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Norwegian overtakes Scoot as second largest long haul LCC after AirAsia X: long haul low cost Part 3

Analysis

In 3Q2017 Norwegian will overtake Singapore's Scoot to become the world's second largest long haul low cost airline after Malaysia's AirAsia X. Ironically Norwegian's new route from London Gatwick to Singapore will help propel it into the number two position.

Gatwick-Singapore is one of 20 new long haul routes being launched by Norwegian over the next five months, giving the LCC group 48 long haul routes. Norwegian will have more long haul routes at the end of 3Q2017 than both AirAsia X and Scoot, but AirAsia X will still have significantly more capacity.

Long haul low cost operations now account for less than 0.5% of total global seat capacity, but the sector is expanding fast and starting to become more mainstream. This summer there will be more than 160 long haul low cost routes operated by 16 airlines.

This is the third in a series of reports on Norwegian's new London-Singapore route, which is launching on 28-Sep-2017, and on the fast expanding long haul low cost market.

The first report highlighted how London-Singapore becomes the longest LCC route in the world and examined the impact Norwegian will have on the London-Singapore market, which is currently only served nonstop in both directions by British Airways and SIA. The second report focused on how the route - and potential other long haul routes - impacts the Gatwick and Singapore markets.

See related reports:

This report examines Norwegian's rapid long haul expansion and where this places Norwegian among long haul low cost operators.

Long haul low cost sector to exceed 500,000 weekly seats this summer

There are currently 15 LCCs operating long haul services, generating approximately 440,000 weekly seats (based on OAG schedules for the week commencing 24-Apr-2017). The long haul low cost sector is by all measures small, accounting for less than 0.5% of global seat capacity.

However, it is growing fast, driven primarily by Norwegian, and will soon exceed 500,000 weekly seats. Norwegian's capacity is increasing by 79% over the next five months, reaching more than 87,000 seats after service to Singapore is launched in late Sep-2017.

There will be 170 long haul low cost routes operated by 17 LCCs this summer, including the 48 by Norwegian. Only four of these routes will be served by more than one long haul low cost operator - Toronto-London Gatwick (Air Canada rouge and WestJet), Singapore-Melbourne (Jetstar and Scoot), Barcelona-Los Angeles (Norwegian and Level) and Barcelona-Oakland (Norwegian and Level).

Long haul low cost operations ranked by weekly seat capacity: 2-Oct-2017 to 8-Oct-2017

Rank Airline Weekly seats

Number of routes

1 AirAsia X 133,458 21
2 Norwegian 87,337 48
3 Scoot 69,144 18
4 Jetstar Airways 46,900 14
5 Air Canada rouge 37,923 20
6 Thai AirAsia X 31,668 4
7 NokScoot 24,070 6
8 Cebu Pacific 13,080 5
9 Azul 12,466 4
10 Eurowings 11,780 12
11 Lion Air 11,440 1
12 Wow air 10,944 3
13 WestJet 7,336 3
14 Level 5,860 4
15 Beijing Capital 5,952 6
16 French Blue 5,556 3
17 Jin Air 3,930 1
TOTAL 512,984 169

After several years of relatively slow expansion and significant scepticism doubting its long term viability, the long haul low cost model is starting to make inroads globally, prompting several airlines to consider establishing long haul LCC operations. Air France-KLM's Nov-2016 announcement on the establishment of Boost, and IAG's Mar-2017 announcement on the launch of Level, will almost certainly be followed by other major players making a move in the fast evolving long haul low cost space.

Jetstar was the pioneer of the long haul low cost model

Jetstar and AirAsia X were the pioneers in the current generation of long haul LCCs. AirAsia X launched services in 2007, operating an all widebody fleet and feeding its already well established sister, the short haul LCC AirAsia. Jetstar added widebody aircraft and long haul routes in 2006, using the same operator's certificate as was used to launch the group's original short haul operation in 2004.

Jetstar has been relatively conservative in pursuing long haul expansion, particularly after it decided, in 2012, against implementing a plan to establish a long haul base in Singapore. Jetstar now only operates long haul services from Australia, serving 12 routes to Asia and Hawaii.

