See also CAPA's profile on low cost carriers.
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In Homer's epic tale The Odyssey, it takes Odysseus 10 years to return home after the Trojan War. Although CEO Adam Scott's first attempt to start Odyssey Airlines began around nine years ago, he will he hoping for a smoother journey after the planned launch of all-business class flights between London City Airport and New York in 2016.
Odyssey's business model is based mainly on the convenience of London City and the deployment of the Bombardier CS100 in a 40 seat configuration. It will compete with British Airways' 32 seat A318 business class-only service from the same airport, in addition to multi-class services from BA, American, Virgin Atlantic, United and Delta from Heathrow.
History has not been kind to premium-only operators on the North Atlantic, whose share of global premium revenues is declining. In spite of this less than encouraging backdrop, Odyssey is not the only airline planning all-business class operations between Europe and North America. Following our recent analysis of Dreamjet's forthcoming launch between Paris and New York, in this second of two reports we look at Odyssey's prospects.
The North Atlantic and Europe are suffering a fall in their share of world premium traffic revenues. Moreover, the North Atlantic market has consolidated in recent years, to be dominated by the immunised joint ventures within the three global alliances (plus the new Delta-Virgin Atlantic JV).
So why are two new European all-business class transatlantic services currently planning to enter this market? It may be possible for a differentiated product, tapping into a defensible and large enough sector of this market, to succeed if its business plan is well devised and well executed. However, history is not attractive for a new entrant and previous attempts, before the global financial crisis, saw the rise and fall of Eos Airlines, MAXjet, Sliverjet and L'Avion.
In this first of two reports, we review the defunct all-business class transatlantic airlines and the all-business class services of existing network carriers. We also look at the business model proposed by Dreamjet, which plans to operate between Paris and New York this year. In part two, we will consider Odyssey Airlines, which plans to start up from London City to New York in 2016.
More than two years after declaring plans to resurrect the PEOPLExpress name, executives are now planning a Jun-2014 launch from Newport News Williamsburg International Airport.
After the airline’s self-styled seasoned executives underestimated the effort and complexity of obtaining certification from the US Department of Transportation (DoT), PEOPLExpress is working with Las Vegas-based Vision Airlines to introduce service after flirting with the purchase of charter carrier XTRA Airways during 2013.
Without explicitly declaring itself an ultra low-cost carrier (ULCC), it seems PEOPLExpress is taking pages from Spirit’s playbook in offering cheap base fares and charging for other aspects of travel. It will be largely shielded from large network airlines on its initial crop of routes; but limiting its exposure to larger carriers does not alone guarantee the airline’s chances of success.
AirAsia India has announced it will launch service on 12-Jun-2014. in this extract from the CAPA India Aviation Outlook Report 2014/15 we review the challenges and opportunities for the airline in this potentially massive market.
The short notice startup in AirAsia's joint venture - including 30% shareholder Tata - has surprised competitors and could gain the airline the advantage of the early mover.
AirAsia's experience across the region could well lead to the introduction of new norms into the Indian market; but speedy introduction of changes to the 5 year/20 aircraft rule will be necessary to securing the success of the airline in the medium term.
Canadian start-up carrier Canada Jetlines believes a “dive to the middle” by the country’s two largest carriers Air Canada and WestJet has created an opportunity for the pure-play ultra low-cost business model to manifest itself in Canada as fares continue to climb.
The new carrier’s thesis is it can stimulate traffic by offering lower fares to passengers that would otherwise travel by car and adopt the ultra low-cost carrier strategy of extreme unbundling – charging for nearly every aspect of travel outside of a seat. It is a strategy that has worked for Spirit Airlines in the larger US market.
It is not a certainty the ULCC model can be easily replicated in Canada; but if Canada Jetlines does ultimately become airborne perhaps the carrier to feel most of the heat is WestJet, an airline that is moving up market, but still has significant dependence on cost-conscious leisure travellers.
FlySafair’s ambitions to launch services on South Africa’s biggest domestic route between Johannesburg and Cape Town from 17-Oct-2013 have been dealt a severe blow by a High Court interdict issued on 8-Oct-2013 restraining FlySafair from operating scheduled domestic passenger services pending a review of South Africa’s Air Service Licensing Council’s (ASLC) decision to grant the carrier a licence to operate.
The interim injunction has stalled, temporarily at least, a looming battle in the South African domestic market into which FlySafair and fellow LCC start-up SkyWise are planning to launch, ending a brief period where the South African Airways and Comair groups enjoyed a duopoly following the demise of LCC 1time in Nov-2012.
Comair, which operates as LCC Kulula, and the full service British Airways franchise combined forces with would-be competitor SkyWise to block FlySafair’s launch by challenging the ASLC’s decision. Comair and SkyWise claim that FlySafair does not meet South Africa’s maximum 25% foreign ownership limit to operate domestic services and that one of its directors is not a resident of South Africa.