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Why So Few Long Haul Low Cost Carriers?  
User currently offline777MAS From Malaysia, joined Sep 2003, 197 posts, RR: 0
Posted (7 years 6 months 1 week 2 days 19 hours ago) and read 3988 times:

I think the title of the post pretty much asks the big question, in relation to the success stories of short haul LCCs.

Recently Oasis have started their HKG-London flights, and it is so very recently announced Air Asia X will launch theirs also to London. They are trying where Laker Airways in the 80s had failed.

I read somewhere that long haul LCCs face a different set of risks, that aren't faced by their short haul counterparts. Anyone able to comment on these? The question would also be: can the short haul LCC business model be applied easily for long haul?

19 replies: All unread, jump to last
 
User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3371 posts, RR: 9
Reply 1, posted (7 years 6 months 1 week 2 days 19 hours ago) and read 3973 times:

I may be wrong here but many of the savings that the short-haul LCCs gain are from their quick turnarounds - low parking costs, extra flights fitted in per day and the benefits of these diminish if you have long flights with not many take-offs and landings

User currently offline1stfl94 From United Kingdom, joined May 2006, 1455 posts, RR: 0
Reply 2, posted (7 years 6 months 1 week 2 days 19 hours ago) and read 3935 times:

Also with long haul flights the big airlines tend to make more money from the First and Business seats so can drop the price of economy seats to compete with LCCs. Plus people like their extras on long haul flights, PTVs, meals, drinks whereas these things don't really matter so much on short haul

User currently offlineGLAGAZ From UK - Scotland, joined Feb 2004, 1982 posts, RR: 11
Reply 3, posted (7 years 6 months 1 week 2 days 18 hours ago) and read 3892 times:

Well the trend is only just starting surely?

Zoom
flyGlobespan
Oasis
Air Asia

......

Perhaps if we give it a bit of time.

Gaz



Neutrality means that u don't really care cos the struggle goes on even when ur not there, blind and unaware
User currently offlineBCAL From United Kingdom, joined Jun 2004, 3384 posts, RR: 16
Reply 4, posted (7 years 6 months 1 week 2 days 18 hours ago) and read 3810 times:

Stelios (of easyJet) has repeatedly said something along the lines that when flights last +4 hours, the low-cost no-frills formula becomes stretched and it is therefore difficult to make savings on overheads. Besides this, passengers would insist on something by way of IFE and/or meals, and the controllable costs (i.e. fuel, air traffic licences) would no longer be controllable. In addition, an aircraft flying (say) STN-EWR would only be able to do one daily return journey, requiring two separate crews, and then one short-haul flight, so the high utilisation of aircraft and quick turnarounds would not be possible.

However, in recent years we have seen the LCCs stretching to flights +4 hours and carriers like Oasis Hong Kong entering the market, so perhaps with the flying public's appetite for a bargain, we will be seeing more long-haul LCCs in future.

Not that long ago a paper-airline called BackPackers' Express was preparing to enter the UK/Germany-Far East/Australian market, promising bargain fares and karaokee as part of the IFE. The airline never got off the drawing board but the thought of spending +11 hours in a toothpaste tube at 30,000' with 430 backpackers and listening to endless versions of [insert song name here] was my vision of hell.



MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
User currently offline787KQ From United States of America, joined Mar 2006, 547 posts, RR: 0
Reply 5, posted (7 years 6 months 1 week 2 days 17 hours ago) and read 3786 times:

Quoting BCAL (Reply 4):
so the high utilisation of aircraft and quick turnarounds would not be possible.

High utilization is common with longhaul aircraft. There is little additional benefit that can be achieved.


User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 6, posted (7 years 6 months 1 week 2 days 17 hours ago) and read 3783 times:

Quoting GLAGAZ (Reply 3):
Well the trend is only just starting surely?

Zoom
flyGlobespan
Oasis
Air Asia

......

Laker SkyTrain
Wardair
PeoplExpress
Air Florida
Phuket Air
Icelandair
Virgin
(the last two having changed their business model)
....

Not just starting, however not yet made to work.


User currently offlineCV580Freak From Bahrain, joined Jul 2005, 1033 posts, RR: 0
Reply 7, posted (7 years 6 months 1 week 2 days 16 hours ago) and read 3696 times:

Air Asia X plans to launch later this year

http://news.bbc.co.uk/1/hi/business/6233295.stm



One day you are the pigeon, the next the statue ...
User currently offlinePilotdude09 From Australia, joined May 2005, 1777 posts, RR: 4
Reply 8, posted (7 years 6 months 1 week 2 days 15 hours ago) and read 3642 times:

Well from Australia, there will be Virgin Blue and we have Jetstar, which the reviews i have heard and from friends of their HNL ordeal from SYD they would NEVER do it again. But on the other side of the coin, you get what you pay for.