Jetstar's long haul operation currently generates approximately 46,000 weekly seats, based on CAPA and OAG data for the week commencing 24-Apr-2017. Over the next five months its long haul capacity will increase very slightly, with some seasonal adjustments and two new routes to Vietnam, resulting in approximately 47,000 weekly seats in early Oct-2017. Jetstar operates 335-seat two class 787-8s on all its long haul routes.

Jetstar Airways long haul capacity by route: 2-Oct-2017 to 8-Oct-2017

Rank Destination Origin Weekly seats
1 Bali Denpasar Ngurah Rai Airport Melbourne Tullamarine Airport 6,700
2 Bali Denpasar Ngurah Rai Airport Sydney Kingsford Smith Airport 4,690
3 Tokyo Narita Airport Cairns Airport 4,690
4 Singapore Changi Airport Melbourne Tullamarine Airport 4,020
5 Honolulu International Airport Sydney Kingsford Smith Airport 4,020
6 Phuket International Airport Sydney Kingsford Smith Airport 3,350
7 Osaka Kansai International Airport Cairns Airport 3,350
8 Phuket International Airport Melbourne Tullamarine Airport 3,350
9 Bangkok Suvarnabhumi International Airport Melbourne Tullamarine Airport 2,680
10 Bali Denpasar Ngurah Rai Airport Brisbane Airport 2,680
11 Ho Chi Minh City Tan Son Nhat Airport Sydney Kingsford Smith Airport 2,680
12 Tokyo Narita Airport Gold Coast Airport 2,680
13 Honolulu International Airport Melbourne Tullamarine Airport 2,080
14 Ho Chi Minh City Tan Son Nhat Airport Melbourne Tullamarine Airport 2,010
TOTAL 46,900

AirAsia X launched second, but has consistently been the market leader

AirAsia X launched more than a year after Jetstar's long haul operation, but expanded rapidly and quickly overtook Jetstar as the largest long haul LCC.

AirAsia X currently operates 22 long haul routes, generating approximately 132,000 weekly seats. All of AirAsia X's routes are considered long haul as its franchise agreement with AirAsia does not allow it to operate short haul routes from its Kuala Lumpur base.

AirAsia X's capacity will increase slightly over the next five months with some seasonal adjustments (its two Saudi Arabia routes do not operate year-round) and the launch of services from Osaka to Honolulu, resulting in approximately 133,500 seats in early Oct-2017. Osaka-Honolulu route is counted as long haul capacity, given the route's length, but AirAsia X's other fifth freedom route, from Gold Coast to Auckland, is not counted as long haul since this is a short sector. (Jetstar routes between Australia and New Zealand are also not counted in its long haul capacity figures.)

The AirAsia X fleet consists of 377-seat two class A330-300s.

AirAsia X long haul capacity by route: 2-Oct-2017 to 8-Oct-2017

Rank Origin Destination Weekly seats
1 Kuala Lumpur International Airport Taipei Taoyuan International Airport 12,818
2 Kuala Lumpur International Airport Seoul Incheon International Airport 10,556
3 Kuala Lumpur International Airport Sydney Kingsford Smith Airport 10,556
4 Kuala Lumpur International Airport Perth Airport 10,556
5 Kuala Lumpur International Airport Melbourne Tullamarine Airport 10,556
6 Kuala Lumpur International Airport Beijing Capital International Airport 10,556
7 Kuala Lumpur International Airport Gold Coast Airport 8,294
8 Kuala Lumpur International Airport Osaka Kansai International Airport 8,294
9 Kuala Lumpur International Airport Shanghai Pudong International Airport 8,294
10 Kuala Lumpur International Airport Tokyo Haneda Airport 5,278
11 Kuala Lumpur International Airport Wuhan Tianhe International Airport 5,278
12 Kuala Lumpur International Airport Chengdu Shuangliu International Airport 5,278
13 Kuala Lumpur International Airport Tehran Imam Khomeini International Airport 3,016
14 Kuala Lumpur International Airport Sapporo Chitose Airport 3,016
15 Kuala Lumpur International Airport Delhi Indira Gandhi International Airport 3,016
16 Kuala Lumpur International Airport Chongqing Jiangbei International Airport 3,016
17 Kuala Lumpur International Airport Xian Xianyang International Airport 3,016
18 Kuala Lumpur International Airport Hangzhou Xiaoshan International Airport 3,016
19 Kuala Lumpur International Airport Kathmandu Tribhuvan Airport 3,016
20 Kuala Lumpur International Airport Busan Gimhae Airport 3,016
21 Osaka Kansai International Airport Honolulu International Airport 3,016
TOTAL 133,458

Rapid expansion enabled Scoot to overtake Jetstar

Air Canada rouge, Cebu Pacific, Norwegian and Scoot were part of a new crop of long haul LCCs that were launched in 2012 and 2013.

