"Low" cost airlines exposed...again
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"Low" cost airlines exposed...again
From travelmole.com:
Low cost carriers are 'out of date', says Carlson
Low cost carriers are “out of date” and not as cost-effective as most businesses believe, according to travel management firm Carlson Wagonlit Travel.
Carlson’s research studied 24,500 routes used by business travellers in Europe along with the travel patterns of 38 Europe-based multinationals.
While almost half of the companies interviewed considered the savings from budget airlines could be more than 10%, Carlson claims that the maximum saving to be had is just 3% to 5%.
It says that despite increased use of the airlines by business customers “there is a gap between the potential cost savings and the reality.”
Carlson points to issues such as the fact the lowest fares need to be booked a long time before departure, and that refunds and ticket exchanges are less flexible.
It also claimed that savings are not always automatic - partly due to dynamic pricing. Prices for a given seat on a route may change rapidly and continuously according to demand. According to Carlson: “The cost of one leg may even alter by a factor of four to five times on the return leg.”
In addition Carlson claims that the budget airlines have become “out of date” since mainstream carriers such as BA responded to the low cost threat with similar pricing models and also focused on service. According to Carlson “the issue of low cost carriers is becoming outdated in parts of Europe - with the UK taking the lead”.
Executive Vice President Europe Richard Lovell said: "We believe that a saving of three to five per cent of total travel spend may well be a maximum in today's environment. This is because there are still a significant number of constraints to be overcome before the low cost carriers' services truly meet the business travellers needs today".
But Carlson's claims have been rubbished by easyJet. A spokeswoman told TravelMole: "This is complete nonsense. If there was no low cost carriers there would be no competition so the larger airlines would hike prices up again. Businesses need the products and cost savings we offer, they don't need a free newspaper and a plastic meal."
The spokeswoman pointed out that easyJet had started to cater for corporates with the launch of a B2B website that allows travel managers to access management information.
Low cost carriers are 'out of date', says Carlson
Low cost carriers are “out of date” and not as cost-effective as most businesses believe, according to travel management firm Carlson Wagonlit Travel.
Carlson’s research studied 24,500 routes used by business travellers in Europe along with the travel patterns of 38 Europe-based multinationals.
While almost half of the companies interviewed considered the savings from budget airlines could be more than 10%, Carlson claims that the maximum saving to be had is just 3% to 5%.
It says that despite increased use of the airlines by business customers “there is a gap between the potential cost savings and the reality.”
Carlson points to issues such as the fact the lowest fares need to be booked a long time before departure, and that refunds and ticket exchanges are less flexible.
It also claimed that savings are not always automatic - partly due to dynamic pricing. Prices for a given seat on a route may change rapidly and continuously according to demand. According to Carlson: “The cost of one leg may even alter by a factor of four to five times on the return leg.”
In addition Carlson claims that the budget airlines have become “out of date” since mainstream carriers such as BA responded to the low cost threat with similar pricing models and also focused on service. According to Carlson “the issue of low cost carriers is becoming outdated in parts of Europe - with the UK taking the lead”.
Executive Vice President Europe Richard Lovell said: "We believe that a saving of three to five per cent of total travel spend may well be a maximum in today's environment. This is because there are still a significant number of constraints to be overcome before the low cost carriers' services truly meet the business travellers needs today".
But Carlson's claims have been rubbished by easyJet. A spokeswoman told TravelMole: "This is complete nonsense. If there was no low cost carriers there would be no competition so the larger airlines would hike prices up again. Businesses need the products and cost savings we offer, they don't need a free newspaper and a plastic meal."
The spokeswoman pointed out that easyJet had started to cater for corporates with the launch of a B2B website that allows travel managers to access management information.
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say what?
I guess this means Carlson doesn't have any recriprocal agreement with low-cost airtlines. To make a statement like " the budget airlines have become out of date ' smacks of either jealousy or ignorance or plain incompetancy. Maybe they should look and see where airlines like AA and UAL are trying to emulate the low-cost carriers business model. Either way, knowing where they stand, they won't get my business.
Two of the few airlines to make money in the U.S last year were Jet Blue and Southwest...hate it when those budget carriers get it right ;-)...
RIP Carlson
Newark
Two of the few airlines to make money in the U.S last year were Jet Blue and Southwest...hate it when those budget carriers get it right ;-)...
RIP Carlson
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So what's new?
Surely this was known right from the start? I think it's fair to say that some low-cost carriers (notably Ryanair, amongst others) never intended to woo the business traveller in the first place.
It would be interesting to know the % of travellers who fly Ryanair or bmibaby on business - from what I've seen, it isn't many at all!
It would be interesting to know the % of travellers who fly Ryanair or bmibaby on business - from what I've seen, it isn't many at all!
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As a travel agent, they would say that, wouldn't they...
Commission?
With major airlines paying 7% or less? and many business travel contracts now specifying an minimum invoice value of between £10 and £25 to enable them to generate (minimal!) income from low cost flights?
Scourge of Bad Airline Management!
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AJ certainly doesn't get the baby flights I do.... try the routes out of CWL, particularly CDG, EDI and BFS, and you can't move for suits and laptops....
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More like a weak attempt by Carlson to try and keep their business model together.
Afterall travel agencies are a dying breed and are having to survive on ever decreasing margins coupled with falling volumes. With the advent of internet bookings offering online booking discounts and the low cost carriers avoiding using travel agents altogether things are looking grim. There are even a number of relatively easy to use "CD-rom" type travel booking packages that the bosses secretary can use for business travel bookings which are being taken up by small to medium sized businesses.
Afterall travel agencies are a dying breed and are having to survive on ever decreasing margins coupled with falling volumes. With the advent of internet bookings offering online booking discounts and the low cost carriers avoiding using travel agents altogether things are looking grim. There are even a number of relatively easy to use "CD-rom" type travel booking packages that the bosses secretary can use for business travel bookings which are being taken up by small to medium sized businesses.
