low fares it makes a big splash, but the economics don’t make sense,” he said in a recent interview with Business Traveller.

Despite this, Cowen says the demand for and strength of LCCs is growing. “Legacy carriers have always downplayed the threat of LCCs, yet FSC (full-service carrier) market share has nonetheless been reducing in favour of LCC market share growth for decades in almost all geographies. I see long-haul LCC as a boon as through interline connection with regional LCCs, offering a far greater choice of low-fare destinations to travellers.”

And while HK Express itself currently does not operate low-cost routes, Cowen isn’t ruling out the possibility, saying that long-haul low-cost flights is “certainly something HK Express is interested in given the huge demand for low fares in the Hong Kong and Pearl River Delta region” – though for the time being the airline is focused on expanding its short-haul fleet and network over the next 18 months.

HK Express is also a founding member of the U-Fly Alliance, which comprises only LCCs. Chinese carrier Lucky Air, a U-Fly Alliance member, currently operates long-haul flights to Moscow – it began a new service on June 12 this year from Kunming that takes 10 hours and 10 minutes. “I have no doubt that more long-haul LCC routes will follow,” said Cowen.

Not all LCCs are as optimistic as HK Express, however. Earlier this week, Malaysian LCC Air Asia X CEO, Tony Fernandes, said that it the airline had decided not to pursue a return of its Europe services – which it cut in 2012 – and its previously targeted expansion to the US mainland.

In a series of tweets, the Air Asia X boss said, “We have decided that ultra-long haul is not relevant now. Won’t get seduced into price wars over London.

“We will stick to the 8 or 9 hours. Our focus will be to Asia with the odd route to Hawaii, which is actually 8 hours from Japan.

“We let the full-service guys fight it out over Europe. Many of them bleeding so much.”

Norwegian announces non-stop Singapore-London service

Norwegian Boeing 787-9 Dreamliner

Low-cost carrier Norwegian will begin flying long-haul non-stop between Singapore’s Changi Airport and London Gatwick starting September 28 this year. The new route is part of Norwegian’s wider UK growth plans and marks the first long-haul route to take off under its new Norwegian UK subsidiary.

The new service will fly four times weekly – increasing to five times weekly during the northern winter season – operated by a 344-seat, two-class Boeing 787-9 Dreamliner.

“Our transatlantic flights have shown the huge demand for affordable long-haul travel, so we are delighted to expand into new markets and offer our first route to Asia from the UK,” said Norwegian CEO, Bjorn Kjos. “Travel should be affordable for all so adding Singapore to our growing UK network will give passengers even more choice for affordable, quality travel to a range of global destinations.”

The arrival of Norwegian’s new route will see the total number of weekly flights between Singapore and London increase to 50 (during northern winter season). London is Changi Airport’s 14th-busiest route, servicing more than 1.2 million passengers in 2016.

“With changing consumer preferences and an improvement in aircraft technology, low-cost carriers have taken the opportunity to expand into the long-haul market,” said Changi Airport Group CEO, Lee Seow Hiang. “We will continue to work with our airline partners to exploit other such opportunities to grow their operations at Changi.” 

Details of the Singapore (SIN)-London Gatwick (LGW) route are as follows (all times local, details of fifth weekly northern winter service to be determined):

Flight No. From To Departs Arrives Days
DI7408 SIN LGW 0850 1530 Tuesday
0845* 1525 Friday
0815** 1455
DI7410 2340 0620+1 Wed, Sun

*From Sep 29-Oct 6, 2017
**From Oct 13-27, 2017

Flight No. From To Departs Arrives Days
DI7407 LGW SIN 1030 0615+1 Mon, Thu
DI7409 2230 1815+1 Tue, Sat

Norwegian launches partnership with No.1 Lounges

Norwegian partners with No.1 Lounges

Norwegian has launched a new partnership with No.1 Lounges, allowing its loyalty scheme members to earn Cashpoints and benefit from discounted lounge entry.

Norwegian Reward members booking lounge access online will receive 25 Cashpoints, and 15 per cent off the entrance fee at the group’s Gatwick, Birmingham, Edinburgh and Heathrow T3 lounges.

Those paying for No.1 Lounge access at the airport will get a £5 discount on the turn-up entrance fee, and will also earn 25 Cashpoints providing they present their membership number at the time of entry.

Premium passengers on the carrier’s US routes from Gatwick continue to receive free access to the No.1 Lounge in the South Terminal.

Note that No.1 Lounge entry at Gatwick, Edinburgh and Birmingham also includes Premium Security lane access.

For more information on the Norwegian Reward programme, read our interview with the carrier’s chief commercial officer Thomas Ramdahl, and head of Norwegian Reward Brede Huser.

The Scandinavian carrier recently announced an order for 30 new Airbus A321LR aircraft, which will be delivered from 2019, and which will be capable of operating the carrier’s long-haul routes between the US East Coast and Europe, Scandinavia and parts of Asia, and South America and Europe.,

Norwegian loyalty programme introduces new “rewards”

Low-cost carrier Norwegian has added a new set of benefits to its Norwegian Reward loyalty programme.

After completing six flights members will receive a 2 per cent CashPoint boost on all tickets taken over the following 12 months.

From then, for every six flights taken members can choose from a list of other benefits, which also last for 12 months.

These include free fast-track security access on all flights, and free seat reservation on all flights. Members can also opt for free baggage on all flights, once they have taken 18 flights.

Members can earn a total of eight rewards for flights taken over the previous 12 months, and the 2 per cent CashPoint bonus can be chosen up to five times (giving members up to a 10 per cent boost).

Activated rewards remain valid “for 12 months from the last time you had a sufficient number of qualifying flights”, and must be used at the time of booking.

For more information on the new rewards, click here.

Mark Caswell