Cebu Pacific and Norwegian are independent LCCs that added widebody aircraft and long haul routes in 2013, alongside their longstanding short haul operations. Scoot was an entirely new start up, launched by the SIA Group in 2012 and operating an all widebody fleet, although it is now in the process of merging with the short haul LCC Tigerair. Air Canada rouge was also an entirely new start up, and launched operations in 2013 with a mix of narrowbody and widebody aircraft.

Scoot, until now, has expanded at the fastest rate. Its rate of expansion has particularly accelerated over the past two years, with seat capacity nearly doubling. This enabled Scoot to overtake Jetstar as the second largest long haul LCC and maintain a larger long haul operation than Air Canada rouge, Cebu Pacific and Norwegian.

Scoot currently has 17 long haul routes generating approximately 67,000 weekly seats. Scoot will reach more than 69,000 weekly long haul seats in early Oct-2017, driven by the launch of services to Athens.

Scoot also operates five short haul routes within Southeast Asia or within North Asia (Singapore-Bangkok, Kaohsiung-Osaka, Taipei-Tokyo, Taipei-Sapporo, Taipei-Seoul) that are not counted in the chart below. Another short haul route, Singapore-Hong Kong, is resuming in May-2017. However its two fifth freedom routes beyond Bangkok (Bangkok-Osaka and Bangkok-Tokyo) are counted, since they are longer than four hours.

Scoot long haul capacity by route: 2-Oct-2017 to 8-Oct-2017

Rank Origin Destination Weekly seats
1 Singapore Changi Airport Taipei Taoyuan International Airport 9,510
2 Singapore Changi Airport Sydney Kingsford Smith Airport 5,250
3 Singapore Changi Airport Guangzhou Baiyun International Airport 5,250
4 Singapore Changi Airport Perth Airport 4,930
5 Bangkok Don Mueang International Airport Tokyo Narita Airport 4,690
6 Singapore Changi Airport Nanjing Lukou International Airport 4,690
7 Singapore Changi Airport Chennai International Airport 4,690
8 Singapore Changi Airport Hangzhou Xiaoshan International Airport 4,100
9 Singapore Changi Airport Qingdao Liuting International Airport 3,750
10 Singapore Changi Airport Tianjin Binhai International Airport 3,670
11 Singapore Changi Airport Melbourne Tullamarine Airport 3,350
12 Singapore Changi Airport Gold Coast Airport 3,000
13 Singapore Changi Airport Shenyang Taoxian International Airport 2,680
14 Singapore Changi Airport Amritsar Sri Guru Ram Dass Jee Airport 2,250
15 Singapore Changi Airport Athens International Airport 1,974
16 Singapore Changi Airport Kaohsiung International Airport 2,010
17 Bangkok Don Mueang International Airport Osaka Kansai International Airport 2,010
18 Singapore Changi Airport Jeddah King Abdulaziz International Airport 1,340
TOTAL 69,144

Scoot operates 335-seat two class 787-8s and 375-seat two class 787-9s and is about to put 787-8s with 329 seats into service; these will be used to launch Athens in Jun-2017 and subsequently other not yet announced European routes. The slightly less dense configuration on the 787-8s that Scoot is taking in 2017 is a result of losing six seats to accommodate crew rest bunks required for the new Europe flights.

Norwegian's long haul capacity to increase by 80% over the next five months

Norwegian has expanded faster than Scoot in terms of route expansion as it currently operates 28 long haul routes, which is also more than AirAsia X has. However, almost all of Norwegian's long haul routes are served less than daily, and therefore it currently has only approximately 49,000 weekly long haul seats - which is only slightly larger than the Jetstar long haul operation. (These route and capacity figures do not include Norwegian's three short haul routes beyond US gateways to the Caribbean.)

