Low Cost Airlines
New long-haul low-cost airlines prepare for take-off in Scandinavia
9 August 2010 | So far, the only region where the low-cost, long-haul business model has truly taken off has been the Asia-Pacific. In Europe, airberlin is currently the sole low-cost carrier to have established a long-haul operation, operating 13 A330s (it also ordered 15 B787s). The airline uses its extensive domestic network to feed its long-haul flights from Dusseldorf to New York, LA, San Francisco, Vancouver, Dubai, Beijing, and holiday destinations in the Caribbean, Africa and Thailand. Airberlin also just entered the Oneworld alliance and, amongst others, will codeshare with American Airlines to feed/connect its passengers in the USA. Ryanair has been hinting to start trans-atlantic routes with a separate company (rumoured to be named Ryanair Atlantic), but has shelved these plans until 2015.
Now, two airlines in Scandinavia aim to take advantage of the Nordic region’s geographic location between North America and Asia (as Finnair successfully does with its ‘Via Helsinki’ hub). Norwegian, the fourth-largest low-cost carrier in Europe has plans to established up to 20 long-haul routes from Scandinavia to Asia and the USA, capitalizing on its large regional network. The airline plans to start operations in 2011, in time for summer season, and eventually may order up to 15 widebodies, possibly B787’s. Norwegian has listed New York and Bangkok as initial destinations and has also mentioned Miami, the American west coast, New Delhi and Beijing. Flights will mainly be from its Oslo-hub, but also from Copenhagen and Stockholm. Norwegian plans to operate a 2-class configuration, with prices from Euro 200/400 return in Economy/Business to New York.
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Thai Airways and ANA to set up low-cost airlines with partners
4 August 2010 | Thai Airways and Singapore-based Tiger Airways have joined forces to launch a new low-fare airline, called Thai Tiger Airways, in the first quarter of 2011. Thai Tiger will offer short-haul services out of Bangkok’s Suvarnabhumi International Airport and planned destinations include Chiang Mai, Phuket, Penang, Kuala Lumpur, Macau, Shenzhen and Chennai. THAI will have a 51% share in the new carrier.
ASEAN
Budget airlines are expanding rapidly throughout Asia and in 2009 accounted for 15.7 percent of total capacity (compared with just 1 percent in 2001), according to the Center for Asia Pacific Aviation. THAI has seen its market share on domestic routes drop from 80% to 50 % and its regional market share from 42% to 30 % over the last few years. Using the low-cost expertise of Tiger Airways will allow THAI to become more competitive in the fast-growing intra-Asian travel market, and prepare itself for the upcoming liberalization of the ASEAN skies in 2015. THAI already has a 39% stake in domestic low-cost airline Nok Air.
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Asia-Pacific long-haul low-cost airlines getting ready for further expansion
24 June 2010 | Asia’s fragmented geography makes air travel an attractive option. Especially low-cost airlines have allowed many Asians to travel by plane for the first time, and there is major scope for LCC growth on medium and long-haul routes as the rapidly growing middle classes of Asia are increasingly traveling longer distances. Market liberalisation is the other growth engine, with the opening of new routes between secondary destinations, especially in China, India and Southeast Asia.
Low-cost carriers already fly many 5-hour routes across Asia, such as Jin Air and Jeju Air from Seoul to Bangkok, and Tiger Airways from Singapore to destinations in Greater China. Indonesian low-cost carrier Lion Air also has plans to expand its regional network to China, Japan and South Korea. According to Airbus in 2009 Asian budget carriers flew an average 1,800 kilometres per flight. In comparison, the average flight length for Southwest Airlines (USA) was 1,019 km, and 978 km for Easyjet (Europe). The Asia-Pacific region is also home to 2 of the 3 long-haul low-cost airlines in the world, AirAsia X and Jetstar (airberlin is the third one). Read full article »
Low-cost airline Vueling departs point-to-point model, starts transfer service at Barcelona hub
11 June 2010 | Departing the traditional low-cost carrier business model which emphasizes point-to-point routes instead of transfers at hubs, Vueling Airlines will start connecting passengers through its base at Barcelona El Prat Airport from July 5, 2010. Passengers will have to buy only one ticket when booking the flights, and Vueling will connect baggage at no additional charge.