Qantas, Still calling Australia Home.........
User currently offlineShamrock350 From Ireland, joined Mar 2005, 6318 posts, RR: 14
Reply 9, posted (7 years 6 months 1 week 2 days 15 hours ago) and read 3613 times:

Aer Lingus have gone down the low cost long haul path although it could be expanded a lot more with the current product.
DUB-JFK was only €99 for a while.


User currently offlineMainMAN From United Kingdom, joined Jul 2005, 2096 posts, RR: 5
Reply 10, posted (7 years 6 months 1 week 2 days 15 hours ago) and read 3576 times:

Quoting 777MAS (Thread starter):
I read somewhere that long haul LCCs face a different set of risks, that aren't faced by their short haul counterparts. Anyone able to comment on these? The question would also be: can the short haul LCC business model be applied easily for long haul?

As others have said, long-haul LCCs are a sector of the market which is in its infancy. To a certain extent, many legacy carriers have overheads which dictate that filling the fat seats up front with high yielding corporate and governmental bods is a given necessity, the type of which can generally only be found in a small number of locations around the world........Sydney more than Melbourne, Singapore more than KL, London more than Manchester. Even euro-cities like Amsterdam, Copenhagen and Barcelona aren't spectacularly high yielding, and neither's Toronto from this side of the pond. There's a demand for direct services from scores of these 'normal' cities, somebody will work out financially how to achieve them.

Quoting BCAL (Reply 4):
The airline never got off the drawing board but the thought of spending +11 hours in a toothpaste tube at 30,000' with 430 backpackers and listening to endless versions of [insert song name here] was my vision of hell.

Can you imagine 11 hours of listening to *Slade - it's Christmas* or *Rockin around the Christmas Tree* on the way to see your rellies in Mildura? No, I think I'd parachute out over a Muslim country instead.

[Edited 2007-01-05 18:11:13]

User currently offlineBCAL From United Kingdom, joined Jun 2004, 3384 posts, RR: 16
Reply 11, posted (7 years 6 months 1 week 2 days 15 hours ago) and read 3555 times:

Quoting MainMAN (Reply 10):
and neither's Toronto from this side of the pond.

It was quoted somewhere (possibly in the Parliamentary papers where BA gave their views of Bermuda 2) that BA makes more profit on the LHR/YYZ route than they do on the LHR/JFK route.



MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
User currently offlineStitch From United States of America, joined Jul 2005, 30415 posts, RR: 84
Reply 12, posted (7 years 6 months 1 week 2 days 15 hours ago) and read 3531 times:
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Quoting 777MAS (Thread starter):
I read somewhere that long haul LCCs face a different set of risks, that aren't faced by their short haul counterparts. Anyone able to comment on these? The question would also be: can the short haul LCC business model be applied easily for long haul?

Intercontinental stage lengths lower aircraft utilization rates. Take a 73GER and a 73G, both with 125 Economy seats. A 73G flying ten daily 1000-mile one-way flights can carry up to 1250 people and a good chunk of cargo in addition to the passenger's bags.

A 73GR, however, performing only two daily 5000 mile one-way flights, however, can only carry 250 people and because so much underfloor space is taken up by the fuel, cargo would be essentially limited to the passenger's bags.

Now, even if you could get an average of three times as much per seat on the 73G flights, you're still only bringing in around 60% of the passenger income, and that doesn't include all the lost underfloor cargo income. Now, you do save a on crew costs (four flight deck crew and six cabin crew for the international run vs. 20 and 60 for the domestic) and fuel costs will be lower, but are those savings equal to or better then the 40% extra passenger revenues, to say nothing of the cargo revenue?

Now, you can work on that by using a 763ER. You could double the number of people you carry and carry cargo. Assuming you can still get three times the fare, you'll come out ahead on the twice-daily 767 (250 extra passengers per day then the short-haul 73G flights). Of course, the 767 costs more to operate (we'll assume you can get a used 763ER for the same price as a new 73G), but has the same flight crew costs though 66% more cabin crew costs (five vs. three). However, you're carrying more passengers and now you can carry cargo. And while I imagine two 763ERs can't carry as much non-luggage cargo as ten 73Gs, you may be able to get higher-value cargo on the international run...

As many above me have noted, international LCC's are beginning their rebirth. Unlike WN, which has been around for some 30 years even if it only started really growing in the last 10 or so, there have not been any "long term" international LCCs (the pioneers of the 1970s and 1980s having all failed), so the ones starting now have to "start fresh" and don't have any existing successful airline to model themselves on, as all the short-haul LCCs have had with WN.


User currently offline787KQ From United States of America, joined Mar 2006, 547 posts, RR: 0
Reply 13, posted (7 years 6 months 1 week 2 days 13 hours ago) and read 3454 times:

Quoting Stitch (Reply 12):
Intercontinental stage lengths lower aircraft utilization rates.

Huh? What are you trying to say?


User currently offlineNaritaflyer From Japan, joined Apr 2006, 549 posts, RR: 1
Reply 14, posted (7 years 6 months 1 week 2 days 13 hours ago) and read 3442 times:

There are several issues.

