I actually think the premium markets will recover and the next major shock is going to be the collapse of the LCC market.
Why?
Global commentators say business is picking up, however, unemployment has not caught up to the forecast yet due to various reasons including people living off redundancy and not looking for work yet.
The greatest area for unemployment? The low income to middle income worker or as some of you like to refer to them, the cashed up bogan. These people make up the bulk of Virgin, Jetstar, Ryanair, Air Aisa X etc passengers. This market appears to be next in the firing line.
The self funded retirees etc have seen their share portfolios rebound in the last few months and will NOT be flying low cost for their long awaited holidays. Look at the Honolulu market if you want proof. Who wants to die knowing the kids will be living it up in business class while you went LCC to save a few quid?
If the full service carriers can get their products up to speed they will be well positioned to capture this upswing and the subsequent yield improvement from it. The LCC's will have to transform their take it or leave it product (pay for it or don't get it) if they want to even attempt to capture some market share. The problem, as
VB have found, is that you then add cost and are no longer a LCC or full service carrier and no one knows where you sit in the market, so they still identify you with your original market entry point, in the case of
VB, low cost.