Norwegian is pursuing rapid long haul expansion this summer, which will enable it to overtake Scoot and widen the gap with Jetstar - and with other, smaller, long haul LCC operators. Norwegian has announced a staggering 20 new long haul routes, all of which will be launched by the end of Sep-2017.

The 20 new routes include 19 new routes to the US (for a total of 44 routes to the US) and London-Singapore, which will give Norwegian four routes in Asia compared to the current three. The new total of 48 long haul routes will generate more than 87,000 weekly seats in early Oct-2017, or 18,000 more weekly seats than Scoot, but still 46,000 fewer seats than AirAsia X.

Norwegian long haul capacity by route: 2-Oct-2017 to 8-Oct-2017

Rank Origin Destination Total seats
1 New York John F Kennedy International Airport London Gatwick Airport 8,944
2 London Gatwick Airport Los Angeles International Airport 4,816
3 New York John F Kennedy International Airport Paris Charles de Gaulle Airport 4,074
4 London Gatwick Airport Oakland International Airport 3,440
5 New York John F Kennedy International Airport Oslo Gardermoen Airport 3,440
6 London Gatwick Airport Singapore Changi Airport 2,752
7 London Gatwick Airport Boston Logan International Airport 2,752
8 London Gatwick Airport Seattle-Tacoma International Airport 2,752
9 Edinburgh Airport Stewart International Airport 2,646
10 Dublin Airport Stewart International Airport 2,457
11 New York John F Kennedy International Airport Copenhagen Kastrup Airport 2,328
12 Paris Charles de Gaulle Airport Los Angeles International Airport 2,328
13 New York John F Kennedy International Airport Stockholm Arlanda Airport 2,328
14 Barcelona El Prat Airport New York Newark Liberty International Airport 2,328
15 London Gatwick Airport Orlando International Airport 2,064
16 Dublin Airport Providence T F Green Airport 1,890
17 Copenhagen Kastrup Airport Los Angeles International Airport 1,852
18 Stockholm Arlanda Airport Oakland International Airport 1,746
19 Barcelona El Prat Airport Oakland International Airport 1,746
20 Stockholm Arlanda Airport Los Angeles International Airport 1,746
21 Barcelona El Prat Airport Los Angeles International Airport 1,746
22 Edinburgh Airport Providence T F Green Airport 1,512
23 Denver International Airport London Gatwick Airport 1,376
24 Los Angeles International Airport Oslo Gardermoen Airport 1,376
25 Fort Lauderdale-Hollywood International Airport Oslo Gardermoen Airport 1,376
26 Oslo Gardermoen Airport Oakland International Airport 1,376
27 Fort Lauderdale-Hollywood International Airport London Gatwick Airport 1,376
28 Boston Logan International Airport Oslo Gardermoen Airport 1,376
29 Copenhagen Kastrup Airport Fort Lauderdale-Hollywood International Airport 1,164
30 Stockholm Arlanda Airport Fort Lauderdale-Hollywood International Airport 1,164
31 Copenhagen Kastrup Airport Oakland International Airport 1,164
32 Paris Charles de Gaulle Airport Fort Lauderdale-Hollywood International Airport 1,164
33 Barcelona El Prat Airport Fort Lauderdale-Hollywood International Airport 1,164
34 Belfast Flesland Airport Stewart International Airport 1,134
35 Edinburgh Airport Hartford Bradley International Airport 1,134
36 Cork International Airport Providence T F Green Airport 1,134
37 Bergen Flesland International Airport Stewart International Airport 756
38 Shannon Airport Stewart International Airport 756
39 Bergen Flesland International Airport Providence T F Green Airport 756
40 Belfast Flesland Airport Providence T F Green Airport 756
41 Shannon Airport Providence T F Green Airport 756
42 Orlando International Airport Oslo Gardermoen Airport 688
43 Copenhagen Kastrup Airport Boston Logan International Airport 688
44 Oslo Gardermoen Airport Bangkok Suvarnabhumi International Airport 688
45 Copenhagen Kastrup Airport Bangkok Suvarnabhumi International Airport 582
46 Stockholm Arlanda Airport Bangkok Suvarnabhumi International Airport 582
47 Copenhagen Kastrup Airport Orlando International Airport 582
48 Paris Charles de Gaulle Airport Orlando International Airport 582
TOTAL 87,337

Norwegian opens new long haul bases, expands using 737 MAX

Norwegian currently operates long haul routes from five hubs in Europe, including Copenhagen (seven routes), Oslo (seven routes), London Gatwick (six routes), Stockholm (five routes) and Paris (three routes).