Vueling said that although the new hub model would result in new costs such as luggage handling and transfer counters at the airport, the additional costs are in line with its low cost base ethos. Says Vueling CEO Alex Cruz, “There will be no changes to our scheduling. We remain fundamentally a point-to-point airline. As a ‘new-generation carrier’ we won’t stop implementing ‘traditional’ products/services as long as we don’t break our main premise that a short-haul operation cannot survive today without obsessing on having the lowest cost structure.”
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Southwest ‘plane-vertises’ its bags fly free policy
26 May 2010 | While some low-cost airlines don’t shy away from turning their aircraft into flying billboards, Southwest Airlines is using its most visible assets – airplanes and ground support equipment – in an innovative way to advertize its ‘Bags Fly Free’ policy. The airline has put a “Free Bags Fly Here” slogan on more than 50 aircraft with an arrow pointing to the cargo bin, and also tagged around 1,000 luggage carts across its network with banners that say “I Carry Free Bags.”
Aimed at anyone who looks out the terminal window or the window from their airplane, Southwest’s ‘planevertising’ initiative is a smart way to target people at the time when they are most unhappy about having had to pay bag fees.
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More ‘re-bundling’: Low-cost carrier Germanwings launches bundled pricing
20 April 2010 | According to ancillary revenues specialist Collinson Latitude the first wave of ancillary revenue was focused on unbundling, but today’s air traveler is getting lots of confusing messages, so repackaging will make ticket fares simpler again. Collinson Latitude sees 3 phases in the development of ancillary fees (full presentation here): The first ‘product unbundling’ phase is about introducing fees for services such as ticket booking, baggage check-in, and seat selection. In the second ‘product enhancement’ phase passengers can purchase paid extras such as priority security, lounge access and inflight Internet. The third stage is a ‘repackage / rebundle’ phase in which airlines rebundle paid services in packages.
Network carriers such as United and Air New Zealand (ANZ) are among the first airlines to introduce bundled fares. For example, United Airlines’ ‘Premier Line’ travel option combines checked luggage, airport fast-track and extra legroom. ANZ recently introduced new bundled fares on its short-haul routes that range from seat-only to the full works.
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Kuwaiti ‘no-frills chic’ airline Wataniya starts flights to Europe
In a home region where Gulf Gullivers Emirates, Qatar Airways and Etihad are rapidly becoming major global players, Kuwaiti carrier Wataniya Airways takes a no-frills chic approach towards flying. Launched in January 2009, the airline’s fleet of A320 aircraft are configured with premium economy and business class seats only, while prices are kept low. The airline says its A320’s are configured with the lowest seat density (122 vs. 145 seats on most airlines) of any A320 used on scheduled routes in the world.
Billing itself a ‘premium service airline’ Wataniya has its own dedicated terminal at Kuwait International Airport, and passengers have Wi-Fi access as well as USB and power ports in every seat. The airline’s premium economy class offers 96 seats with a 34-inch seat pitch and the 26 business class seats have a seat pitch of 44 inch. Wataniya currently operates five A320’s, a sixth aircraft is scheduled to be received in June 2010 and a seventh later in 2010. The airline is listed at the Kuwait Stocks Exchange.
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Next in radical unbundling: Spirit to charge for carry-on luggage
7 April 2010 | Ultra low-cost carrier Spirit Airlines has become the first airline in the USA – perhaps in the world – to charge passengers with carry-on luggage as much as USD45 each way for stowing a bag in the overhead bin. Spirit said it will add measuring devices at the gates to determine which carry-ons are free and which ones will incur the charge. Personal items that fit under the seat will still be free, as long as they aren’t bigger than 16 x 14 x12 inches (40 x 30 x 20cm). Other exceptions to the fee are umbrellas, coats, strollers or car seats, reading material for the flight, or food passengers bring to eat on board. The new charge is USD30 if paid in advance online, USD45 if paid at the airport, and USD20 for frequent-flyer members. Passengers that pay the carry-on luggage fee will get priority when boarding.
Spirit, which likes to compare itself to budget carrier Ryanair, was the first US carrier to impose checked baggage fees in 2008 and at the moment all major airlines except Southwest and JetBlue charge to check a bag on domestic flights. However, many passengers have been bringing large and heavy bags into the aircraft instead to avoid checked luggage fees. The U.S Association of Flight Attendants has even launched an ‘End Carry-on Crunch’ campaign to protest against the number of people who bring overstuffed bags on board and clog the overhead space.
