777MAS
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Why So Few Long Haul Low Cost Carriers?

Fri Jan 05, 2007 9:42 pm

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?
 
scouseflyer
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RE: Why So Few Long Haul Low Cost Carriers?

Fri Jan 05, 2007 9:46 pm

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
 
1stfl94
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RE: Why So Few Long Haul Low Cost Carriers?

Fri Jan 05, 2007 10:09 pm

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
 
GLAGAZ
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RE: Why So Few Long Haul Low Cost Carriers?

Fri Jan 05, 2007 10:26 pm

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
 
BCAL
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RE: Why So Few Long Haul Low Cost Carriers?

Fri Jan 05, 2007 11:12 pm

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."
 
787kq
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RE: Why So Few Long Haul Low Cost Carriers?

Fri Jan 05, 2007 11:26 pm

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.
 
ANother
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RE: Why So Few Long Haul Low Cost Carriers?

Fri Jan 05, 2007 11:29 pm

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.
 
CV580Freak
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 1:12 am

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 ...
 
pilotdude09
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 1:43 am

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.........
 
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shamrock350
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 1:52 am

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.
 
mainMAN
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 2:08 am

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]
 
BCAL
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 2:15 am

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."
 
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Stitch
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 2:23 am

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.
 
787kq
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Joined: Wed Mar 08, 2006 6:52 am

RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 4:08 am

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

Huh? What are you trying to say?
 
naritaflyer
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 4:19 am

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.
 
Viscount724
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 7:44 am

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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Australia1
Posts: 457
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 8:04 am

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 ?
 
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Stitch
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RE: Why So Few Long Haul Low Cost Carriers?

Sat Jan 06, 2007 8:36 am

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.
 
ANother
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Joined: Thu Nov 03, 2005 2:47 am

RE: Why So Few Long Haul Low Cost Carriers?

Sun Jan 07, 2007 1:20 am

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.
 
787kq
Posts: 377
Joined: Wed Mar 08, 2006 6:52 am

RE: Why So Few Long Haul Low Cost Carriers?

Sun Jan 07, 2007 1:24 pm

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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