Low Cost Bubble Deflating?

[Desk Driver]

I've asked before and now I'll ask again.

With Easyjets news of their first loss today. Is the european low cost market about to burst.

I imagine that our market is not big enough for 2 major players and countless little fringe operators.

It look like the states can only support 2 players (Southwest & Jetblue)

[Hogg]

And here it is from before, as DeskDriver said HE did ask before so now we can remind him :D :D :D LCC (http://www pprune.org/forums/showthread.php?s=&threadid=68305)

[JKP505]

easyJet and Ryanair can live with each other, as the serve two very different markets - EZY serves primary airports mainly to the west Med, whereas FR serves secondary airports mainly to Italy and central Europe.

BMi Baby can survive, although I believe they may end up scrapping either MAN or EMA as they are too close to each other, and MME is a bit of a dodgy destination.

Air Scotland will be the first failure this year, the 757 will never work on budget airlines operating from places like ABZ where there is no demand, and GLA where there is sufficient charter traffic.

FlyGlobespan can probably make it work, as could MyTravel and Jet2, but the problem for these airlines is where they can create UK bases in a saturated market where all the budgets barring FR serve exactly the same destinations. e.g. EMA has quite a bit duplication from WW and EZY.

The only possible airports that could cope with direct European routes would be BFS, NCL, MAN and GLA.

How would NWI do with a low cost carrier?

[richardhall99]

I have thought above why Norwich had not been used as a LCC destination in the past but I think it would fall into the same category as Teesside. It is not the principal airport for that region, I think that Stansted is major international airport for that area which has all the LCC there except BMIbaby and do not think that Rynair or Easyjet would set up at NWI with Stansted and Luton along the road.

Its a cheap airport to operate out off isn't it?

[akerosid]

Personally, I think the low cost "bubble" is far from bursting. EZY is making losses because it's trying to do too much: it isn't keep to as disciplined a business model as FR.

Say what you will about FR (most people do), they keep to their business model ruthlessly and no sign of red ink there (except when MOL's writing poison pen letters!)

There's room for airlines that keep to that model; low cost depends on keeping costs to a minimum; it's axiomatic and it says something if a lo-co airline gives low fares as an excuse for losses. People want to fly and they want to do it cheaply. That's not likely to change anytime soon.

[PAXboy]

This bubble has a long way to expand. I agree that EZY + FR can co-exist.

In Europe, the SwissExpress idea is probably in danger, before they remove the chocks. There is HUGE money to be made in Germany. They have expensive travel and their standard of living is falling, so the cost will appeal.

[starone]

HA HA!!! I have to say it, with all their guff in the early days and pr stunts with stelios et al, they have become sooooo boring, much like a bloke called nigel infact. Their prices are NOT cheap, as compared to a true loco like fr( as much as it hurts to say that) even their excuses are like nigels...blah blah blah gulf war blah blah blah SARS blah blah...ehhh HEEELLLOOOOO? Has nobody noticed they do not operate to these destinations???? why would it affect them and not fr.....ohh well because we took over go blah blah blah more then we thought blah blah blah. o you've bitten off more then you can chew eh? HA HA. Even your ads are not original (allegedly), you're the new NIGEL. HA HA!!

Myself and mates have been waiting for this moment for a loooong time and we raised a glass in cheer tonight, i'm savouring every moment of this lot squirming and rubbing their stumped toe. The honeymoon, as they say, is well and truly over. HA HA!!!

[HZ123]

Surely there is a point at which the numbers of weekenders and the many thousands of travellers utilising the LC's services have their fill of it. Especially as it would appear that inflation is growing and peoples finances are being further stretched.

You can only take so many holidays per year. LC's yields have been lower and according to RW 50 Easys are going to be made redundant. I would have guessed that their costs would be very low anyway.

[crewmeal]

Maybe passengers are learning to shop around a bit and the low cost carriers are not as cheap as they say they are. I have found that out on the BHX - AMS route where KLM were £30 cheaper than My Travel Lite. Even KLM's timings are far better as they had more services available.