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Air New Zealand goes single class on short-haul routes and radically rebundles fares
24 March 2010 | Fierce competition on the Tasman and South Pacific routes has led Air New Zealand (ANZ) to radically overhaul its short-haul fares and service offerings. The airline has decided to remove business-class seats from its A320 aircraft that fly from New Zealand to Australia and the Pacific islands, increasing capacity by an extra 19 seats to 171 seats. Instead, the single-class A320s will have four options of service, priced accordingly.
A ‘Seat’ option allows one carry-on bag of 7kg, tea, coffee and water and access to some entertainment options but no new release entertainment. ‘Seat + Bag’ allows one carry-on bag and one checked bag, tea, coffee and water and some entertainment. ‘The Works’ offers carry-on and checked bag, meal and drinks and a seat request, and ‘Works Deluxe’ allows two priority bags, a carry-on bag, meal and drinks, a seat request, a guaranteed empty seat next to the passenger, premium check in, lounge access and better entertainment options. ANZ said a Works Deluxe airfare would be around NZD500 (EUR270, USD360) cheaper than a current business class fare and the seat-only option would be “in exactly the same place” as budget airlines. The airline is also introducing automated check-in procedures similar to those currently used on domestic flights, in which a RFID chip can be used to check in.
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EasyJet and AirAsia expand their no-frills hotels
18 March 2010 | Low-cost airlines easyJet and AirAsia have both extended their no-frills concept to the hotel sector. Similar to low-cost airlines, easyHotel and TuneHotels.com are keeping rates low by offering limited service and a pay-as-you-use system for extra amenities such as towels. The no-frills hotels encourage guests to book online and the further people book their stay, the cheaper the room. With small, clean and modern rooms, they cater to those on a budget, and tourists who spend most of their time sightseeing. Says Tunehotels.com’s CEO, Mark Lankester: “[Our guests] appreciate being able to spend less on a room they will only really spend a few hours in, while still having peace of mind that they will be getting a good, safe night’s sleep at the end of a full day.”
In August 2005, easyHotel opened its first property in London’s Earls Court and it just opened its 12th location in Berlin, and its next opening will be in Porto in summer 2010. The budget hotel will also unveil its first property outside Europe, in Dubai, later in 2010. Chargeable facilities including satellite TV, wifi, luggage storage and extra towels. The group now has six properties open in London (including hotels at Heathrow and Luton airports), as well as hotels in Basel, Zurich, Budapest, Sofia, and Cyprus. Room prices start at EUR 15 to 25 per night.
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Kingfisher Airlines launches same-day parcel delivery service
4 February 2010 | In a bid to improve ancillary revenue, Indian airline Kingfisher just launched Kingfisher Xpress, a door-to-door cargo delivery service. The service will offer a pick up facility in the 6 main metropolitan cities of India (Mumbai, New Delhi, Bangalore, Hyderabad, Chennai and Kolkata) with same day delivery in 18 cities across India. The airline will also offer a next-day delivery service across 20 cities in India. Kingfisher says the service is India’s first and only same-day delivery by air service, with a money-back guarantee if the parcel isn’t picked and delivered on the same day, door to door.
Kingfisher is not the first airline to launch an express delivery service. In July 2009, budget carrier AirAsia launched ‘Redbox’ (recently rebranded as ‘Courier’), which it said was the world’s first low-cost courier service. With fares 50 percent cheaper than its rivals, Redbox/Courier is targeted at small and medium enterprises and individual customers. AirAsia is transporting the packages from airport to airport while its partner DHL is picking up and delivering them. The low-cost carrier also partnered with UPS-subsidiary Mail Boxes Etc (MBE) to enable customers to drop off their packages at MBE’s 17 outlets in Kuala Lumpur and Selangor. AirAsia said the courier service would initially operate only within Malaysia, but would expand to all destinations that AirAsia and AirAsia X fly to.
