Dear A 300-2005 Man,
Well, regarding the LCC as such, I think it’s a temporary phenomenon, considered medium terms development in Europe. We are talking about a period something around 10 years, since the major careers like LH or BA started to realize, that this concept has clearly the right to exist on the market. Although major career don’t like this, they rather participate on that process in order not to loose the market shares and the most important to control this development, by holding major shares of LCC, like i.e. Germanwings is owned by LH in Germany, which is a bit different from Easy jet. In fact the European market service, done by major careers, is already adjusted to the LCC in terms of fares politics, while not given up the full capacity to LCC, which obviously allow them negligible margin cut. To cut the story short, I predict, that as soon as the economy recovers in EUR and the people will have more money to spend, they will look more after the quality of service, while the biggest advantage of LOW COST careers, LOW COSTS, will star to disappear due to political instability catapulting the fuel prices in to 51 US per barrel. Then the Europeans are very demanding, see development at Ryan, basically the unions will do there job and force the LCC in to higher costs. The final risk factor is the political system within the EUR, which doesn’t allow the juristic person to be subsidised by the state. LTU was an exception. So the possible outcome will be the merge of the LCC with the majors or bankruptcy. I bet on second option.
Must not be this way, but could be.
At the same time the same factors (higher oil prices-higher income of the gulf states, state subventioned airlines, cheep labours from far east, combined with huge investment and developing of trade and tourism) in the ME will give the biggest economical advantage for gulf careers.
But coming back to original issue “who is going to be number one and who will die in the gulf area”.
Well, taking in to consideration the existing situation and financial potential of gulf states, political involvement of the states, I think, Etihad is going to be number 1, QR number 2, EK number 3. I am talking about the situation in 10 to 15 years.
May be wrong may be not.
Cheers.
