View Full Version : low-cost-carriers, the sky is the limit....
sky unlimited
8th May 2002, 07:38
At this moment a lot of things are going on in the world of low-cost-carriers. Easyjet wants to buy Go and/or Deutsche BA,
Basiq Air and Buzz are in the middle of a merger (?). Ryanair is expanding its fleet with almost 150 new B737's. Virgin XP is looking for new European low-cost-partners. And finally, most of Europeans major airliners are going to create a low-cost-subsidary (Alitalia, Air France, Lufthansa).
Do you really think there is enough low-cost-business to accomodate all these (new) airliners? I really don't think so. I'm convinced that in for or five years we only have two or three low-cost-carriers left (Ryanair, Easy and Basiq/Transavia). I think that the battle for the low-cost-passenger won't be a battle between the major airliners and the low-cost-carriers, but will end up in a big fight between only the (wannabe) low-cost-carriers.
Has someone the same opinion?
:eek: :eek: :eek:
brabazon
8th May 2002, 10:19
It's quite easy (sorry!) to get carried away with the low cost phenomenon. They certainly have generated large traffic volumes and good profits (in some cases) for the airlines, but it is still predominantly UK-based.
How many think that Air France, Lufthansa etc are going to allow their traffic to be taken by these carriers? Also are European travellers as willing as the Brits have been to forgo their frills?
More importantly can easyJet impose their culture and systems on the likes of go and Deutsche BA - any employees of either airline wish to comment - how do you feel about giving up your brand identity and going "orange"?
We can look forward to cheaper travel in the future, but will it all be on low cost airlines? Not necessarily.
Deutsche BA (or dba as it is called from now) is just in the process of changing to a low cost airline scheme. From the beginning of April we got a new price model and as a direct result the passenger numbers soared, +14% compared with april last year, without any change in capacity. At the beginning of may we got a new livery, right now only our magazine, but on the 22nd of may we'll get the first aircraft in the new colours.
So changing our brand or our colours shouldn't be a problem for us, but i don't know about changing our culture. Right now we are a small airline where everybody knows everybody and being part of Easyjet will be quite a change. But i hope our future within Easyjet will be much better than our past with BA was.
Bally Heck
9th May 2002, 01:29
No.
If you the budget carriers take up their options there will be around 250 aircraft of 150 seats or thereabouts in a couple of years. Flying 6 sectors a day gives around 215000 seats per day flying shorthaul.
I can't see enough people wanting to go to enough places to support that.
It equates to 82,000,000 bums on seats per year!
Someones bubble will burst. Not something I would risk either my career or my investment cash on.
tinyrice
9th May 2002, 01:52
The European airline world resembles the USA in the free for all that followed de-regulation in the eighties. In the long run, history and econimics have shown that there just isn't that much to go around, and aviation Darwinism will prevail.
Yes, and Southwest proved to be at the top of the food chain...
FlyingIrishman
9th May 2002, 17:42
You're quite right, given all the current expansion mania from all the low fares airlines, there are bound to be casualties. As we have seen from the USA, only 1-2 lpayers will survive this. In Europe they will be Ryanair and easyJet.
Ryanair is the most established low fares airline and has been operating for 17 years. It has huge cash reserves and won't suffer from overexpansion as they will only be growing organically at a growth rate of 25% p.a. The cost base is far lower than that of any rival and as a result, the break even load factor is 53%. They are in the strongest position overall.
easyJet has a slightly different target market and has done well in this segment. Expansion plans are sound and in years to come, Ryanair and easyJet will split the market between them.
This means that there won't be room for other low fares airlines.