First: bilateral rights which allows airlines to service international markets are usually held by established legacy carriers.

Second: All airlines are LOW COST on long-haul routes. Cost varries inversely with stage-length so LCCs have a better chance on short-haul routes.

Third: Any new start-up would be low cost by default because it has not had the time to accumulate the overhead that legacy carriers have built-up over the past 40 or 50 years.

Fourth: There are several low cost carriers on international routes and they are called charters.

I know that the points I am making are contradictory but the combination of all those factors basically pushes start-ups to first tackle the domestic market which is easier picking given the bloated cost of legacy carriers.


User currently offlineViscount724 From Switzerland, joined Oct 2006, 24643 posts, RR: 22
Reply 15, posted (7 years 6 months 1 week 2 days 9 hours ago) and read 3364 times:

Quoting ANother (Reply 6):

Laker SkyTrain
Wardair
PeoplExpress
Air Florida
Phuket Air
Icelandair
Virgin
(the last two having changed their business model)

Although a charter carrier initially, I wouldn't consider Wardair as "low cost". Their service (e.g. meals on real china, free drinks, 34 inch seat pitch, etc.) was fully comparable, and in many cases better than the scheduled carriers. They had an excellent service reputation and very strong customer loyalty. In some cases, scheduled operators had to upgrade their inflight services on routes where they were competing with Wardair. They were light years from Laker and People Express.

When Wardair made the decision to convert from charter to scheduled in the mid-80s their problem was that their costs became too high for their revenues, hastening their decision to merge with Canadian Airlines in 1989.


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User currently offlineAustralia1 From , joined Dec 1969, posts, RR:
Reply 16, posted (7 years 6 months 1 week 2 days 9 hours ago) and read 3342 times:

Quoting ANother (Reply 6):
Zoom
flyGlobespan
Oasis
Air Asia

......


Laker SkyTrain
Wardair
PeoplExpress
Air Florida
Phuket Air
Icelandair
Virgin
(the last two having changed their business model)

You forgot Canada 3000 & Air Transat.

2T didn't survive SEP11, but Air Transat did. TS is right up there with some UK charter operators in jamming in lots of seats, eg. TS 332 has something like 362 seats in 2 classes with 3-3-3 in Y, but they still seem to be making money. I guess vertical integration helps.

Zoom seems to have started where Canada 3000 left off. Do Zoom deal with travel agents or is it all direct?

Why has Canada been the leader in low cost long haul carriers? Is it lack of over-regulation ?


User currently offlineStitch From United States of America, joined Jul 2005, 30415 posts, RR: 84
Reply 17, posted (7 years 6 months 1 week 2 days 8 hours ago) and read 3302 times:
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Quoting 787KQ (Reply 13):
Huh? What are you trying to say?

I'm trying to say that you can fly fewer revenue-generating flights in a day when flying longer stage lengths as opposed to shorter stage lengths. It is easier to schedule ten 500nm stage length flights then two 5000nm ones because the shorter stage lengths allow more flights during "desirable" flight times.

If I fly JFK to LHR, I need to leave JFK at night to arrive in LHR in the morning, then I leave LHR in the morning to arrive at JFK in the late afternoon to prepare for my return evening trip. That's two flights in a 24-hour period.

During that same "24 hours" (actually more like 14-16 hours in a single day), I could fly a round-trip from JFK to BOS, DCA and PHL. Maybe even get in a CLE R/T. Or hit smaller cities like SYR, ALB, BGM, ITH, BWI, and other cities in MD, PA, NY, VT, MA, RI, and such.


User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 18, posted (7 years 6 months 1 week 1 day 16 hours ago) and read 3134 times:

Quoting Viscount724 (Reply 15):
Although a charter carrier initially, I wouldn't consider Wardair as "low cost".

True, they had a different business model, but in the sense they could charge lower fares they were perceived as being low cost, at least to their customers.

The point I was trying to make is there is nothing 'new' in long-haul LCC. A quick google, or posing a question in this forum would have told them that.


User currently offline787KQ From United States of America, joined Mar 2006, 547 posts, RR: 0
Reply 19, posted (7 years 6 months 1 week 1 day 4 hours ago) and read 2970 times:

Large long-haul aircraft have higher daily utilization on average. An example is from Air New Zealand, where the long-haul aircraft have utilization of about 14 hours, while short-haul aircraft have less. This issue is that its harder for LCC's to have higher utilization than other airlines, though possible.

http://www.airnewzealand.com/aboutus/fleet/default.htm

Although some long-haul flights spend a lot of time on the ground (many flights to deep South America for example), its often easier to get good utilization with a combination of flights to and from Europe and some domestic or other flying. East coast to Europe, turn to US, quick turn to Caribbean or fly to West Coast. The issue of lack of utilization could occur with a small fleet, or few destinations. Otherwise, good scheduling dictates high utilization at good hours.


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