Alex On… can the long-haul LCC model survive ?

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This topic contains 20 replies, has 11 voices, and was last updated by  AMcWhirter 2 Apr 2019
at 13:25
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Viewing 15 posts - 1 through 15 (of 21 total)

  • AMcWhirter
    Participant

    I decided to post this today in light of recent events.

    By now we all know about the problems at Norwegian.

    Then came news of Wow Air which we reported this morning.

    Wow Air uncertainty continues as Icelandair talks dropped

    And now comes news that budget carrier HK Express *may* be about to be taken over by local carrier Cathay Pacific. (HK Express operates both short- and long-haul services)

    https://www.scmp.com/news/hong-kong/transport/article/3003219/cathay-pacific-agrees-deal-take-over-budget-airline-hk

    Little wonder then that Ryanair and EZY (two of the most successful LCCs) have never bothered with long-haul.


    AlanOrton1
    Participant

    IAG have a long haul LCC in Level.

    Interested to see if this does succeed as it hasn’t been going all that long.


    rferguson
    Participant

    One thing I think any new carrier needs – LCC or full service, long or short haul – is very very deep pockets. Most airlines do well at filling their jets profitably in the high season then struggle in lower seasons. Throw in a terror attack, war or significant rise in fuel prices and this could be disasterous for any airline and obviously those with the least in the bank are going to go under first usually by their lenders getting nervous and grounding their fleets of leased jets.

    I’m not sure how Level will do as an independent outfit but I guess it’s worth mentioning that one of the worlds most successful long haul LCC’s is also an ‘in house’ airline or a full service carrier. Jetstar.

    It benefits from the deep pockets of their parent Airline. It has a trusted name in a backer in order to get beneficial financial and contracting deals. And in the case of level it even gets its aircraft from in house. The parent airlines are able to shift assets around as necessary and in the case of Jetstar QF have started up routes by JQ that QF cannot operate profitably with their own metal and crews.

    There are of course big differences between Level and JQ. JQ predominantly compliments QF services from QF hubs whilst Level (currently) only flies longhaul from airports that are not BA hubs. That of course could always change.

    2 users thanked author for this post.

    Folium
    Participant

    Apart from Jetstar in the Pacific region you also have long haul LCCs such as AirasiaX, Scoot and Lion in their various guises.

    Now it seems that CX will also enter the fray with Hong Kong Airlines as an announcement on its acquisition may be posted Tues am.


    TiredOldHack2
    Participant

    I remember that Monarch, on whose grave I have cheerfully danced, inadvisably went into long-haul operations, which (I believe) accelerated their demise.


    canucklad
    Participant

    To answer your question Alex ….. No

    And elaborate by replying with a question of my own ………

    What is the point of long haul LCC’s ?

    1 user thanked author for this post.

    capetonianm
    Participant

    A few years ago when I was (inadvisedly) running an airline management course for a business school this was the topic of one of our discussion sessions.

    Some of the bright eyed idealistic youngsters thought it could work, by the end of the course the general consensus was that the model was not sustainable.

    That said, some legacy operations are also not sustainable without government support.


    cwoodward
    Participant

    Alex, Hong Kong Express does not not operate long haul flights.
    It operates a fleet of leased A320s only and to describe any of its destinations as even medium haul is pushing it a bit.
    The sister airline (basically the same ownership – at the moment) Hong Kong Airlines operates long haul but positions itself these days as a full service airline.


    canucklad
    Participant

    Long Haul LCC’s are todays answer to those days of yore when working class people chose to buy a ticket on an overnight National Express bus from somewhere grim Ooop North to the glamourous sunny happy Dan Saff.

    The bus offered an affordable escape route for hankie hatted gents and fag dangling wife’s to drag their snot smothered kids away from the mundane misery of everyday life for a week .

    Once the wretched journey eventually reached the stop at the glamourous Watford Gap , and the sun rose on their impending holiday , happiness would warm their hearts knowing that the money they saved because they didn’t take the train , meant they could now afford a 99 in their cone .

    That’s the audience that LCC’s need to attract !!

    But , in this day and age , how on earth are the Grimshaw family going to be able to afford their holiday at the end destination of where LH LCC’s choose to fly?

    Simply put, those who can afford a week in Florida, or Thailand or South Africa can afford not to gamble with their comforts by booking on a LCC.
    WOW, Norwegian and others should have learnt from the charter airlines of the past…..but they haven’t!!

    2 users thanked author for this post.

    AMcWhirter
    Participant

    What is the point of long haul LCC’s ?

    As the conventional airlines lower their economy class standards and prices there is less of a gap between them and LCCs.

    Alex, Hong Kong Express does not not operate long haul flights.

    Apologies. My mistake. I was confused between the two carriers.

    Hong Kong Airlines ending flights to Auckland

    Simply put, those who can afford a week in Florida, or Thailand or South Africa can afford not to gamble with their comforts by booking on a LCC.
    WOW, Norwegian and others should have learnt from the charter airlines of the past…..but they haven’t!!

    There will always be travellers who are attracted by price. Viewed globally it’s not an easy question to answer.

    For example, Norwegian failed with its LGW-Singapore service after only a few months but out of Scandinavia its Bangkok route has managed to operate for many years so far. Air Asia X had to retreat from Europe but, so far, Scoot is continuing with its two routes (Athens and Berlin) from Singapore.

    Long-haul LCCs do appeal to millennials though. But as we have reported previously the conventional carriers are competing with HBO tariffs.

