[transtraxman]

This item of news provided by BT might come as a surprise to many…..
https://www.businesstraveller.com/business-travel/2019/06/24/lufthansas-eurowings-to-withdraw-from-long-haul-market/.

Some would say that Lufthansa did not even give the airline a chance to prove itself. However, they have decided that the losses were too great to admit the possibility of success.

The following article is the best I have found which looks at the problem of low-cost long-haul flying. It says basically that LLC long-haul cannot work as the majors can counterreact in so many ways to make the flights inviable.

“Did Lufthansa Group Overreact to Low-Cost, Long-Haul Threat?” (Skift, 25 June 2019)
https://skift.com/2019/06/25/did-lufthansa-group-overreact-to-low-cost-long-haul-threat/

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alanred13, tomwjsimpson

[AMcWhirter]

Some years ago I wrote a piece for the magazine which questioned the viability of low-cost long-haul.

We published another piece in the current June (2019) issue. [Paywall] It explains the situation from the European perspective.

Aviation: Low cost, high stakes

But a few major airlines still involve themselves with long-haul low-cost. JAL is traditionally a conservative airline yet it too will launch budget subsidary: Zipair.

Japan Airlines’ new budget carrier Zipair unveils livery and uniforms

JAL to launch low-cost long-haul carrier Zipair Tokyo

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tomwjsimpson

[canucklad]

For me there’s 2 separate stories here. And both are beginning to converge……

Story 1.
LCC starts with the classic short haul business model and then dips its toes into the long haul sea. It quickly realises that in order to compete with the established legacy carriers at a reasonable cost point it’s going to have to invest in the customer experience — A classic example of this is ,the fine Westjet

Story 2.
Legacy carriers start to panic about market share and brand reputation so dabble into the LCC world by re-inventing themselves as Level, Rouge , Scoot , and now Zipair . And by separating it’s LCC brand from the mother brand it can safely implement cost savings by pro-actively promoting a diluted service.

Neither strategy makes business sense. Anyone who has ever been involved in brand management will tell you that you should play to your strengths . By confusing your established target audience you risk losing loyalty and if you don’t replace them with new clientele buying into your new message you’ve double whammied yourself.

I suspect that’s the conclusion the LH big wigs arrived at. Why have siblings fighting each other . As any parent knows, no one wins !¬

[AMcWhirter]

canucklad – Re: Story 2

Another example is Joon … branded as the airline for millenials.

It was started under previous AF management for both long- and short-haul routes.

But when the new CEO took over Joon was axed.

In fact Joon’s final flight is later today.

Final flight for Air France’s subsidiary JOON, the airline for millenials

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sparkyflier

[SimonS1]

Numerous business models have been tried over the years but few seem to work. It seems to boil down to:

1. Global full service airlines. Made more efficient by 10 across, more fuel efficient aircraft.
2. Low cost, short haul. Based on intensive use of aircraft (20 min turnaround time), PAYG catering and dense seating.

Gradually most airlines seem to be falling in with this – for example BA is in essence a low cost carrier on short haul with a few tweaks like connecting flights, empty seat/catering in ‘business’, and a loyalty scheme.

Not to mention that these days it takes legislation like EC261 to force airlines to behave sensibly….but many people would these days place airlines along side the banks and utility companies when it comes to quality of service.

Most other models seem to have failed. The all business class airlines are mostly gone (MaxJet, SilverJet, L’Avion, Privatair etc) and BA has reduced the LCY service to 1pd. The long haul low cost hasn’t exactly been a roaring success, several airlines are gone/restructured (Eurowings, AirAsia, Nationwide, Oasis, Primera) and those that remain like Norwegian aren’t exactly flush with cash.

Eventually I imagine someone will crack the model but until then it is just salami slicing of costs. Low cost on board, paying for seat allocation, dense seating/F being downsized, lower quality lounges and so on. You get what you pay for, I guess…..personally I would never pay $100 more for a ticket that includes a $5 airline meal and a free G&T but each to their own.

[AircraftLover]

Few low-cost airlines achieve success in the long term
High standards of safety and service cost money
A Boeing B-787 airliner costs US$248.3M

Flying long-haul involves complying with many different aviation regulators
And requires to conform with more complex regulation for the aircraft, for the cargo, for the crew, and for the passengers

Low-cost airlines have changed the aviation industry, making unnecessary travel a habit

Worldwide, in 1990, there were 1,025 billion passengers
In 2017, there were 3,979 billion passengers

https://data.worldbank.org/indicator/IS.AIR.PSGR

[SimonS1]

[quote quote=945198]Few low-cost airlines achieve success in the long term

High standards of safety and service cost money

A Boeing B-787 airliner costs US$248.3M

Flying long-haul involves complying with many different aviation regulators

And requires to conform with more complex regulation for the aircraft, for the cargo, for the crew, and for the passengers

Low-cost airlines have changed the aviation industry, making unnecessary travel a habit

Worldwide, in 1990, there were 1,025 billion passengers

In 2017, there were 3,979 billion passengers

https://data.worldbank.org/indicator/IS.AIR.PSGR[/quote]

Not sure I agree with any of that.

There are several LCCs that have been successful in the long term (both profits and share price). See Ryanair and Easyjet for example.

I don’t see what relevance the price of an airliner is here. All airlines have to acquire them.

As for unnecessary journeys, well others would argue that it has actually brought air travel beyond the provenance of the rich. In fact for pointless air travel I would instead look at those who undertake positioning flights to get ex-EU fares on the legacy carriers. That really is pointless…..

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cwoodward

[Author]

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