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Are Multi-leg Flights Profitable For LCCs?  
User currently offlineShanxz From Singapore, joined Apr 2006, 243 posts, RR: 0
Posted (5 years 9 months 2 weeks 1 day 14 hours ago) and read 3688 times:

There are a number of LCCs that have started offering multi-leg flights, something which goes against a traditional point-to-point LCC model followed by the likes of Southwest. In Europe, Air Berlin does it, and Tiger Airways does it in Asia Pacific (see route maps below). Air Arabia does it too. Originally, I had written that this may be a good idea for LCCs, but is it true given the current state of the industry?

Specifically, I have a few questions:
1) Is this business strategy profitable for LCCs, given their avoidance of hub&spoke model traditionally due to high costs?

2) How long are passengers willing to stay without food and drinks? Eg, a flight on Tiger Airways from Bangalore to Perth via SIN can be probably be classified as a long haul!

3) Should airlines provide some free food/drinks and transit amenities to passengers doing these journeys?

There seems to be a sense of denial, as Tiger Airways conditions of carriage state:

Quote:
We are strictly a point-to-point carrier and shall not be responsible to you for any connecting flights.

4) How has the recent fluctuations in oil prices affected the success of this strategy?






Airlines are in the service business, not transport. Brand matters...
15 replies: All unread, jump to last
 
User currently offlinePanHAM From Germany, joined May 2005, 9528 posts, RR: 31
Reply 1, posted (5 years 9 months 2 weeks 1 day 13 hours ago) and read 3645 times:

To answer your question, YES, for WN it must be profitable since they offer a good number of nflights with mutliple stops across the USA. Important however is, that there are a minimum number of flights at each station to make efficient use of the manpower and equipment.

Multi sectr flights seem also to be more acceptable to US travellers.

AFAIK Air Berlin does not offer similar. They do offer connections via hubs in DUS, NUE PMI but passengers usually have a chance to buy food/ drinks. AB also provides catering on board.

Looking at the Tiger mao, you can connect through SIN. You can do that at various airports served by FR as well but they don't guarantee the connection and they don't check your luggage to final destinations, AB does.


In case of Tiger Air bangalore to perth, you have 9 hours transit at SIN
which means you can eat anywhere you want in SIN, not only at the airport.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineShanxz From Singapore, joined Apr 2006, 243 posts, RR: 0
Reply 2, posted (5 years 9 months 2 weeks 1 day 9 hours ago) and read 3547 times:



Quoting PanHAM (Reply 1):

Looking at the Tiger mao, you can connect through SIN. You can do that at various airports served by FR as well but they don't guarantee the connection and they don't check your luggage to final destinations, AB does.

And that's where lies the difference. Tiger and FR operate as true LCCs, in theory, but AB doesn't. So does that mean more costs for AB?



Airlines are in the service business, not transport. Brand matters...
User currently onlineStitch From United States of America, joined Jul 2005, 31107 posts, RR: 85
Reply 3, posted (5 years 9 months 2 weeks 1 day 9 hours ago) and read 3516 times:
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Quoting PanHAM (Reply 1):
Multi sectr flights seem also to be more acceptable to US travellers.

Well we don't have too much choice, since the majority of our commercial airlines operate via the "hub and spoke" model.  Wink

Still, airlines like AS are nice for offering non-stops around the West Coast so I can fly from SEA to SAN without a stop.  thumbsup 



Quoting Shanxz (Thread starter):
Is this business strategy profitable for LCCs, given their avoidance of hub&spoke model traditionally due to high costs?

WN, I believe, operates more a "stops on a string" strategy more then a pure "hub and spoke" one. So instead of having a whole slew of planes fly into a single city, disgorge all their passengers, then sit for an hour or two before reloading and flying off somewhere else to do it again they fly to a city, offload some pax and take on some more, then continue on to their next destination. So they spend less time on the ground and more in the air.


User currently offlineJRadier From Netherlands, joined Sep 2004, 4703 posts, RR: 50
Reply 4, posted (5 years 9 months 2 weeks 1 day 7 hours ago) and read 3424 times:



Quoting Shanxz (Thread starter):
There are a number of LCCs that have started offering multi-leg flights, something which goes against a traditional point-to-point LCC model followed by the likes of Southwest.

WN does allow connections (and offers them too), they just don't operate their aircraft on a hub/spoke model.



