Low-cost long-haul flights
All about low-cost transatlantic and long-haul flights. The past and the present. Failures and successes.
Currently, low-cost airlines, such as Ryanair, Easyjet, Vueling, Southwest, Frontier, Spring and many others, usually restrict themselves to short/medium-haul flights. The first attempts to offer low-cost scheduled flights on intercontinental routes failed completely in the second half of the 20th century. However, the situation is changing dramatically.
Originally, it is the long-haul market which gave birth to low-cost flights. In the 1950s, the Icelandic airline Loftleiðir offered transatlantic flights at low prices, primarily between New York and Hamburg or Luxembourg with stopover in Reykjavik. Similarly, in the second half of the 20th century, under the name of Skytrain, the British airline Laker Airways offered low-cost flights between London Gatwick and New York.
The oil crisis in the 1970s and the economic recession that followed put an end to these initiatives. Loftleiðir had to merge with Air Iceland and to form Icelandair in 1979 while Laker Airways went bankrupt in 1982.
The success of the low-cost short/medium-haul flights.
At the end of the 20th century, the deregulation of the airline industry first in the United States and then in the rest of the world as well as, at the beginning of the 21st century, the development of the Internet however completely changed the air transport market and allowed the birth and the development of low-cost airlines in the niche of the short/medium-haul flights.
Such flights do not require a large range of aircrafts which are expensive to manage, but instead, allow a high flight rotation and therefore a reduction of the fixed costs. In addition, flights offered by low-cost carriers do not have connections to other flights. So they skip the related costs and they do not require the cooperation of the major airlines that keep the international market into their hands. Last but not least, the reduction of the payroll and other overheads as well as, in many countries, the use of cheaper regional airports also made possible the decrease of the airfares of those flights.
The American airline Southwest pioneered such low-cost short/medium-haul flights. The example was followed by countless other airlines. If several of them failed, many others have been able to develop successfully so that some of them are now part the largest airlines in the world.
Among the many low-cost airlines, you find for example, Ryanair, Easyjet, Vueling, Wizz Air, Jet2.com and Iberia Express in Europe, Southwest, Spirit, Jetblue, Virgin America, WestJet and Interjet in North America, Gol, Azul Airlines and VivaColombia in South America, Pegasus Airlines and FlyDubai in the Middle East, Air Asia X, Lion Air, Indigo, SpiceJet, Cebu Pacific and many others in Asia.
The revival of the low-cost long-haul flights.
The success of the low-cost short/medium-haul flights initiated two new trends. On the one hand, some American airlines (Spirit Airlines, Allegiant Air and Frontier) have pushed the low-cost strategy even further. They offer ultra-low-cost domestic flights with a minimum service and they charge à la carte any additional option.
On the other hand, the success of low-cost airlines has revived the opportunity to long-haul flights at low-cost. After a few limited initiatives, low-cost long-haul flights attract indeed growing interest. While the current low-cost airlines find there an opportunity to extend their scope of activities, the legacy and flag carriers also want to take part in those low-cost flights in order to ensure their own survival.
Opportunities to reduce costs of long-haul flights are more limited than those related to short/medium-haul flights. However, some kinds of savings such as lower payroll may be implemented also in long-haul journeys. In addition, displaying very low airfares before taking into account checked baggage and meals aboard is a lure, the commercial importance of which can’t be underestimated.
Depending on the airlines concerned, four trends feature the development of low-cost long-haul flights.
1. Diversification of low cost airlines’ business.
Some airlines that have offered short/medium-haul flights at low cost for some years took the initiative to extend their business to long-haul routes.
The Australian low cost Jetstar Airways offers currently low-cost flights to destinations such as Japan, Myanmar and Hawaii from Australia.
Similarly, the low cost Air Asia airline, under the name of Air Asia X, offers long-haul flights from various airports in Asia. For example from Kuala Lumpur, Air Asia provides flights to the Middle East (Iran, Saudi Arabia, and United Arab Emirates) and starts flights to Hawaii in June 2017. Air Asia however ended low-cost flights to London in 2012.
Cebu Pacific, the low cost airline of the Philippines, also offers long-haul flights particularly to the Middle East (Doha, Dubai, Kuwait and Riyadh) from Manila. Since March 2017, it has added flights to Guam (island of the Pacific belonging to the United States).
