Lo Co? will it fail?
 

Hi all

I'll try and keep this short as there are so many contibuting factors to the mess that this industry is in, but here is one aspect I would like to discuss.

Of course the world economies and the current worlwide depression has ment that fewer people are travelling and these events have ultimately cost me and so many others their jobs in the industry. HOWEVER, let's set that aside for a minute.

The seemingly Low Cost model is in my opinion not sustainable! Yes for a time we all benefitted from cheap fares and trainees like me found work due to ever expanding airlines and routes! But at what cost? Crews pay for their own training ( in some cases cabin crew), salaries are in decline, T&C's are continuously being eroded and now pilots pay to fly in a desparate bid to get started! Of the average 28 or so different service personel involved in an aircraft turnaround, ALL have seen their working conditions fall apart in order for airlines to say they sell cheap seats. But do they?????

Yes there are still some great deals available, but as we can see, airlines have to claw back money everywhere in order to advertise a €4.99 return fare! But you may add at least €80 to that before you can print out your own boarding pass and I believe now our favourite airline is charging a fee for online bookings!! So what is to be done, as clearly this business model is failing. Am I missing something? This industry is a complete disaster and it has become a race to the bottom for ALL involved including passengers.

Enough is enough! I as a passenger, no longer want to see my flight advertised free one way, 99cent return and then be charged for a meriad of expenses attached to my ticket! I would be happy to pay a fair price for my journey, so that the industry can find SOME level ground again!

So the question is this, is it time for air fares to rise again and would the public accept it?? Would pax be relieved to finally see only ONE bottom line price to pay when booking a ticket, not outrageous but FAIR?? I think so!

Low Cost airlines need to become Sustainable Cost airlines.

I think you'll find that Lo-Co is the only show in town. In recession consumers become price sensitive, airlines with the lowest costs will be able to offer fares from A to B and still make a margin.

There will be a contraction in overall traffic, but people will still fly. Airlines with high costs will not be able to compete.

I still think low cost are doing far better than their full service counterparts.. are they not?

I do think that low cost is still the way forward.. like it or not - and the credit crunch is just meaning that only the fittest survive in these times of an overall traffic reduction.

Yes.....but is there a happy medium?? Low cost is costing more and more...so are we starting to see a trend towards a Medium cost? Why else are all these extras being charged?

I flew with Air Asia SIN/KUL/SIN last week and it was interesting to note the number of business travellers on board. I think that a lot of business travellers are now shunning the legacy carriers and taking the cheapest option - certainly on short haul. That has to be good news for the lo co's.

Cabin was clean and tidy, cabin/ground staff were polite and efficient, both flights ran to within 5 minutes of schedule and our bags were waiting for us as we arrived at each baggage carousel. As a business model, I would say it's working very nicely.

Very simple really because it works!

People are drawn in my the very low fare.... that can be advertised.

Very low fares are available if you are willing to have NO FRILLS and book in advance.

For those who want to add on to their basic ticket price for things like checked luggage, meals etc then they can.....

Or you have the alternative where all of these options are factored into every ticket even though they may not be used making the ticket price higher.

As for airlines having people paying for their own training.... If you ran an airline and had people throwing themselves at you to reduce what is a very expensive overhead.. would you not accept?

My personal thoughts are that carriers offering a 'shopping basket' approach may be the way forward. Very similair to Lo Co but perhaps a headline fare of £x.xx which includes x KG of baggage. Then pax could be free to add and take off whatever they like, that way any lack of baggage and additional charges is purely through their own doing :ok:

I use low cost airlines when they are cheaper, but it's not always the case: sometimes it is much cheaper to take Iberia, Air France, KLM, British Airways, etc rather than Ryanair, easyjet, Vueling, etc... and of course the service is MUCH better outside lowcostland.
Low cost airlines are now charging for luggages :yuk:, for paying in VISA :yuk:, etc, etc...

I think Low cost airline can survive IF and only IF they sell tickets at lower price, otherwise the will go to hell :ok:

Anyway all the low cost are struggling more and more at the moment, and it will be even worse as soon as winter comes...