[Wee Weasley Welshman]

A single point if I may.

These are 6 monthly results. Perhaps it is only fair to take an entire year into account.

If one does so, easyJet makes a healthy annual profit. A small but perhaps significant point to remember.

Thank you.

WWW

[starone]

WWW couldn't agree more, no doubt they will come with a full year profit, but it still doesn't stop me, for one, enjoying this in a purely purile immature and childish manner.

crewmeal..it's true, people are far more discerning now and price is the king, there have been so many articles and comparisons charts done in the past year that people simply aren't following the latest 'fad' and believing that loco means low fares. In NCl for example people are surprised that ezy costs so much, the only route they are actually worth is bfs/ncl, and thats only because they have flybe as competition and nary a week doesn't pass without a £10 deal coming available, a mate priced ncl/bcn and got £215!!!!! IB was waaaay cheaper and yes he was flexible with dates +/- 14 days each way.

[4321zip]

how long have the low-cost, no-frills airlines been around in the UK & Europe?
5-7 years?
when you look how long it has taken for the industry to change post-deregulation in the United States, I think we're going to see a lot of new airlines coming into the market, and end up merging or going bust into maybe 3 independent (like AirTran, JetBlue and Southwest in the US maybe EasyJet, Ryanair and ?) and 3 spin-off (like Song, MetroJet and Shuttle by United in the US and bmibaby, Mytravellite and Snowflake SAS in Europe) low-cost-airlines in a few years time.

[Clear right!]

Starone,

If your mate is having to fork out £215 for BCN that means the flight is doing very well, it's called yield management. As seats are sold prices go up.....

If IB was waaaay [sic] cheaper why is that then? IB has cheap tickets and one of the highest cost bases in Europe. Somthing doesn't add up..... :\

As for ezy's loss for the last 6 months. Last year was the only year they ever made a profit in the winter season so no surprises that it gets back to normal.

TTFN :ok:

[starone]

Clear Right!- I actually said this at the time (before ezy results) to him, surely this means that they are doing stompingly well? His reply was that he could get an fr to dublin in an emergency situation for travel the next morning for approx 50quid. so why are they doing so well yet, comparativley, ezy aren't? Don't fr have ym as well? ( i know they are not strictly comparable routes)

The reason that IB were waaaaaaaaayy (very sic) cheaper goes back to my point that the trads are having tonnes of sales, buy 1 get1 free, 2 for1's, dig your suitcase out, dig your granny out sales etc, which means that the locos are not so cheap, except fr (no i don't work for them)

perhaps stelios should come back, as the guardian suggested yesterday.They've gone a bit stale and the perception, at least, is that they've got more expensive.

[payingpax]

I fly lots – but as the handle suggests mostly at my own expense. And this year I’ve not travelled once on either Easy or Ryan.

I don’t think the bubble has burst, it’s just that for the moment traditional carriers have become new the low cost.

There have been some real bargains this year, either because of one-off promotions, or through some seriously low fares that are frequently offered (quietly dumped?) via OPODO or Expedia.

Traditional carriers also generally provide a free snack and a beverage (more savings here). If you book on line you don’t (BMI excepted) have to pay a credit card surcharge.

Add to that they often fly from Heathrow – which if you live in London near a tube station means £3.70 on the Piccadilly line, rather than £20+ on railway or £6.80 per day in a car park.

The Piccadilly line may be bit slow – but it’s quicker and more comfortable than the coach that you have to catch from Stansted on a Sunday.

[HZ123]

Allthough these loses have been posted compared to the FTSE value of the company it is of little concern apart from those ex staff members seeking a new job.

Within this loss how much is written off on the costs of the 'GO' takeover which clearly have some financial implications which will be ongoing.

Surely their larger problems will manifest themselves in the next few years when they take delivery of the A319 and experience the number of ground incidents i.e. damage to engine cowlings and damage around the hold doors and seals that require the a/c to go out of service and the exorbitant costs of Airbus spares. I am told that the spares cost soon make up the loss on the beneficial sale price per a/c.