It’s a Long Story: And not a very happy one. Low-cost longhaul is all the rage, but with scant evidence of success
What exactly is low-cost longhaul service? Some people say the label applies to Gulf carriers or Chinese carriers. These do, in fact, fly longhaul routes with a lower-than-industry -average cost structure. What about tour operators like TUI, Thomas Cook and Air Transat? Icelandair? Turkish Airlines? Ethiopian Airlines? Aeroflot? Hong Kong Airlines? Aer Lingus?
Calling these airlines lowercost carriers is fair enough. But they’re distinct from the current proliferation of purely low-cost longhaul operations attempting to replicate the success of the low-cost shorthaul phenomenon using similar tactics: highdensity seating, aggressive ancillary selling, high rates of employee and aircraft utilization, demand stimulation through low fares and so on. It’s this type of longhaul LCC service that’s attracting more attention than ever in markets that were once the preserve of established, fullservice legacy carriers—the transatlantic market most prominently, but also the Asia-Europe market and markets within East Asia.
Consider the many examples. Norwegian is one of the world’s fastest growing airlines, sending densely-configured B787s to the U.S., the Caribbean, Bangkok and soon Singapore from points throughout Europe, including Scandinavia, London, Paris, Barcelona and soon Rome (see page eight). Wow Air seeks to undercut its home rival Icelandair with low-cost flights to North America, even offering itineraries like the U.S. to Israel, all via its Reykjavik hub. Azul is flying longhaul from South America. You might call Air Berlin a tour operator, and a carrier with costs that aren’t so low, to boot. But its longhaul operation does resemble an LCC in some ways, including its rapid-growth approach to the transatlantic market.
WestJet’s blockbuster B787 order signaled its seriousness about taking its low-cost business model longhaul. In Asia, AirAsia X was an early practitioner. Cebu Pacific followed with extremely dense A330 flights to the Middle East and Australia. India’s SpiceJet has an option in its latest contract with Boeing to take B787s. VietJet and Spring Airlines have mentioned longhaul flying as a possible future endeavor. So has Ryanair at times in the past.
At least as enthusiastic about low-cost longhaul flying are established legacy airline companies themselves, giving birth to a multiplying crop of separately…
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