The low cost airline of Singapore, Scoot, starts long-haul flights to Athens in June 2017.
With the exception of the few airlines stated in section 2 below, the European low-cost airlines showed little interest for long-haul flights. So far, they are indeed focusing on destinations on or near the mainland (e.g. the Canary Islands and Morocco for Ryanair, Vueling, and Easyjet, Turkey for Easyjet, Israel for Ryanair and Vueling). Vueling flies to African destinations such as Dakar and Banjul, but only from Barcelona: this is not a long-haul flight.
So, some low cost airlines mainly from Asia and Australia do offer intercontinental flights at low prices, in addition to the short/medium-haul flights, which remain their core business. The trend is growing.
These long-haul flights are particularly cheap when passengers do not have checked baggage and/or when they do not require food. Otherwise, their fares remain mostly lower than those of other airlines.
It may however happen that a cheaper deal, possibly with a stopover, is available from another airline. This occurs particularly when the low cost airline is the only airline that offers nonstop flights to the targeted destination. Therefore, even in the presence of low-cost flights, it is worth to compare all available flights before booking your air ticket.
2. Specialization of some airlines in low-cost long-haul routes.
While continuing their short/medium-haul flights, a few other low cost airlines have chosen to specialize in low-cost intercontinental flights and make them a major part (or the only one) of their business.
The first attempts in that way failed quickly. Thus, in 2005, Oasis Hong Kong Airlines based in Hong Kong provided low cost flights between Hong Kong and London Gatwick or Vancouver. At the same time, Zoom Airlines which was based in Ottawa offered transatlantic flights to mainly the United Kingdom and France. After only a few years, both airlines ceased operations because they incurred heavy losses.
Since then, however, travelers seem to have become more familiar with no-frills flights so that the most recent projects in that way have had a much better fate. Norwegian, originally a Norwegian regional airline, decided in 2012 to specialize in transatlantic flights at low cost through two subsidiaries (one of which one is based in Ireland). Norwegian has been quite successful.
In addition to a Norwegian air operator's certificate (AOC), Norwegian got an AOC both in Ireland and the United Kingdom. This enables Norwegian to operate flights from any EU airport to any destination in the United States.
Today, with low-cost flights, Norwegian serves many destinations in the United States (New York, Boston, Fort Lauderdale, Orlando, Las Vegas, Los Angeles, Oakland, and others) as well as Puerto Rico from various European airports such as London Gatwick, Paris-Charles De Gaulle, Oslo, Stockholm, Copenhagen, and others. In addition to these transatlantic flights, Norwegian also offers low-cost long-haul flights to Bangkok and Dubai from its operating bases in Scandinavia.
In 2017, Norwegian launched low-cost flights between Barcelona and four airports in the United States as well as between airports in Ireland or Scotland and some regional American airports such as Providence in Rhode Island.
Apparently, they don’t content themselves with the most popular routes, but want also to fly on secondary routes. Norwegian would also consider a partnership with Ryanair: this would allow passengers of an airline to continue their journey with the other airline (provided that baggage is checked in again).
By offering cheap transatlantic flights in addition to flights within Europe, the Icelandic low-cost airline WOW Air follows a similar policy which is however limited to the Icelandic market. From Keflavík Airport, WOW Air serves several U.S. cities (Boston, New York Newark, Baltimore-Washington D.C., Los Angeles, San Francisco, Miami and Pittsburgh) as well as some other intercontinental destinations such as Toronto, Montreal and Tel Aviv.
Sister company of Air Caraïbes, the new French airline, French Blue, only serves two intercontinental tourist destinations at low cost (Punta Cana in the Dominican Republic, and, from June 2017, Saint Denis in the island of Réunion in the Indian ocean), both from Paris-Orly airport.
3. The involvement of flag carriers in the market for long-haul flights.
Faced with growing competition from airlines such as Norwegian and the airlines of the Middle East, the European flag carriers have no choice but offer also long-haul flights at low prices. Since they have lost a significant market share in the niche of the short/medium-haul flights, they would not survive a similar loss in the market of the transatlantic and long-haul flights.
