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Low-cost carrier



The principal area of competition tends to be the full-coach or "walk-up" fare. Advance purchase fares tend to be competitive with major carriers but not significantly lower.

Traditional perceptions of the "low-cost carrier" as a stripped-down, no-frills airline, as seen on Southwest Airlines, have been changing as new entrants to the market adapt the business model in new ways. AirTran Airways, US Airways and Spirit Airlines offer a premium cabin (as did America West Airlines), while Frontier and jetBlue offer live in-flight television, sometimes for an extra fee. AirTran has XM Satellite Radio available at every seat. Frontier, JetBlue, US Airways and AirTran all use assigned seating. Some airlines even have services not available on some legacy carriers, such as mood lighting, found in Virgin America.

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US Airways

In 2005, low-cost carrier America West Airlines was purchased by US Airways, then the nation's seventh largest legacy carrier.[4] The merged carrier assumed the US Airways name, with the stated goal of displacing Southwest as the nation's largest low-cost carrier. Before the merger, US Airways had substantially reduced its costs through a pair of bankruptcies. In the months after the merger was consummated, former America West pricing structures were rolled out across the former US Airways route network, and operating certificates were merged in 2007. However, full integration of the two carriers has been delayed by management's inability to get former AWA pilots and former US pilots to agree on a unified labor contract.

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Criticism

As the number of low-cost carriers has grown, these airlines have begun to compete with one another in addition to the traditional carriers. In the US, airlines have responded by introducing variations to the model. US Airways offers a first class product and airport lounges, for example, while Frontier Airlines and JetBlue Airways advertises satellite television. Advertiser-supported Skybus Airlines launched from Columbus in 2007, but ceased operations in April, 2008. In Europe, the emphasis has remained on reducing costs and no-frills service. In 2004, Ryanair announced proposals to eliminate reclining seats, window blinds, seat headrest covers, and seat pockets from its aircraft.[2]

Some elements of the low-cost model have been subject of criticism by Governments and Regulators, and in the UK in particular the issue of "Unbundling" of ancillary charges by both low-cost carriers and other airlines (showing airport fees, taxes as separate charges rather than as part of the advertised fare) to make the "headline fare" appear lower has resulted in enforcement action. Believing that this amounts to a misleading approach to pricing, the Office of Fair Trading (OFT) in February 2007 gave all carriers and travel companies three months to include all fixed non-optional costs in their basic advertised prices. Although the full service carriers had complied within the specificed timescales, the low-cost carriers have been less successful in this respect, leading to the prospect of legal action[3] by the OFT.

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No-frills long-haul flights

The first airline offering no-frills transatlantic service was Freddie Laker's Laker Airways, which operated its famous "Skytrain" service between London and New York City during the late 1970s. The service was suspended after Laker's competitors, British Airways and Pan Am, were able to price Skytrain out of the market.

In 2004 the Irish company Aer Lingus lowered its prices to compete with companies such as Ryanair and also started offering no-frills transatlantic flights for just above €100. Late in 2004 the Canadian airline Zoom Airlines also started selling transatlantic flights between Glasgow, UK; Manchester, UK; and Canada for £89.

It has been suggested that the Airbus A380, able to hold up to 853 passengers in an all Economy layout [4], would enable true low-cost long-haul service. While the per-seat costs of such an aircraft would be lower than the competition, there are fewer cost savings possible in a long-haul operation and therefore a long-haul low-cost operator would find it harder to differentiate itself from a conventional airline. In particular, low-cost carriers typically fly their aircraft for more hours and flights each day, scheduling the first departure early in the morning and the last arrival late at night. However, long-haul aircraft scheduling is more determined by timezone constraints (e.g. leaving the US East Coast in the evening and arriving in Europe the following morning), and the longer flight times mean there is less scope to increase aircraft utilization by adding one or two more short flights each day.

In April 2006, the industry magazine Airline Business analysed the potential for low-cost long-haul service [5] and concluded that a number of Asian carriers, including AirAsia, were closest to making such a model work. On November 2, 2007, AirAsia X, a subsidiary of AirAsia and Virgin Group flew its inaugural flight from Kuala Lumpur, Malaysia to Gold Coast, Australia. AirAsia X claims that it is the first true low-cost long-haul carrier since the end of Sir Freddie Laker era.[citation needed]

In August 2006, Zoom Airlines announced that it was to establish a UK subsidiary, probably based at Gatwick Airport, to offer low-cost long-haul flights to the USA and India.

On 26 October 2006, Oasis Hong Kong Airlines started flying from Hong Kong to London Gatwick Airport (delayed by one day because Russia suspended fly-over rights for that flight an hour before the flight's scheduled departure). Tickets for flights between Hong Kong to London can be as low at £75 (approximately US$150) per leg (not including taxes and other charges) for economy class and £470 (approximately US$940) per leg for business class for the same route. From 28th June 2007, a second long-haul service has operated to Vancouver, British Columbia. The company stops its flights from 9 April 2008, after over 1 billions HKD of losses.

Australia's Jetstar has operated International since 2005, when they began service to Christchurch, New Zealand. In late 2006, more international services began. Departing from Sydney, Melbourne and Brisbane, they fly to popular tourist destinations within 10 hours of Australia such as Honolulu International Airport, Japan, Vietnam, Thailand, Malaysia and more. With the delivery of new planes, they hope to fly to the continental US and Europe.

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Low-cost business only carriers

A trend from the mid-2000s was the formation of new low-cost carriers exclusively targeting the long-haul business market, with aircraft configured for a single class of service, initially on transatlantic routings. Probably best described as "less frills" rather than "no frills", the initial entrants in this market utilised second-hand, mid-sized, twin jets such as Boeing 757 and Boeing 767 in an attempt to service the lucrative London - US Eastern Seaboard market:

  • Eos Airlines, which ceased operating on 27 April 2008[5]
  • Maxjet, which has ceased its scheduled business flights, but is planning to restart as a luxury charter carrier[6]
  • Silverjet, which ceased[7][8] operations on 30 May 2008

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See also

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References

  1. ^ （Frankfurt-Hahn Airport,Airport Weeze,Paris Beauvais Tillé Airport,London Luton Airport,Ibaraki Airport(been going to open a port in March, 2010) etc）
  2. ^ The History of PSA
  3. ^ Southwest profitable for 34th consecutive year - January 7, 2007
  4. ^ US Airways To Merge, Move Base To Arizona, Washington Post, May 20, 2005
  5. ^ http://www.btnmag.com/businesstravelnews/headlines/article_display.jsp?vnu_content_id=1003795000
  6. ^ http://travel.timesonline.co.uk/tol/life_and_style/travel/business/article3903900.ece
  7. ^ We are very sad to announce that from 30 May 2008 we will cease operations. Silverjet. Retrieved on 2008-05-31.
  8. ^ Special fares for Silverjet customers. British Airways. Retrieved on 2008-05-31.

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External links




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