LCCs Working As Part Of A Full Service/Low Cost Group: Secrets For Success
The majority of low cost long haul airlines operate either as part of a larger low cost group or they are subsidiaries of full service carriers. Indeed the number of successful independent low cost long haul operators is rare; currently there is only one independent airline in the newly launched French Bee, while another start up, US based World Airways, is in the works. But independent long haul LCCs have historically struggled because they have lacked short haul feed from a sister airline, adding merit to the argument that long haul LCCs work better if they are part of an LCC group with short haul connectivity. Meanwhile in an attempt to combat growing LCC competition, many full service carriers have wisely avoided unsustainable price matching (although tiered fare products are a popular tactic amongst the US majors) and launched their own LCCs. Yet embedding a low cost culture within a legacy environment poses its own set of challenges, especially where services and systems are shared. A constant threat is that the subsidiary cannibalises the principal’s mainline traffic. But the success of Qantas’ Jetstar, launched more than a decade ago, shows that if executed correctly, low cost subsidiaries can generate remarkable synergies for both parent and child carrier.
- How are the traditional operators responding to long haul low cost competition? Price matching or launching their own low cost brand?
- Is it possible for traditional hub-based network airlines and LCCs to co exist on long haul sectors?
- What is the key to making a low cost long haul subsidiary work? How do you clearly differentiate the airline brands, ensure the networks are complementary and avoid cannibalisation?
- Does a low cost long haul airline only work when part of a larger group?
- What are the opportunities or limitations for creating brand awareness, increasing purchasing power and synergising fleets under the two partnership models?
- Can low cost subsidiaries ever be considered true LCCs if they’re owned by parents with high cost legacy structures?
- In the absence of partner feed from a short haul sister LCC or the backing from a full service parent, what are the options for independent operators to sustainably launch long haul operations?
- Air Canada Rouge, President, Duncan Bureau
- flyadeal, CEO, Con Korfiatis
- flynas, Senior Vice President, Paul Byrne
- T.B.L. (JAL’s new LCC), Executive Officer, Hiroyuki Uehara
- VietJet Aviation, Member of Board of Directors, Cuong Chu