For once you have tasted flight you will walk the earth with your eyes turned skywards, for there you have been and ther
User currently offlinePanHAM From Germany, joined May 2005, 9528 posts, RR: 31
Reply 5, posted (5 years 9 months 2 weeks 1 day 6 hours ago) and read 3376 times:



Quoting JRadier (Reply 4):
WN does allow connections (and offers them too), they just don't operate their aircraft on a hub/spoke model.

There was a time whenthey didn't. I once flew DAL-ABQ-PHX and had to re-check my bags at ABQ.

Quoting Shanxz (Reply 2):
And that's where lies the difference. Tiger and FR operate as true LCCs, in theory, but AB doesn't. So does that mean more costs for AB?

Not necessarily. AB indeed is a hybrid carrier but their biz model to hub via PMI and offer up to 2 daily connections between north and south markets is clever and works. Their seat mile costs are quite competetive and they operate from the main airports, not some remote place 120 km away which is useless for business people who cannot carry their road warrior gear on board because of silly weight restrictions.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineShanxz From Singapore, joined Apr 2006, 243 posts, RR: 0
Reply 6, posted (5 years 9 months 2 weeks 1 day 5 hours ago) and read 3315 times:



Quoting JRadier (Reply 4):
WN does allow connections (and offers them too), they just don't operate their aircraft on a hub/spoke model.

What's the difference?

Quoting PanHAM (Reply 5):
Not necessarily. AB indeed is a hybrid carrier but their biz model to hub via PMI and offer up to 2 daily connections between north and south markets is clever and works. Their seat mile costs are quite competetive and they operate from the main airports, not some remote place 120 km away which is useless for business people who cannot carry their road warrior gear on board because of silly weight restrictions.

 checkmark  Is this easily duplicated by other LCCs, like Air Arabia and AirAsia?



Airlines are in the service business, not transport. Brand matters...
User currently offlineMOBflyer From United States of America, joined Sep 2007, 1209 posts, RR: 4
Reply 7, posted (5 years 9 months 2 weeks 1 day 5 hours ago) and read 3302 times:



Quoting PanHAM (Reply 5):
There was a time whenthey didn't. I once flew DAL-ABQ-PHX and had to re-check my bags at ABQ.

That was because of the Wright Amendment, not WN not offering connections.


User currently offline6thfreedom From Bermuda, joined Sep 2004, 3333 posts, RR: 20
Reply 8, posted (5 years 9 months 2 weeks 23 hours ago) and read 3159 times:



Quoting Shanxz (Thread starter):
1) Is this business strategy profitable for LCCs, given their avoidance of hub&spoke model traditionally due to high costs?

2) How long are passengers willing to stay without food and drinks? Eg, a flight on Tiger Airways from Bangalore to Perth via SIN can be probably be classified as a long haul!

3) Should airlines provide some free food/drinks and transit amenities to passengers doing these journeys?

While the services are multi-stops, the only "connectivity" the airline offers is a single booking on the internet.
They do not guarantee connections, do not transfer bags or through check in.
It's as if you have bought to seperate fares, and do the whole thing yourself.
Furthermore, pricing is purely based on the two lowest fares for each sector.. ie it is not yiled managed to attract extra customers in any way.


User currently offlinePe@rson From United Kingdom, joined Jan 2001, 19236 posts, RR: 52
Reply 9, posted (5 years 9 months 2 weeks 14 hours ago) and read 3029 times:

Start reading some aviation textbooks. I heartedly recommend Holloway's Straight and Level: Practical Airline Economics and Doganis' Flying Off Course: The Economics of International Airlines.


"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineEnilria From Canada, joined Feb 2008, 7337 posts, RR: 14
Reply 10, posted (5 years 9 months 2 weeks 2 hours ago) and read 2903 times:



Quoting PanHAM (Reply 1):
for WN it must be profitable since they offer a good number of nflights with mutliple stops across the USA.

WN has been cutting back those types of flights greatly. To me if the "stop" is between two hub-like airports then it is probably great (e.g. WN flying BWI-BNA-HOU), but I think something like HOU-AMA-MAF-ELP would be a trainwreck financially. If there are strong anchors of local traffic (e.g. a hub or Vegas or Florida) on either end of the multi-stop flights that also helps. Hopping along on high fare, low volume, business markets is generally considered an unprofitable model and even WN has vastly reduced it.