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Long-haul low-cost carrier AirAsia X goes lie-flat in Business Class
2 February 2010 | AirAsia X, the long-haul operation of budget carrier AirAsia, has been growing rapidly to eight planes serving eight destinations today. In the second half of 2010, the carrier will add 4 new aircraft as part of its order of 25 A330s. The long-haul low-cost carrier currently flies from Kuala Lumpur to London (Stansted), Australia (Gold Coast, Melbourne, Perth), China (Hangzhou, Tianjin, Chengdu) and Taipei, and in 2010 will launch services to Sydney, Mumbai and New Delhi (it will also discontinue its route to Abu Dhabi due to a lack of demand). Plans for flights to Japan (Tokyo, Osaka, Fukuoka) as well as more Chinese destinations (Xi’an, Wuhan and Shenyang) are also on the table.
In a move to improve its premium product and increase the density in its economy class, AirAsia X is upgrading its business class to lie-flat seats. The seats are slightly angled, so they are not 180 degree flat, but AirAsia X claims it is the first budget airline to offer passengers a premium seat like this. The 28 ‘non-reclining’ black leather seats on AirAsia X’s 6 A330s will be replaced with 12 lie-flat beds, since, according to AirAsia X, the economics are very similar between 28 premium economy seats and 12 lie-flat bed seats, and therefore it might as well opt for the latter and up the quality of its product. The carrier will also replace the current 30 recliner seats on its 2 A340s with 18 lie-flat seats.
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Kulula gets the attention with ‘Flying 101’ aircraft livery
Image courtesy flickr user shanair
21 January 2010 | South African low-fare airline kulula.com has come up with a funny livery design. One of their Boeing 737-800 is called ‘Flying 101’ and the design covers the planes exterior in a tongue-in-cheek aircraft guide to the various parts of the planes interior, such as the ‘throne zone’ where the exit seats are located. Kulula says the ‘Flying 101’ branding idea is a result of its strategy to demystify air travel for its passengers.
Although, the ‘Flying 101’ aircraft will land in Johannesburg 2 more weeks from now (on 8th February 2010), it has already been a worldwide hit on the Internet after being seen by plane spotters enroute to South Africa. The plane is part of a fleet expansion of eight Boeing 737-800s, each with a unique livery. The second Boeing is currently undergoing its transformation and will look like an oversized container box, with the words ‘this way up’ printed on its side. Some of kulula’s current aircraft liveries include the ‘cow’ plane, ‘camo’ plane and ‘the jetsetter’ plane.
Low cost carriers force European flag carriers to rethink short-haul product
30 November 2009 | Europe’s legacy carriers have long found low-cost airlines a nuisance, but the recession has turned them into a serious problem, as both business and leisure travelers trade down to cheaper tickets. Furthermore, airlines such as Air France and Iberia also face strong competition from high-speed trains. In order to stay competitive on short-haul routes, Europe’s ‘Big Three’ are rethinking their product offering in order to drive down unit costs.
The latest news comes from Lufthansa, which will introduce denser seating in its European economy class next year. To free up more ‘knee space’ for passengers, the seat back pocket will be elevated at the same time. Lufthansa also wants to simplify its catering (it currently serves six different options, depending on the type of flight and time of day), which will allow It to reduce the space needed for kitchens onboard. The airline says “the aim is that Lufthansa becomes more profitable and less complex,” and is reportedly targeting a 40 percent reduction in costs on its European network.
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Air France restructures its short-haul product to counter loss of passenger to low-cost carriers
12 November 2009 | Air France has anounced it will restructure its European service to counter the loss of passengers to low-cost carriers and to make its short and medium-haul business (which account for 40 percent of its revenue) profitable again. Air France says the new European product will increase its market share by lowering its cheapest fares with 5 to 20 percent (depending on the route) and its most expensive tickets with 19 to 29 percent. Customers will also be allowed a greater flexibility to change bookings. The restructuring also means lower operating costs for Air France, for example by serving simpler meals and increasing the number of internet bookings. Air France’s new Europe product will come into affect from April 2010, with tickets on sale in January.
According to Air France, its customers (passengers, travel managers and travel agents) all indicated they want two clearly differentiated products for short-haul air travel. At the one hand, they want a simple and inexpensive economy product, and on the other hand a more affordable premium product, for those that require additional flexibility, more comfort and a more efficient journey. According to Air France CEO Pierre-Henri Gourgeon “regarding short-haul travel, customer requirements have changed. They now want reliable, efficient air transport, with an appropriate service, at the lowest possible price, while retaining the Air France touch”.
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