I agree that the luxury all inclusive fares are in this economy an unatractive option and where people can they will save money and reduce the frills, but I have just booked a flight and although the basic seat was less than €20 return the final cost including 1 checked in bag was €100 more! And I did not choose to select my seat! So is this low fares?? There are no frills here, just me and a bag!!! My point is that these are not low fares, they are REASONABLE fares, the advertised price is utter garbage as we ALL know by now and ALL those extras being charged are purely a means to supplement the unworkable advertised cost of the seat. Me and a bag is NOT a frill. Those are the basic necessities of travel abroad!
AGAIN, bearing in mind that so far, this model has only been able to work by screwing over ALL the airline proffessions, not just flight deck, and I see that we are getting shafted more and more in order to try and sustain the low cost illusion! So can it continue?? Or will changes HAVE to be made before the whole sorry mess implodes?

In many ways the question needs to be asked ... is it time to Re - Regulate the Airline Industry ? The bottom line price , tax included , obvious and apparent to all should be the one distributed online , in advertising , and the one that the passenger should pay and be aware that he / she is paying. Black and white , no manipulation of the " facts ". When just as much manipulation goes on in the fare structure as in the overall cost model , people become confused , aren`t sure what they are paying versus the competition to fly a similiar route on a similiar aircraft for a similiar airline.( Eventually prices will reflect more " real time "costs.. ) With added regulation we could get rid of all the crooks in airline management who don`t add value. Too many are there to decieve and fool the ticket buying public by blatantly decietful advertising. Imagine if EVERYTHING was priced the way airlines priced their tickets ?? There would be riots in the street. There would still be enough scope left for real entreprenuers and cost conscious airlines to compete , and compete fairly.

I see loco's as nothing more than good marketing. They simply are not cheap. Somehow the headline seat cost is enough to sucker pax into the con.
I simply don't use them as they are never cheap nor convenient.
I always try to see what the deal is and they always fail. Besides I would much sooner pay more and not have to be treated like sh1t!
The sooner the industry returns to something sustainable for all the better.
This whole loco model has destroyed every aspect in this now. The likes of ryanair and easy can rot for all I care!

Paying your bills...
 

Be it low-cost carrier, high-cost carrier, legacy carrier or regional carrier, all of us have to pay the bills at the end of month. We basically operate similar equipment on competitive routes, try to optimize crew utility- and aircraft utility-rate, gamble on fuel hedging, "optimize" company overhead structures, have a pool of external consultants from the same institutions to tell us how to run the show, market our brands to the best extent possible in order to bring our customers on board of our aircraft and then safe, efficient and on time from A to B and hopefully from B to A later on.
All this has a price tag, and our customers finally have to pay it.
Our passengers will decide how much of low-cost, high-cost, legacy or you name it will continue to exist in the future. While the "low-costers" will add a little more "gadets" to attract former legacy or "high-coster" business, former will try to add some "no-frills" to their product to get those "low-costers" on board. Finally, we'll probably see just ONE ultimate, very best and universally survivable world carrier offering all kinds of standardized air travel...with higher ticket cost due lack of competition...brave new world this will be !

Oh DEAR GOD Flare-Idle will it be Blue, White and Yellow, or have a large amount of Orange on it??? That's a scary thought.....however...I do think you are correct to some extent, low cost fares will have to rise and high priced tickets may well have to drop....and somewhere in the middle some happy middle ground will be had...with a few variables to draw passengers....here's a novel idea....wait for it.....like GOOD SERVICE AND HAPPY CREWS?? I do love the idea that you can still pay silly money on premium class if you still chose to do so and we need that variable.....but all I want is the low cost pretention to fade away to a mirky past!

The legacy carriers could really put the squeeze on the low costers if they wanted to. By reducing the ticket price to nearer the low co's not so low current price they, could really put the likes of Ryan and Easy into financial meltdown. No one would travel "low cost" carriers if the price was right on BA etc.

Just a thought D and F :8

Summary Table of Results (IFRS) - in Euro

Half Year Results

Sept 30, 2007 Sept 30, 2008

Passengers 26.6m 31.6m

Revenue €1,554m E1,811m



The above Ryanairfigures tell you many things, including the fact that the passengers increased by 18% in 2008, and that average gross yield per passenger was 58.42 Euros in the year to 30 Sep 07, going down to 57.31 in the last year.