Over the next five months, the Gatwick base is being expanded with three new routes and the Paris base is being expanded by one new route. At the same time, four routes are being launched from a new base in Barcelona and 12 routes are being launched from six new smaller gateways in Ireland, the UK and Norway (Bergen, Belfast, Cork, Dublin, Edinburgh and Shannon).

All four Barcelona routes (Fort Lauderdale, Los Angeles, Newark and Oakland) and the new Paris route (Orlando) will be operated by 787-8s. Two of these routes are being launched at almost the same time by Barcelona-based Level, which is commencing operations in Jun-2017 with A330-200 services to Buenos Aires, Los Angeles, Oakland and Punta Cana.

The three new Gatwick routes (Denver, Seattle and Singapore) will be operated by 787-9s. The other 12 new routes being launched by Norwegian this summer will be operated by a new fleet of US based 737 MAX 8 narrowbody aircraft.

See related report: Norwegian Air: 10 new North Atlantic routes enabled by new narrowbody aircraft and price stimulation

The new 737 MAX flights originate in Newburgh (New York), Hartford (Connecticut) and Providence (Rhode Island). Initially 10 routes were announced, to start in Jun-2017. Subsequently, after the above report was published, another two routes were announced (Newburgh-Bergen and Providence-Bergen), and they will be launched in early Jul-2017.

Norwegian is configuring its 737 MAX 8s with 189 all economy seats. Its current long haul network is operated with 291-seat 787-8s and 344-seat 787-9s in two class configuration.

The 787-9s are used for all the Gatwick routes, while the smaller 787-8s are used on all Paris and Stockholm routes, as well as most Copenhagen and Oslo routes. The new Barcelona routes are being launched with 787-8s. As Norwegian is only taking 787-9s, it is moving 787-8s from Oslo to Barcelona and placing new 787-9s at Oslo, which will be used to upgauge five existing long haul routes.

Norwegian more than doubles the size of its long haul network

Norwegian will have long haul services to 26 airports by the end of 3Q2017 - up from only 12 currently. (This excludes the two destinations in the Caribbean, which are currently served seasonally as tags from Fort Lauderdale and New York; Norwegian will not be serving any destinations in the Caribbean at the end of 3Q2017, according to OAG data.)

In Jun-2017 Norwegian will grow its US network from six destinations currently to 10, including the three new 737 MAX bases and Newark (which is being served from Barcelona). In Sep-2017 Norwegian will further expand its US network to 12 destinations as Denver and Seattle are launched (from London Gatwick).

The addition of Singapore will give Norwegian two destinations in Asia, along with Bangkok. Meanwhile, the number of gateways in Europe will expand from the current five to 12.

Norwegian could overtake (Malaysia) AirAsia X in 2018

Norwegian is planning more rapid long haul expansion in 2018 as several more 787-9s and 737 MAX 8s are delivered. A combination of new Asia routes, new US routes and the launch of long haul services to South America is expected in 2018. More expansion is planned for 2019 as Norwegian starts to take deliveries of the A321neoLR - a new narrowbody type with even more range than the 737 MAX 8.

Norwegian could potentially surpass AirAsia X as the world's largest long haul airline by the end of 2018, particularly as the Malaysian carrier is not planning to pursue significant expansion until early 2019 - when it receives it first batch of new A330-900neos. (AirAsia X does not have any more A330ceos on order.)

