TransAsia Airways board approved (20-Nov-2013) plans to establish a subsidiary tentatively named Chuanmin Air Transport Co Ltd with an estimated investment of TWD2000 million (USD66.7 million) to TWD3000 million (USD100 million), with the funds to come from the carrier’s long-term funds. The proposed start-up will primarily operate scheduled and non-scheduled domestic and international passenger services, cargo, mail and other civil air transport operations and other related businesses. TransAsia stated the objective of the start-up is to “cater to different segments and expand air operation.” TransAsia also stated the start-up will be Taiwan’s first LCC, launching a competition for the public to name the start-up with the winner to be awarded unlimited flights on TransAsia for 10 years. TransAsia chairman Vincent Lin said the carrier will not only be the first Taiwan-owned LCC but also the only one that puts a priority on the needs and purchasing habits of Taiwanese travellers. Mr Lin stated the development of LCCs has now become a global trend, particularly LCCs entering the Taiwan market, and one that Taiwan can not be absent in. Mr Lin reiterated the LCC will be 100% owned by the TransAsia Airways Group and will have fleet comprising of two to three A320/A321s initially with flight radius within five hours, including to Southeast Asia, Northeast Asia as well as second- and third-tier cities in mainland China, stating "we will lease brand new aircraft for a brand new airline. We will use the best equipment possible." More details on routes is expected to be announced in three to six months. Mr Lin said he hopes the LCC will commence operations at the end of Nov-2014. [more - original PR - Chinese I][more - original PR - Chinese II][more - original PR - Chinese III]
TransAsia Airways board approves plan to establish Taiwan's first LCC, could commence op in 1 year
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For the first time ever in Europe, in 2016 a low cost airline carried more passengers than any other airline or airline group, as Ryanair's 117 million passengers pushed Lufthansa Group's 110 million into second place. Ryanair had beaten Lufthansa itself, but not the whole Lufthansa Group. IAG's first full year of including Aer Lingus helped it to take third place from Air France-KLM. Europe's number two LCC, easyJet, was ranked fifth.
The big five can be expanded into a big seven to include Turkish Airlines and the Aeroflot Group, although these two had contrasting growth rates in 2016. A chasing pack of middle sized airline groups includes three LCCs (Norwegian, Pegasus and Wizz Air) and three legacy airlines with varying challenges to establishing sustainable profitability (SAS, Air Berlin Group and Alitalia).
Most of the faster growing airline groups in the top 20 are LCCs and the main growth drivers for Europe's big three legacy groups are their LCC subsidiaries. Just outside the top 20 are some fast growing legacy airlines in Eastern Europe, demonstrating the potential there. Nevertheless, unless there is a big merger or acquisition, Ryanair looks set to remain at number one for some time.
Norwegian Air part 2: long haul growth shows its strategic innovation, but increases debt burden
Norwegian plans to add US routes to its Edinburgh base, a development considered in part 1 of this report, adding to its growing list of European long haul bases. However, its Edinburgh-US routes will use new Boeing 737MAX-8 aircraft – its first deployment of narrowbodies for long haul. It has also ordered 30 Airbus A321neoLRs for long haul use. Narrowbodies open up new possibilities for routes between the UK (or other European markets) and the US east coast.
Norwegian also plans to add non-US destinations to its UK long haul network, with details expected during the course of 2017. Norwegian's flexibility to develop its long haul operations from the UK would be improved by the grant of a US foreign carrier permit to its UK-registered subsidiary, Norwegian Air UK.
Norwegian has had to surmount many obstacles to build and grow its global network – which may also include Latin America in 2017, when it will accelerate long haul ASK growth to 60%. However its rapid expansion, currently driven mainly by long haul growth, has led to a rapid increase in debt, and is likely to weigh on unit revenue. Norwegian's undoubted strategic innovation can only be sustained if it is financially successful.