That would be all the revenue from all charges made by Ryanair, of which only one is the "fare". It follows that the average yield from each return flight is 116 Euros or so, or a little more than £100 at todays xrates.

I only mention it to illustrate the point that neither Ryanair nor any other budget airline is particuarly "low-cost", and that revenues were holding up quite nicely until last autumn at least. So I wouldn't panic too much, apart from realising that the increase in costs needs to be stopped or even reversed to preserve the airline's long-term health. Much of that might have been fuel, of course, I haven't looked.

Kelly Hopper ......so we can all rot for all you care

Glad you want us all out of a job and rotting...

Same to you where ever you are ... god help them..

Your a vile individual......:sad:

Hehe - in case you missed it, it was tried by BA several years ago in the shape of Go. Disastrous attempt and ended up getting taken over by . . . .easyJet! Do you think BA are happy turning a 922m profit into a 401m debt?? I don't think the so-called 'Legacy' carriers are as dominant as you make them out to be . . . They've more to concentrate on than challenging the LCC's . . . they've already admitted defeat on that (Gatwick??) . . .

i used to be an engineer and i don’t remember any of them saying others in different companies / race teams etc could 'rot', ever! what is it with pilots?? its not a religion to me. i just like flying and it pays the bills, i don’t care what other companies do or don’t do. good luck to them. get off your high horses and relax a bit.

Also - what is this rubbish ?!

Quote:

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The legacy carriers could really put the squeeze on the low costers if they wanted to. By reducing the ticket price to nearer the low co's not so low current price they, could really put the likes of Ryan and Easy into financial meltdown. No one would travel "low cost" carriers if the price was right on BA etc.

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if they wanted to???? :eek: ha! how would they do it? - by reducing the ticket cost, you say. and how would that be acheived, you utter genius?

later ladies..

don't check bag if you don't want pay.
the system "works", but there will be some "blood".

1-airline decreases their fees to kill other airlines, then when out of business, they increase their price back, until someone come and play the same system.

2-airlines become too big, and lose control of costs and his own structure collapses .(ex.:British Airways who will be soon dead, maybe?).
No airline will stay strong forever!an airline is just a ticking bomb!

tic tac tic tac....boum!!!

The problem isn't the low cost carriers. It's the fact that they force other companies that don't have the same structure into doing things they can't afford.

The low cost carriers have basically very streamlined operations. As long as pilots stopped paying for their company training, I couldn't complain about it.
But as things are now, we are paying for jo-schmo's ticket. Ask a welder or a car mechanic how much it would cost him to get a job in the company next door. They'll probably look at you as if you were an idiot. But try getting a job with Ryan Air. It costs something like 200 euros just to send in the application. And then another xxxx euros to complete the training, pay for uniform etc.
I'm not going to start the usual rant. I paid for my TR so I've done wrong just like many others.

But the real problem is when high cost carriers try to emulate the low cost concept. Then it isn't just a nuicence to the employees, it becomes dangerous. Flight safety becomes the main area in which management who only sees costs and numbers, concentrate their efforts to save costs. At least it's like that in my company. We struggle to maintain a decent level of safety, but I'm affraid were loosing.

The only solution is that every pilot realises that this is only a job and not anything more. It's not a recreational interest or a hobby. It's something that pays bills. The companies know that we love to fly and that we would sell our parents to get the chance to handle a big jet. Don't let them have the satisfaction of offering a free ticket on your expense! My wish is for every pilot to know his/her value and not to sell out to a lower price. Many of our companies are a fundamental part of infrastructure and we are part of that infrastructure.

/LnS

...so, we'll see the NCC (No Cost Carrier) coming up soon in order to satisfy powdermonkeys "vision"...

NCC?? I think you may have quite misunderstood my point!
Low cost / no cost model is not my vision, I think its a disaster which only barely functions because personel is getting screwed beyond recognition! Yes we love to fly, but bills need to be paid! the point of this thread was "should fares go up, quit pretending its cheap, and we can all earn a living again"!