However, AirAsia X as a group should be able to maintain its market leading status in the long haul low cost sector for at least slightly longer. Thai AirAsia X, which is partially owned by the Malaysia based AirAsia X Group, launched services in 2014 and currently operates four routes from its Bangkok base, generating approximately 33,000 weekly seats. Thai AirAsia X will be operating the same four routes in early Oct-2017 but with slightly less frequency, generating almost 32,000 weekly seats.

Thai AirAsia X long haul capacity by route: 2-Oct-2017 to 8-Oct-2017

Rank Destination Origin Weekly seats
1 Tokyo Narita Airport Bangkok Don Mueang International Airport 10,556
2 Seoul Incheon International Airport Bangkok Don Mueang International Airport 10,556
3 Osaka Kansai International Airport Bangkok Don Mueang International Airport 5,278
4 Shanghai Pudong International Airport Bangkok Don Mueang International Airport 5,278
TOTAL 31,668

As a group, AirAsia X will therefore have nearly 170,000 weekly long haul seats in early Oct-2017, which is nearly double the capacity of Norwegian. AirAsia X has a second affiliate in Indonesia, but Indonesia AirAsia X suspended scheduled operations in 2016 and is currently wet leasing its fleet of two A330-300s to other AirAsia affiliates; it therefore does not have any scheduled long haul routes at this stage.

Scoot also has an affiliate in Thailand

Norwegian also operates as a group, with subsidiaries in Scandinavia, Ireland and the UK. At some of its bases long haul flights are operated by a combination of different airline subsidiaries. In this report Norwegian is considered as essentially one entity as it owns 100% of all its airline subsidiaries. AirAsia X does not own a majority share in Thai AirAsia X.

Scoot also has a Thai affiliate, NokScoot, but Scoot does not have a majority share in NokScoot and NokScoot's financials are reported under Nok Air - a Thailand based short haul LCC. NokScoot operates six long haul routes from its Bangkok base, generating more than 22,000 weekly seats. In early Oct-2017 the same six routes will generate approximately 24,000 weekly seats.

NokScoot long haul capacity by route: 2-Oct-2017 to 8-Oct-2017

Rank Destination Origin Weekly seats
1 Nanjing Lukou International Airport Bangkok Don Mueang International Airport 5,810
2 Taipei Taoyuan International Airport Bangkok Don Mueang International Airport 5,810
3 Tianjin Binhai International Airport Bangkok Don Mueang International Airport 4,150
4 Shenyang Taoxian International Airport Bangkok Don Mueang International Airport 3,320
5 Qingdao Liuting International Airport Bangkok Don Mueang International Airport 3,320
6 Dalian Zhoushuizi International Airport Bangkok Don Mueang International Airport 1,660
TOTAL 24,070

Therefore, Scoot and NokScoot combined will still have slightly more capacity than Norwegian at the end of 3Q2017. Norwegian will have more capacity than Scoot, as previously outlined, and in 2018 should easily surpass the combined Scoot and NokScoot. Scoot and NokScoot are expanding, but not nearly as fast as Norwegian.

There are currently 16 LCCs with long haul operations, but several are small

NokScoot is currently the sixth largest long haul LCC based on seat capacity after AirAsia X, Scoot, Norwegian, Jetstar and Thai AirAsia X. There are another 10 long haul low cost operators (and 11 after Level is launched in Jun-2017) but these are all much smaller, each currently generating less than 20,000 weekly seats.

Combined, these other airlines currently generate less than 90,000 weekly seats. At the end of 3Q2017 they will account for approximately 24% of total long haul LCC capacity.

Cebu Pacific is currently the largest among this group of smaller long haul LCCs, but Air Canada rouge will be the largest based on capacity figures for early Oct-2017.

Smaller long haul LCC operations ranked by weekly seat capacity: 24-Apr-2017 to 30-Apr-2017

Airline

Weekly long haul seats

w/c 24-Apr-2017

Long haul routes

w/c 24-Apr-2017

Weekly long haul seats

w/c 2-Oct-2017

Long haul routes

w/c 2-Oct-2017

Cebu Pacific 19,144 5 13,080 5
Azul 11,924 4 12,466 4
Wow air 11,628 3 10,944 3
Lion Air 11,440 1 11,440 1
Air Canada rouge 10,720 8 37,923 20
Eurowings 8,990 10 11,780 12
WestJet 5,502 3 7,336 3
Beijing Capital 3,696 3 5,952 6
French Blue 3,720 3 5,556 3
Jin Air N/A 0 3,930 1
Level N/A 0 5,860 4

Air Canada rouge is only a significant player during peak summer months

Air Canada rouge currently operates eight long haul routes generating approximately 11,000 weekly seats. In early Oct-2017 rouge will be operating 20 routes, generating almost 38,000 weekly seats. The LCC seasonally redeploys 767s from short haul routes within North America and the Caribbean to long haul routes to Europe and North Africa.

