Long haul low cost airlines: the model grows globally; Australia slows

Australia was the initial testing ground of the long haul low cost model and has since had a higher concentration of long haul low cost capacity than any other market. However, long haul low cost growth in Australia has slowed in recent years as competition intensified, whereas globally the rate of expansion has accelerated significantly.

Jetstar, the pioneer of the current long haul low cost model, has not pursued significant long haul growth for seven years. AirAsia X, the other long haul low cost pioneer, has cut back in Australia over the last three years. Scoot, the third main long haul low cost player in the Australian market, has not added capacity in more than two years.

There is still growth from smaller foreign long haul LCCs: Cebu Pacific is adding its second Australia route in Aug-2018, and VietJet Air is planning to enter the market in 2019. However, these two new routes will generate growth of less than 5% - a very modest figure given the rapid double digit rate of growth for long haul low cost operations globally.