Full service vs LCC airlines: IAG further blurs cultural divide

Premium Analysis

It used to be received wisdom in the industry that legacy airlines should not really try to run low cost airline subsidiaries. If they really insisted, they should make absolutely certain that the LCC was set up and operated at arm's length from the core group. This was regarded as the only way to ensure that the fledgling would not be infected with legacy (i.e. high cost, slow to change) culture.

Ideally, this also meant that LCC subsidiaries should not be led by executives from the parent group.

Of course, times have changed. Thinking, and best practice, has evolved. The risk of 'infection' has not wholly disappeared, but the more prevalent view is there is room for cross-fertilisation between full service and low cost airlines. Unbundling by legacy airlines and bundling by LCCs blurred the distinctions. For some at least, this has created a new middle ground where the two models could meet and exchange ideas.

Recent announcements of senior appointments at IAG, and its subsidiaries Iberia and Vueling, are the latest illustration of how aviation careers can happily straddle both models. Moreover, provided that each unit has the right focus, legacy groups can very successfully run low cost subsidiaries.

Become a CAPA Member to access Analysis Reports

This CAPA Premium Analysis Report is 1,215 words.
Become a CAPA Member

Our Analysis Reports are only available to CAPA Members. CAPA Membership provides exclusive access to in-depth insights on the latest developments in the aviation and travel industry, developed by our team of dedicated analysts located in Europe, North America, Asia and Australia.

Each report offers a fresh perspective on the latest industry trends and is available online or via the CAPA mobile app, with customisable alerts to help you stay informed and identify new business opportunities.

CAPA Membership also provides access to our full suite of tools, including a tailored selection of more than 1,000 News Briefs every week and comprehensive data and analysis on thousands of companies around the world.