The airline has 24 long haul routes in 2017 from three bases in Canada, including: 20 to Europe (13 from Toronto, six from Montreal and one from Vancouver), two to North Africa (both from Montreal) and two to South America (both from Toronto). However, most of the Europe routes are seasonal, and a few only operate for the peak summer months. Capacity is added by rouge on several routes during the peak summer months.

In the peak summer months rouge is therefore one of the world's largest long haul LCCs, only slightly smaller than Jetstar. However, on a year round basis it is a relatively small player.

Cebu Pacific has limited long haul network

Cebu Pacific has been operating long haul services alongside its short haul operation since late 2013. However, Cebu Pacific has been relatively conservative in adding long haul routes and has been using half its A330-300 fleet for short haul flights.

Cebu Pacific currently operates only five long haul routes (Manila to Doha, Dubai, Kuwait, Riyadh and Sydney), generating more than 19,000 weekly seats. In early Oct-2017 it will have the same five routes, generating only 13,000 weekly seats due to seasonal reductions on most of its long haul routes.

Cebu Pacific will have only slightly more long haul capacity in early Oct-2017 than three of the smaller players - Azul, Lion Air and Wow air.

Azul, Lion and Wow have limited long haul operations

Brazil's Azul, the only LCC in South America with a long haul operation, operates four long haul routes to the US and Portugal using its small A330 fleet. Azul currently has almost 12,000 weekly long haul seats and will have a similar amount of long haul capacity in early Oct-2017.

Indonesia's Lion has just one long haul route (Jakarta-Jeddah), but has a similar amount of long haul capacity as Azul. Lion is one of the world's largest short haul LCCs but has a tiny widebody operation, consisting of three A330-300s.

Iceland's Wow air is a new long haul low cost operator, having added its first widebody aircraft in 2016. Wow operates A330s on three long haul routes (Reykjavik to Los Angeles, Miami and San Francisco), generating approximately 11,600 weekly seats. Wow's long haul capacity will be relatively flat over the next few months, with some seasonal adjustments on its three long haul routes.

Wow also has five routes to the northeast US and eastern Canada. However, these routes are not counted under long haul in this report as they are operated with current generation narrowbody aircraft (see background information) and are shorter than other Europe-North America routes due to the location of Iceland. In this report, only routes operated with new generation narrowbody aircraft, which offer significantly improved range, are considered. Neither the A321neo nor 737 MAX are in service yet, but Norwegian is one of the first operators of the 737 MAX 8 aircraft and deliveries are expected to begin in May-2017.

Beijing Capital to add three long haul routes this summer

The Hainan Airlines Group subsidiary Beijing Capital Airlines is one of the newest long haul LCCs, having added widebody aircraft and converted to the LCC model over the past couple of years. Beijing Capital is the first of potentially several Chinese long haul low cost operators, including other Hainan subsidiaries.

Beijing Capital currently has only three long haul routes (Chengdu-Madrid, Qingdao-Sydney and Qingdao-Vancouver). It is launching another three long haul routes over the next few months - Beijing-Lisbon, Qingdao-Melbourne and Qingdao-Moscow - and has big ambitions for long haul expansion over the next few years. Beijing Capital currently has 3,700 weekly long haul seats and will have nearly 6,000 weekly seats by early Oct-2017.

French Blue is a new independent long haul LCC, launching operations in 2016 with an all widebody fleet and seasonally adjusting its network. It currently operates three low frequency routes to the Caribbean, generating approximately 3,700 weekly seats. In early-Oct-2017 French Blue will be operating one daily route to La RĂ©union in the Indian Ocean, generating just over 5,500 weekly seats.