Could be taken the other way. I would say jo-schmo is the typical lo-co self-funded pilot so in fact, perhaps more than anyone, jo-schmo in the right hand seat is paying for joe-public's ticket (with the left hand seat occupant probably having done something a bit similar a few years earlier when the thin edge of that wedge appeared). In doing so they are both really just lining big corporate's pocket somewhere instantly apparent very close to the bottom line.

I would also say that joe-bloggs the ground staff employee is being shafted at every turn. I was astounded to read in another part of PPRuNe how low the salaries and how complete the disregard for quality of life outside of hellish shift patterns and lay-offs have become at one or two lo-co hubs.

What people seem to forget is history just repeats itself......Stagecoach drivers hated the introduction of the train and train companies hated the introduction of the Automobile who hated the introduction of the Airplane.

Industries change over time and either you hold on to what you have or change with it.....how big is the UK shipbuilding industry or the steel industry ?

It has however a huge impact on the people there and consequences and it would be foolish to ignore it.

Look at the way the development of IT has effectively wiped out travel agents and the next stage is the check in desk.

Going forward in the future its not inconcievable that Planes in the future no longer have Pilots onboard.

Laughable at this point in time BUT you program in every concievable eventuality and it is possible via computer.

Alternatively you have a Pilot or Pilots based in a centre who fly the plane and rely on onboard sensors to tell and show what is happening.

Not so laughable when you consider that currently Military personnel in Nevada are flying drone attacking people and equipment in Iraq and Afghanistan.

LCC's will just develop into something else over time but the Dinosaurs within Industrys just die, its reality of competition and it will occur again and again.

Racedo

What the military are doing with drones is somewhat diffrent from what the public will accept giving that we all know a lot more about computers these days, unmand flight will grow of course and may even reach the cargo market in years to come but i doubt it will come into the pax market in your or or my life time.

Just think though if it did, an extra row of seats in the front, what could MOL charge for a forward view!! and it would get around that problem of pilots who's grasp of English is very basic

And NO cabin crew, just a monitor with someone giving instruction, some vending machines at the back and the emergency/safety instruction cards ( optional) can be bought from another vending machine! ahhh the future is bright! :uhoh:

I see it that in less than 10 years you will see it trialled for Commercial jets.

Biggest loss for a Military jet is the loss of a Crew as planes are replaceable, crew take a bit longer.

You could of course always keep a Pilot onboard who can take over in Emergencies if communications go down but ultimately it will happen.

As to the Cargo bit well they has been done for quite a few years in sending supplies up to space stations.

Of course if they develop a commercial jet with the capability to take off like a Harrier then Airports would become very small within 30 years.

Why not pods where if travelling as family you have a 6 person pod or a 2 person if an individual with whatever bed, communication and TV as is required.

Get in the Pod in the terminal and then just pushed into plane where front and back open and pods get pushed into terminal.

Who wants to look out from a tiny at cloud when you can see all the TV stuff you want or a set of Cameras that show all the views from the plane.

A certain airline (lo-co) advertised the final fare price as the head line rate on the internet recently and it was not pretty, a lose of potential trade to the tune of half a million.

It seems Jo public like the idea of being suckered in with a low headline rate and then pile on the extra charges.

Isn't the LCC concept reaching it's conclusion already?

The original idea was that by cutting out the frills which the big boys provided they could undercut their fares. Well just have a look at how much your .01p flight now costs including all the extras, and don't forget the cost of getting from the middle of nowhere to where you actually want to get to.

I recently priced 2 journeys in August and they were both cheaper by a long was by avoiding the so called LCCarriers. The other problem with their business model is they rely on another sucker being born every minute rather than repeat business from satisfied customers, just look at their lack of customer services when things go wrong, and there are only so many new mugs to be had.

Just have a look at Skytrax or other sites and see what happens when things go wrong which they are bound to do from time to time.

They are no longer all that cheap and that was their unique selling point.

The LCC model has changed since its introduction and will continue to do so as lets face it charging for bags, removing check in desk etc would have been laughed at about 5 years ago.

Its still possible to go cheaply but you have to work within the rules they impose.

I think you hit the nail on the head in your post SeatA1Please.

However, I think what they do have is the perception of cheapness - and that is what counts most.