User currently offlineKnope2001 From United States of America, joined May 2005, 2947 posts, RR: 30
Reply 11, posted (5 years 9 months 2 weeks 1 hour ago) and read 2862 times:

In spite of Southwest seeingly having quite a few dedicated 1-stop routings (like TUL-STL-MDW), I believe 10+ years ago they stated that only 10-15% of their passengers flew on one-stop or two-stop thru flights like this. Since that time, they seem to have reduced further the reliance on so-called "dedicated" thru-plane routings like this even further, with more of their traffic flying via nonstop flights or via run-of-the-mill connecting flights.

User currently offlineCubsrule From United States of America, joined May 2004, 23148 posts, RR: 20
Reply 12, posted (5 years 9 months 2 weeks 1 hour ago) and read 2861 times:



Quoting Knope2001 (Reply 11):
Since that time, they seem to have reduced further the reliance on so-called "dedicated" thru-plane routings like this even further, with more of their traffic flying via nonstop flights or via run-of-the-mill connecting flights.

 checkmark There are still plenty of routes with no nonstop service but several direct flights, though. Some of these (DEN-DAL) are for Wright Amendment reasons, but plenty (STL-LAX or MDW-JAX) are not.

Quoting Shanxz (Reply 6):
What's the difference?

They do not optimize schedules for connections as most carriers with a 'true' hub do. Connections that are available are, officially at least, incidental.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineShanxz From Singapore, joined Apr 2006, 243 posts, RR: 0
Reply 13, posted (5 years 9 months 1 week 6 days 19 hours ago) and read 2755 times:



Quoting Pe@rson (Reply 9):
I heartedly recommend Holloway's Straight and Level: Practical Airline Economics and Doganis' Flying Off Course: The Economics of International Airlines.



Quoting Cubsrule (Reply 12):
They do not optimize schedules for connections as most carriers with a 'true' hub do. Connections that are available are, officially at least, incidental.

Thanks guys!



Airlines are in the service business, not transport. Brand matters...
User currently offlineHeathrow From United Kingdom, joined Sep 2005, 979 posts, RR: 0
Reply 14, posted (5 years 9 months 1 week 6 days 19 hours ago) and read 2751 times:

WS is a prime example of using multi-leg routes. today I'm flying YYZ - YQU via YWG, YYC and YEG. A lot of their flights make little stop offs.

User currently offlineB747-4U3 From United Kingdom, joined Jan 2002, 991 posts, RR: 0
Reply 15, posted (5 years 9 months 1 week 6 days 4 hours ago) and read 2574 times:

In Indonesia, multi-leg flights are very common on LCCs such as Lion Air, Batavia Air and Sriwijaya Air.

The reasons for this are:

1. Aircraft lack of range for non-stop flights.
2. Insufficient traffic for non-stop flights.
3. Aircraft runways not long enough to handle aircraft at MTOW.
4. Significant traffic between points along the route.
5. Hubbing (on select routes LCCs will through-check bags to final destination).
6. Destinations not busy enough to warrant a non-stop flight.
7. Many routes have no non-stop competition, therefore multi-stop flight are not less attractive.

Just a few examples:

Lion Air : Jayapura - Makassar - Jakarta

Although the 737-900ER have sufficient range for the route, the runway at Jayapura is not long enough to handle a fully loaded, non-stop, return flight to Jakarta. The flight therefore stops in Makassar in both directions. Aside from the ability to refuel, Makassar acts as a mini-hub, allowing connections to Surabaya and Manado (as well as the continuing flight to Jakarta). Makassar is also an important trading city and sees significant amount of traffic to Jakarta as well as limited traffic to Jayapura.

Lion Air: Palu - Makassar - Jakarta

Although there is demand from Palu to Jakarta, it is not yet sufficient to warrant a non-stop flight. However, there is greater demand from Makassar (the main city in the region) to Palu. The routing therefore takes advantage of the limited traffic from Jakarta to Palu, the more substantial amount of traffic from Makassar to Palu and the limited number of connecting flights (from Surabaya) to make the route work.

(Just to make it clear, most Indonesian LCC airlines work on a point to point basis, however in a limited number of markets where flights do connect they will check bags and passengers straight through to the final destination. The ticket price paid would be the sum of the cheapest fare for both legs of the journey).


I have no official figures, but I think given the situation in Indonesia, multi-stop flights are probably just as profitable or unprofitable as other flights. Many of the flights have to stop due to operations reasons, or because the final destination does not see enough traffic to warrant a non-stop flight of its own. In most cases, any competition on the route is also using a multi-stop routing and therefore yields would not be hurt by stops on route.

I think ultimately whether a multi-stop flight is profitable or not depends on the airlines ability to fill the aircraft at a decent yield on all legs of the trip.


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