Jin Air is not currently operating any long haul routes

Finally, Eurowings, Jin Air and WestJet are all well established short haul LCCs with small long haul operations.

Jin is not operating any long haul routes at this point, since its 777 fleet is being deployed on short haul routes. However, Jin uses its 777s on long haul routes seasonally, making it a long haul low cost operator.

In 2017 Jin's two long haul routes are Seoul-Cairns, which operated briefly at the beginning of the year, and Seoul-Honolulu, which is operating most of the year with the exception of early March to late May (hence it is not operating currently). In early Oct-2017 Jin will have five weekly flights to Honolulu, generating nearly 4,000 weekly seats.

Canada's Westjet began long haul operations in 2015 after taking delivery of its first widebody aircraft. Westjet operates 767s on three long haul routes to London Gatwick (from Calgary, Toronto and Vancouver), generating approximately 5,500 weekly seats. These same three routes will generate more than 7,000 weekly seats in early Oct-2017. WestJet also operates 737-700s on three seasonal routes from secondary cities in far eastern Canada (Halifax and Saint John's) to Ireland and the UK, but these are not considered long haul in this report as they are operated with current generation 737s.

The Lufthansa subsidiary Eurowings has been operating long haul services since 2015. Eurowings currently operates 10 low frequency long haul routes to Asia and North America/the Caribbean from its Cologne base (Bangkok, Cancun, Havana, Miami, Mauritius, Puerto Plata, Punta Cana, Phuket, Salalah and Varadero). Services from Cologne to Las Vegas, Montego Bay, Orlando and Windhoek are being launched over the next few months, while Phuket and Salah are suspended.

As outlined in the first instalment in this series, Cologne-Phuket is currently the longest LCC route in the world. Eurowings has approximately 9,000 weekly long haul seats and will have almost 12,000 weekly long haul seats in early Oct-2017.

Europe experiences waves of new long haul LCC operators

Eurowings is the first long haul low cost operator under a European full service airline group. Its long haul operation, and the rapid expansion of Norwegian, have sparked interest in the long haul low cost sector from several other European full service airlines. Air France-KLM and IAG are both now planning to launch long haul low cost operations, and other European airline groups are considering joining this fast expanding sector.

There will likely be more than 20 long haul low cost operations within the next year or two. More significantly, the total capacity generated by long haul LCCs will quickly double - driven in part by the rapid expansion at Norwegian.

There will likely be more than 1 million weekly long haul LCC seats in summer 2019. The long haul low cost movement seems to have turned the corner and is starting to become more mainstream. Most of the early sceptics have been quietened, and the long haul low cost sector is now capturing significant attention globally, shaking up the market in multiple ways.

As Norwegian starts to expand in Asia there will be significant implications for the Asian market - just as there have been in the European marketplace, leading to the launch of long haul low cost operations by the Lufthansa Group and now Air France-KLM and IAG.

Background information ... defining long haul low cost

This report counts long haul LCC capacity based on various criteria with some differentiation from region to region.

In Asia Pacific, all LCC widebody flights of more than four hours are counted. In Asia the four hour rule typically distinguishes between a short haul and long haul flight for those LCC groups operating widebody aircraft. There are narrowbody LCC routes within Asia Pacific of more than four hours, but those are not generally considered long haul operations and therefore are not counted here.

In the Americas and Europe, the key criterion is widebody LCC routes that cross the Atlantic. Widebody LCC routes connecting North America and South America are also included (there is a limited number and all are at least six hours long). The only narrowbody LCC routes that are included are those over the Atlantic that are operated with new generation longer range narrowbody aircraft - namely the 737 MAX 8 and A321neo. Hence, Norwegian's new 737 MAX 8 routes are included in the long haul low cost capacity calculations for summer 2017.

As there is in Asia-Pacific, there are LCC narrowbody routes of more than four hours within Europe and the Americas using current generation narrowbody aircraft (as well as from Europe to parts of Africa and the Middle East). However, these are not generally considered as long haul operations and therefore not counted in this report. The same rule applies to the limited number of LCC trans-Atlantic routes using current generation narrowbody aircraft from Iceland to the eastern US, and from the far eastern parts of Canada to Ireland and the UK.

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