Radical Change Required ....
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Radical Change Required ....
With the introduction in recent years of Low Cost Budget Airlines the major carriers have been seriously hit. They have hoped that this fad would go away and they would be able to ride the wave. It is now apparent that it will not. Left with this problem major airlines are faced with surviving with their monster airlines with political and financial burdens that appear to be insurmountable. For the proactive CEO there is a way.
There are only two passenger markets as I see it. Economy Passengers and Business Class Passengers. As I see it the whole industry will be separated into two separate entities, one for the Economy passenger and one for the Business Passenger. This is the only way the major carriers can survive this turmoil. How they do this is no easy task and will take a brave CEO to do it. In an ideal world they would wipe the slate clean and start again, or start now building up this concept.
Using British Airways as a model as this is my background, start a Low Cost Budget airline serving shorthaul routes out of London, (why did they get rid of GO?) both holiday and business destinations, (not everyone has the resources for business class fares) not as a hub, but as a bus stop service. The main airline would continue as a stop gap during the transition period providing economy passengers with budget service and pricing, and business class services worldwide removing the first class section, with a higher level of inflight service and personal attention, the main airline would continue losses, but would prompt further cost cutting and removing the fat of this giant carrier. Another Low Cost Start up Budget Airline would be started to cater solely for the Business Passenger and their requirements, in the same way Lufthansa have done with PrivatAir. Each of the new startups would have individual cost bases and would not be part of 'Mainline'. As the profitability of the two new startups increases the justification of winding down 'Mainline' becomes obvious and the airline becoming one again with a low cost base, with two separtely controlled market targetted businesses. Whilst it will take a long time, at least the city will see that an effort is being made with proven business history, but could BA really pull this off. Without some form of radical change it will end up like the rest of the US Carriers 'going broke' !!
There are only two passenger markets as I see it. Economy Passengers and Business Class Passengers. As I see it the whole industry will be separated into two separate entities, one for the Economy passenger and one for the Business Passenger. This is the only way the major carriers can survive this turmoil. How they do this is no easy task and will take a brave CEO to do it. In an ideal world they would wipe the slate clean and start again, or start now building up this concept.
Using British Airways as a model as this is my background, start a Low Cost Budget airline serving shorthaul routes out of London, (why did they get rid of GO?) both holiday and business destinations, (not everyone has the resources for business class fares) not as a hub, but as a bus stop service. The main airline would continue as a stop gap during the transition period providing economy passengers with budget service and pricing, and business class services worldwide removing the first class section, with a higher level of inflight service and personal attention, the main airline would continue losses, but would prompt further cost cutting and removing the fat of this giant carrier. Another Low Cost Start up Budget Airline would be started to cater solely for the Business Passenger and their requirements, in the same way Lufthansa have done with PrivatAir. Each of the new startups would have individual cost bases and would not be part of 'Mainline'. As the profitability of the two new startups increases the justification of winding down 'Mainline' becomes obvious and the airline becoming one again with a low cost base, with two separtely controlled market targetted businesses. Whilst it will take a long time, at least the city will see that an effort is being made with proven business history, but could BA really pull this off. Without some form of radical change it will end up like the rest of the US Carriers 'going broke' !!
Actually I see the market as being even more polarized than that.
I think there is now simply a short-haul market and a long-haul market, with the diviser being somewhere in the 3-5 hour sector lenght region.
Short-haul passengers are almost totally cost driven. In todays world even those doing short flights for business won't pay a premium for a big chair and a glass of plonk. Frequency might be a factor, but most major city-pairs are well enough served that it is already there.
On long-haul, the cramped legs, hunger and need for entertainment and liquid refreshment make a work-out of the expense account justifiable.
I see a world developing where the "Majors" either give away short sectors completely or service them through wholy owned subsiduries (I think BA will rue selling GO fore long) and stick to intensive service on long flights, leaving the "Bus routes" to the likes of South-west and Ryan who, lets face it, can get the punters just as effectively from A to B for much less cost.
As someone once wisely said, once they develop teleportation, airline flying is dead. People just want to get there. If it's a long flight, they'll pay for the "Extras" to make a necessary evil standable. If the flights short enough to endure without the frills, fewer and fewer people will part with the readies to supply them.
I think there is now simply a short-haul market and a long-haul market, with the diviser being somewhere in the 3-5 hour sector lenght region.
Short-haul passengers are almost totally cost driven. In todays world even those doing short flights for business won't pay a premium for a big chair and a glass of plonk. Frequency might be a factor, but most major city-pairs are well enough served that it is already there.
On long-haul, the cramped legs, hunger and need for entertainment and liquid refreshment make a work-out of the expense account justifiable.
I see a world developing where the "Majors" either give away short sectors completely or service them through wholy owned subsiduries (I think BA will rue selling GO fore long) and stick to intensive service on long flights, leaving the "Bus routes" to the likes of South-west and Ryan who, lets face it, can get the punters just as effectively from A to B for much less cost.
As someone once wisely said, once they develop teleportation, airline flying is dead. People just want to get there. If it's a long flight, they'll pay for the "Extras" to make a necessary evil standable. If the flights short enough to endure without the frills, fewer and fewer people will part with the readies to supply them.
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Wizo...
Disagree I'm afraid - but not for any other reason than "experience".
I fly SH for BA (and LH), and we still regularly get, on certain routes and times, "massive" club loads. These are routes (CDG, FRA, NCE) that are hardly even "Medium Haul". I am speaking of "load factors" of 90%+, with sometimes over half that Club. And these are not upgrades - the cabin "divider" goes where the load demands.
The LCA have "generated" large amounts of extra traffic who other wise would not have flown. They have obviously taken some traffic from the non-LCAs. Bit I suspect that neither will come to dominate i.e. room for both.
Where BA have been sensible (at last) is selling a portion of their seats at LCA type fares (and indeed, often lower on a direct comparision). For instance, we come back from ARN on a 767 on a weekday afternoon choka, with ~60-70% club. The aircraft would go up to ARN for this sector nearly empty. By targeting this flight for LCA type fares, it should see the loads go up, if not the yield by much!
NoD
Disagree I'm afraid - but not for any other reason than "experience".
I fly SH for BA (and LH), and we still regularly get, on certain routes and times, "massive" club loads. These are routes (CDG, FRA, NCE) that are hardly even "Medium Haul". I am speaking of "load factors" of 90%+, with sometimes over half that Club. And these are not upgrades - the cabin "divider" goes where the load demands.
The LCA have "generated" large amounts of extra traffic who other wise would not have flown. They have obviously taken some traffic from the non-LCAs. Bit I suspect that neither will come to dominate i.e. room for both.
Where BA have been sensible (at last) is selling a portion of their seats at LCA type fares (and indeed, often lower on a direct comparision). For instance, we come back from ARN on a 767 on a weekday afternoon choka, with ~60-70% club. The aircraft would go up to ARN for this sector nearly empty. By targeting this flight for LCA type fares, it should see the loads go up, if not the yield by much!
NoD