Ever see Tesco own brand cheapo beans and the like? All the value lines look God awful but have you ever wondered why they don't lift a finger to spruce up the jailbird packaging?

It's so the punter doesn't feel too attracted to it. If you're short of cash you'll buy value. But if you're in two minds you might opt for the standard line, or even the premium branded line. The packaging on the low cost food is there to protect the regular products and divert those who could stretch to something more expensive away from something in reality only slightly inferior in quality but far less in price.

Likewise but in a sort of mirror image, by banging the lo-co drum, being gaudy and brash - Easy and Ryan come to mind for me here at least - the budget airlines' packaging diverts the cost-conscious consumer to their product. We may not buy, and especially so when we realise we can have the premium airline for the same or just a touch more, but we are fingering (ahem) the product, and that's half the battle won.

Agree but people have realised that instead of paying £250 for1 for a ticket requiring an overnight stay on Saturday and they get a "meal" on board they can go LCC and pay £100 or less.

I have come across too many people over last 5 years who tell you of the fact that they were able to visit Cousin X.s wedding or the friend they knew but in the old days could never have afforded the opportunity to visit.

People forget the small business person who would never have looked for business opportunities abroad as the £500 BA fare to Rome plus hiring the car to visit a prospective customer really eats into any cash they have. Now they do a Ryanair or Easyjet get change from £100 and can afford 5 visits as they turn a prospective customer into a real one. Sales people generally say 4-5 visits or contact points required to sign up a customer, sometimes less sometimes more.

In many ways the LCC model has liberated many areas of Europe from the shackles of Capital city funding where all the cash was spent on projects and airports in teh Capital or big cities.

Taking at random out on 1 July back on 2 July the Cheapest Ba and Easy fares are:-
BA £130.60 and Easy £127.74 and thats without a cup of coffee, the big boys have moved on as well.

Easyjet with carry 47 Million people in 2009, Ryanair will carry 65 Million, BA will carry 32 Million......just who are the big boys ?

The Legacy carriers only moved because they were forced to, some countries use other means to hold on to their carriers i.e Air France and slot protection at CDG and Orly, Alitalia as was with Govt backing, BA with LHR slots.

Who would have thought fast food would be sustainable either ? Poor nutritionally and expensive when compared to buying fresh and cooking at home.
However it's cheap compared to normal restaurants and readily available.

Low cost is not always cheaper, SHOP AROUND, compare full service fares and any promotions they may be having. READ the terms and conditions for the low cost airline. DECIDE for yourself if any saving is worth having.

I recently had two trips flying low cost. For marginally more than a five hour coach trip I had a 55 minute flight.

However I decided against a longer journey where the low cost fare was $50 more than full service before adding baggage charges.

It pays to do your homework.:ok:

Love the post N0. 19 Quote:-

tic tac tic tac....boum!!! Unquote.

Originated in the middle east!! A lot of airlines might be in better shape if it weren't for........

This whole thing about comparing LCC with the so-called 'legacy' carriers is just a farce. Their business model is different. Many passengers on the BA or AF short/medium haul are actually connecting to another long-haul destination, which LCC will never do, despite the garbage O'Leary says.
Rather, it is on point-to-point services that LCC really compete with traditional airlines. This helps bring fares down, which can only benefit the customer.

Ryanair's business model is based on local authorities/employees/trainees/passengers subsidising the cheap fares, and on a massive increase in capacity to boost passenger numbers. I fear overcapacity will soon be significant enough for the business to become unsustainable. Especially as the worst of the recession will be upon us during the summer. I really think LCC's strenghth is overestimated by a few orders of magnitude.

And by the way there is no so-called slot protection at CDG, only at ORY

Lo co works well in times of expansion
Clever aircraft financing, airport deals, staff paid peanuts, trainees paying to fly etc etc

With the day to day economic situation we see now, travel becomes a discretionary luxury for many,and not an option at all for those unlucky to have lost jobs.

The idea that one can fly from one end of Europe or beyond for less than the price of a train ticket/petrol from London to Manchester, is in the long term unsustainable, no matter how many rip off charges /sandwiches can be tacked on to the "£1" fare