[Flightlevel]

Long haul low cost is only profitable when enough pax will buy your discount ticket (& service) to fill the ‘plane, hence the move to 10 across. It also depends on the currency conversion that was bad for recent flights to Oz.
That’s enough pax at a low enough price to compete, and legacy carriers know they can sell some very low fares because the yield from business and first subsidises those very low fares & you still get good on board service & air miles!

[AMcWhirter]

@Flightlevel I assume from what you are saying that you were using AirAsiaX between Asia and Australia.

I say that, because AirAsiaX failed in Europe even though it achieved good load factors. The “sweet spot” as AirAsiaX’s CEO called it, is for a flight length of around eight hours.

Also nowadays it’s no longer true that airlines cross-subsidise their fare yield between the classes.

I have written a detailed piece on economy class over the years (see the March edition of Business Traveller UK).

Increasingly, it’s become clear that the legacy carriers are reducing costs in the economy cabin in order to compete.

[Flightlevel]

With respect (I don’t fly Air Asia) Good load factors don’t fill the’plane, of course fare classes subsidise each other, their overall income pays for the flight, pays for the airline. and provides the profit, no airline says they make a profit on first class – because you can’t fly an airliner first class only, and rarely business class only. Legacy carriers cannot compete directly with the low cost carriers so they provide better service, however some very low fares (with restrictions) can equal LCC fares & reduce the opportunities for LCC’s to compete.

[AMcWhirter]

@Flightlevel

You appear to have misunderstood the point I was making and I would suggest you read my article on long-haul economy seating in the March issue of the magazine.

You are correct in saying that the airlines have been cross-subsidising their classes for the past 20 or so years.

But there are now changes afoot in Europe, North America and the Gulf.

Take the conventional 299-seater B777-300ER as operated by BA. It accommodates 114 premium passengers and 185 economy passengers. The ratio of premium to economy seats suggests cross-subsidisation.

Then look at Air Canada’s 458-seater B777-300ER. There are now fewer premium to economy class seats (just 56 to 398) so the latter must pay their way.

These examples show how the ration between premium to economy class has declined

A new generation of slimline seats is further driving down costs in the economy cabin as we wrote here last November.

http://www.businesstraveller.com/news/101041/klm-revamps-b777-economy-seating

And now Emirates is looking to install new lighter economy class seats on its A380s.

Speaking at this week’s ITB trade show in Berlin, Emirates CEO Tim Clark told Aviation Week, that these seats offer a 30 per cent weight saving (compared to the seats currently installed) and that alone would remove three metric tons of weight out of the aircraft.

[PeterCoultas]

martinJ:

100% correct – it is the ridiculous cost of one ways on the so-called legacies that is the problem – when RTW’s were sensible prices (and with 29 sectors etc) it was possible to circumvent this nonsense – sadly no longer. Long live LCC’s until the legacies get their price structures more user friendly

[canucklad]

The title of this particular thread is….Long-haul low cost to return to London?

Dependent on you classify their business model, one could argue it’s never left……Others have failed, yet Air Transat has successfully traversed the North Atlantic for over 20 years, from LGW and other airports up and down the UK.

And as I ranted elsewhere in the forum, their aircraft are set out more comfortably than AC, a legacy carrier. Factor in that AC’s entry price point is closer to Air Transat’s higher fares and you have to think about what AC is doing wrong.

The difficulty that airlines now have in a very competitive global market, is deciding were to pitch their offering, and specifically which demographic audience to target. The best way for me to try and put over my point is, using another industry as an analogy…..

The huge “ legacy “ supermarket chains now find themselves struggling, because of the emergence of the LCC’s called Lidl and Aldi.
Let’s take Sainsbury’s and to a much bigger extent Morrison’s as an example, they now can’t figure out what model and marketing strategy to adopt. As a result their offering confuses their existing loyal customers, who become disenchanted and try out Aldi. Pleasantly surprised at the quality and the cost paid, they spend more in Aldi and less in their traditional legacy store.

This is exactly where BA and othersnow find themselves. The Morrisons of the Airline world.
Ryanair and EasyJet in particular, don’t have to do much; they just need to wait until the Legacy carriers tip their once loyal, now disenfranchised customers into their basket so to speak.

Unfortunately for Morrison’s,, Sainsbury’s and Tesco, people who are loyal to Aldi, will stick to Aldi because Aldi never let them down. They can only exceed their customers expectations.

[Flightlevel]

I’m sure in your analogy BA consider themselves Waitrose if not Harrods! The LCC’s are now moving upmarket with business class offerings and that is simple within the EU at lower service levels, and maybe Air Transat has managed from Canada, however it is much more difficult on long haul if service standards are lower because the business customer really wants the better service available from legacy carriers.

[canucklad]

You’re totally right Flightlevel , BA ‘s leadership team probably do associate themselves closer to Waitrose than say Asda . And if you’re sitting in their Concorde lounge you’d probably agree. But,i’ll stand my comparison. They definitely are Morrison’s in my opinion. Once had a good name for service and quality , but sadly started to haemorrhage customers because they sacrificed quality and price in order to drive costs down and profit margins up. And naively assuming their core business customers wouldn’t notice.

Interestingly, you’ve also mentioned the LCC’s actively chasing legacy airlines core business customers by upgrading their offerings. IMO, this is also fraught with risk. Easyjets and Ryanairs core business is a group of passengers who used to fly democratically all together. Now, by introducing certain products, you could argue that the LCC’s have created a two tier class system by stealth ,potentially antagonizing their core old fashioned loyal customers.

To mix my analogies further, the airline business in the UK is rapidly resembling Westminster politicians. Whether you vote blue,red or now indeed yellow, what you end up with is pretty much the same old guff. Our legacy politicians have pretty much managed to disconnect with the majority of us. Sadly a story of trying to be a Jack of all trades and master of none.

And finally from east comes another option that appeals to the disenfranchised.

[AMcWhirter]

I wonder if Air Asia X will ever make up its mind ?

The carrier continues to talk about a return to Europe. But is now referring to “an exclusive destination” (whatever that might mean) rather than London.

In other news the carrier is applying to operate to Honoulu. Air Asia X already flies to Osaka so It suggests that Honoulu would see the route extended.

But if it were to gain Osaka-Honolulu fifth-freedom traffic rights I can’t see the local Japanese carriers surrendering market share without a battle.

http://www.thestar.com.my/Business/Business-News/2015/04/06/AirAsia-X-to-fly-to-Hawaii-exclusive-destination-in-Europe-by-December/?style=biz

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