For commercial reasons (such as brand image) and for cost reasons (employment of less well paid staff), major European flag carriers have chosen to offer long-haul flights at low cost through a specialized subsidiary, following in part the example of Jetstar Airways (Qantas Airways’ subsidiary).
In March 2017, the International Airlines Group (IAG), formed by the merger of British Airways and Iberia, announced the creation of Level, a low-cost airline based in Barcelona- El Prat.
As from June 2017, Level will offer low-cost flights from Barcelona to Buenos Aires in Argentina, Punta Cana in the Dominican Republic as well as to Oakland and Los Angeles in the United States. These first flights will be made by aircrafts and crews of Iberia. Level will serve additional long-haul routes later on.
As at Norwegian, passengers of Level have to pay supplements if they want to have checked baggage, receive a meal aboard or have access to the internet. Interesting feature: they benefit from Avios, the loyalty scheme for the group, while the low cost airlines usually have no program for frequent travelers.
Vueling, which belongs also to IAG, is based in Barcelona so that passengers can benefit from possible connections between the flights of Level and Vueling in Barcelona (provided that baggage is again checked in).
In Germany, Lufthansa implements a similar strategy by entrusting the low-cost subsidiary Eurowings with flights to Miami, Orlando and Seattle in the United States, Varadero in Cuba, Punta Cana and Puerto Plata in the Dominican Republic, Port Louis in Mauritius (Indian Ocean), Bangkok and Phuket in Thailand, and other long-haul flights. It may happen in the medium term that Brussels Airlines, which is owned by the Lufthansa Group, operate also low-cost long-haul flights of Lufthansa.
Air France is moving in the same direction since they plan to create a new subsidiary for long-haul flights at low-cost, in addition to Hop and Transavia, the subsidiaries in charge of low-cost short/medium-haul flights. For this purpose, Air France has obtained the agreement of its staff since the new subsidiary is expected to rely on a decrease of wages.
Air France hopes to be able to start long-haul flights at low prices in the fall of 2017. Air France wants to offer low-cost long-haul flights without affecting excessively the other flights. In this respect, the choice of the routes and the price spread between both kinds of flights are critical factors. The new subsidiary would be called Boost.
4. Charter and similar airlines.
A fourth kind of airlines operate intercontinental flights at low cost: the airlines that are related to tour operators, such as TUIFly, Condor, Thomas Cook and Thomson Airways.
For example, from airports in the United Kingdom, Thomson Airways serves destinations such as Varadero in Cuba, Puerto Plata, Punta Cana and La Romana in the Dominican Republic, Cancun and Puerto Vallarta in Mexico, Orlando in the United States, Liberia in Costa Rica, Goa in India, Colombo in Sri Lanka, Phuket in Thailand, and other similar destinations.
These flights serve only holiday destinations. In many cases, their passengers have acquired the air ticket as part of a package that included other services such as accommodation. They are rarely willing to travel without checked baggage. In addition, many of these flights are provided only on a seasonal basis. The fares of these flights are also more volatile than those from other airlines.
Overall, the flights of charter and similar airlines do make up a significant share of the air transport market; however, they are aimed at a largely different clientele from that of flag carriers or low cost airlines.
The current focus on low-cost long-haul flights is not a fad, but the beginning of a radical change of the air transport market with more services paid on a case-by-case basis, more flights to and from secondary airports, lower average airfares, lower service quality, and much more difficult price comparisons.
It remains also to be seen whether, in the long run, travelers will be able to easily combine flights of different types and, if so, what additional changes of their behavior this could trigger.
Willgoto, March 2017.
Update April 2017
On April 6, 2017, Ryanair announced the start of connections between its flights. Travelers will be soon able to book "point to point" flights with Ryanair, i.e. a Ryanair flight to an intermediate airport followed by a Ryanair flight to the final destination without having to check-in again at the "stopover" airport. This facility will be implemented first at Rome-Fiumicino and then gradually in other hubs of Ryanair. This is new in the sector of low-cost flights in Europe.
At the same time, Ryanair confirmed it is planning partnership agreement with other airlines, especially Norwegian and Aer Lingus, in order to offer long-haul flights, as already announced in our above article. In just one package, travelers flying with Ryanair will be able to continue their trip with a long-haul flight of Norwegian or Aer Lingus and vice versa, without check-in again at the stopover airport.