Irelandia Investments partner Tony Davis at CAPA’s Airlines in Transition conference in Dublin rebuffed (11-Apr-2013) the hybridisation of airlines, saying he believes “pure” LCCs that do not hybridise deliver the lowest cost to the customer and “win”. Mr Davis and Irelandia established the Tiger Airways brand in Asia with other partners. Tiger followed a pure model while competitors AirAsia and Jetstar hybridised. Since Mr Davis’ departure from Tiger in 2011 Tiger’s new management is adopting a hybrid platform. Irelandia invests in the Viva-brand of carriers in Latin America.
AIT Dublin: Irelandia says pure LCC with lowest cost 'wins'
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Amadeus and Navitaire: a dual brand strategy allowing greater airline hybridisation
As airlines have embraced dual brand strategies to reach full service and low cost growth aviation IT has responded, as seen with Amadeus' acquisition of Navitaire, which mostly but not exclusively powered the passenger service systems (PSS) of LCCs. In the first six months since the deal closed Navitaire has added 230m passengers boarded, to Amadeus Altea's 393m. Navitaire passengers account for 37% of Amadeus' total.
Having significantly grown its market share, and with past LCC product forays not having worked out, Amadeus receives a new business stream. Some Navitaire customers (Ryanair, AirAsia, IndiGo) are larger than Altea customers and have high growth ahead of them. A second benefit is the Navitaire acquisition supporting Altea customers. By owning both products Amadeus can improve connectivity between Altea and Navitaire airlines. Most of Altea's large customers – Lufthansa, IAG, AF-KLM, Qantas and JAL – have an LCC operating Navitaire software. Of Navitaire's passengers – 35% are on airlines that are LCC units of full service airlines. Other airlines may be holding out on pursuing partnerships and connectivity until there is a cheaper, simpler and streamlined way.
It may seem that the Amadeus-Navitaire marriage is about full service and low cost segments, but its greatest strength is the role it will have in the hybrid segment. Hybridity is growing, and Amadeus-Navitaire could galvanise further expansion.
US airlines and the Cuba route awards Part 1: The US DoT slices up many pieces of the Havana pie
US regulators have decided to spread Havana award rights among eight operators – a mix of global full service airlines, medium frills low cost carriers and ULCCs. Unsurprisingly, given the concentration of Cuban Americans residing in the region, South Florida features prominently in the tentative award approvals.
In theory, the DoT’s proposed route structure ensures that customers travelling to Havana have access to a wider range of fare prices and product offerings. In many respects the agency had little choice but to accommodate as many airlines as possible for service to Havana – in order to ensure that consumers had an array of service providers as scheduled air service resumes between the US and Cuba.
There may be some quibbles regarding the tentative route awards to Havana, but the route composition proposed by the DoT is not likely to change drastically. The agency’s route dispersal reflects certain expectations that the agency would institute a certain level of competitive diversity on new services to Havana.
(This is Part 1 in a series examining US-Cuba route awards. Part 2 will examine markets other than Havana)