Friday 30 September 2022, JW Marriott Grosvenor
21 November 2022, Hilton London Metropole
Business Travel Show Europe, presented by The BTN
Low cost carriers (LCC) will take a bigger share of the aviation market, Herb Kelleher, founder of Southwest Airlines, said.
Mr Kelleher said he had ”no such foreboding” that the low cost market was doomed in the current economic climate.
He was speaking at the first day (September 23) of the World Low Cost Airlines Congress at the QEII Centre in London.
There were two ”strategic initiatives” which LCCS could take to ensure their survival.
One was the introduction of a small 110-150 seater jet which he said was ”mindboggling” for the market.
The second was the reform of air traffic control which would create a more efficient and cost saving environment for airlines.
But he said LCCs also needed staying power and warned: ”Don”t overextend yourself in the pursuit of short-term glittering gains.”
Mr Kelleher rejected the suggestion that legacy carriers could take on the LCCS as they were ”suffering” in the current climate.
Ten attempts by legacy carriers to launch LCC in the US had all failed.
They were now imposing extra costs on their customers, like baggage charges, to offset the high cost of oil.
LCCS were still the ”bargain” of the airline industry.
While he expected consolidation in both the US and Europe where he predicted BA, Lufthansa and Air France KLM would dominate, he said both Ryanair and easyJet were ”in great shape.”
But Mr Kelleher said LCCS must be prepared to adapt to survive or take over markets abandoned by legacy carriers.
This might mean slightly upgrading services to include food on longer flights.
”What we are seeing is the denouement of de-regulation in the United States,” he said. ”There will be fewer carriers and more capacity restraint.”
Tony Fernandes, ceo of Air Asia, told the delegates that there would ”always” be a market for LCCs.
But he stressed that they had to be innovative to keep their market.
During the SARS scare several years ago, most airlines had stopped advertising but Air Asia had tripled its budget.
”If you keep the fares low enough, people will risk their lives,” he said.
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