    My son who is an avid user of Norwegian for his transatlantic travels recently found he could more of less match the LCC price by booking an HBO fare using a Delta/Virgin Atlantic code-share flight.

    That shows what the long-haul LCCs are up against (at least on transatlantic routes).

    2 users thanked author for this post.

    canucklad
    Participant

    That shows what the long-haul LCCs are up against (at least on transatlantic routes).

    And Alex, that’s where the long haul LCC’ss find themselves. Rock and hard place comes to mind.

    In a way, it’s the exact opposite of the relationship short haul LCC’s have developed with legacy short haul carriers. And it’s mostly down to perception.

    Short haul, the majority of us will justify opting for the LCC’s as we head of to the Costa’s or for a cheap city break away because we tell ourselves that “you get what you pay for, and it’s only a couple of hours”

    It allows us to justify these many mini breaks, that inevitably cost us more than we first budgeted for, all because the base price was worth it. The LCC’s created a new target audience and business has boomed.

    Hence the reason that the legacies have fought back by trying to convince us that you can fly cheap and maintain quality.

    Long haul is a different kettle of fish. For most of us, travelling long haul on leisure isn’t so much an impulse , more of a researched purchase.
    This puts the LH LCC’s at an immediate disadvantage.
    Because of the higher spend , as consumers we automatically become more conscious of “Value for money” and generally will justify paying more ( not much) to guarantee a better quality of service for our bigger spend.
    And unfortunately for the LCC’s most consumers align reliability and quality to the major legacy carriers.

    Hence the reason, LH LCC’s don’t dare market long haul travel in a Ryanair style , but try and enter into the USP’s of the legacy carriers by marketing add ons to raise the quality of the overall proposition . Exactly the opposite of how the short haul legacy carriers tried to meet the challenge of Easyjet et al.

    I wonder Alex, how your son’s perceived expectations of Delta/Virgin differ from what he expects from Norwegian . And I wonder what price saving differential would tip him in favour of gambling with a LCC instead of an established full fare quality airline ?

    1 user thanked author for this post.

    AMcWhirter
    Participant

    I wonder Alex, how your son’s perceived expectations of Delta/Virgin differ from what he expects from Norwegian .

    As someone who was brought up on taking Anglo-Scottish flights with Go he’s a fan of budget airlines.

    However he rates VS ahead of Norwegian. Another selling point was that he purchased a basic HBO rate and yet he was upgraded by DL staff on departure from LAX to what VS brands Economy Delight. The LAX-LHR flight was fully booked.

    I wouldn’t know his price point between conventional and LCCs on the transatlantic. But simply by using LHR rather than LGW meant a further saving on public transport fares.


    AircraftLover
    Participant

    I am not a big fan of LCC

    A high standard of airline safety and great passenger service, require a big investment

    I think that a long-haul flight operation is always more complex than a medium-haul flight operation, for many different reasons like logistics, network, aircraft maintenance support, regulation…


    rferguson
    Participant

    I am not a big fan of LCC

    A high standard of airline safety and great passenger service, require a big investment

    I think that a long-haul flight operation is always more complex than a medium-haul flight operation, for many different reasons like logistics, network, aircraft maintenance support, regulation…

    Absolutely.

    The two biggest factors that make short haul LCC’s so successful are their aircraft and crew utilisation. With very short turnarounds and flying in and out of secondary airports the LCC’s can often squeeze in an extra sector or two a day versus the legacy carriers.

    Longhaul is much more complex. LCC’s can’t really squeeze in additional aircraft utilisation (and thus revenue) as they can on short haul flights. Due to the nature of long haul flying an airline is likely to encounter noise restriction airport closings at one end or another. Thus the choice has to be made to schedule your flight at a time that allows a direct turn (but that may not be a favourable time for customers) or keep your aircraft on the ground for hours to comply with restrictions.

    Crews also have to abide by international regulations. Whether you are a LCC or a legacy carrier flying between London and NYC you are still going to have to overnight your crews in suitable accommodation.

    There are ways around this of course. When I flew Jetstar from Sydney to Denpasar a few years ago almost the entire crew were BKK based. Only the CSD and one other crew member were Australian based. The BKK based crew basically fly patters of up to 21 days from their base in BKK throughout the JQ longhaul network.

    I remember reading an interview with Air Asia’s Tony Fernandez a couple years ago (when Air Asia’s return to LON was on again off again) and he stated that ‘medium haul’ flights are the ‘sweet spot’ for Air Asia as flights of up to seven or eight hours still allow them relatively high aircraft utilisation versus say a twelve hour KUL-LON flight.

    This seems to hold true for JQ also. Despite many rumours of them entering the US or European markets they haven’t and their longest flights are around the nine hour mark.

    Another facet is what passengers are prepared to pay. For a flight of up to four hours I’d probably go with the cheapest that suits my needs. If I found a good premium deal on a LCC for a flight of up to maybe seven hours I might give it a shot.
    But when it comes to overnight flights of ten, twelve hours whilst the fare is still an important factor I would rather pay more to factor in higher comforts

    5 users thanked author for this post.

    K1ngston
    Participant

    Interesting thread, as someone who uses Jetstar in and out of Phuket either to Singapore or Jakarta I am also a big fan of their service, as the mantra says “you get what you pay for”

    I note that Norwegian have cancelled their service to Singapore, I did not know this, I certainly wouldn’t have flown them for that sector just curious as to why this particular service failed, I understand the price was good?

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