16 October, etc.venues Monument
30 October, JW Marriott Grosvenor House
1st November 2023, etc.venues County Hall
Alison Chambers reviews The Low Cost Airlines Congress that took place last week in London.
Our roving reviewer and industry guru Alison Chambers has been on her travels again, but this time only to central London.
New Generation Airlines is how the young low cost carriers in Europe and Asia see themselves, delegates at the annual World Low Cost Airlines Congress in London heard last week. ”Maybe we will redefine the sector,” summed up Patrick Murphy, chairman of Aviation Performance and principal MOC of the event, highlighting how the market is indeed blurring as legacy carriers downgrade their service levels while LCCs adopt the operating practices of the traditional airlines. Many offer free drinks and snacks and seat assignment. They are moving toward inflight mobile telephones and offer frequent flyer programmes and special incentives to target corporate travellers. Even Air Southwest, the pioneering granddaddy, is looking at seat assignment.
”Charging $2 for a can of coke is not going to make a lot of difference in an industry with high oil prices, asserted Udom Tantoprasongchai, CEO of Thailand”s low cost carrier OneTwoGo, who describes his airline as an NGA. OneTwoGo”s innovative, simplified fare structure, where passengers pay for fares in ”zones” ” rather like the London Underground ” has won respect. A one hour trip is a set price, a two hour trip a higher amount, and so on. We have competition in the marketplace so this is an important strategy for us. Everything is transparent. ”We don”t believe in selling a camera without a battery,” he says.
”One size definitely does not fit all,” echoed Maunu von Lueders, president of FlyNordic. ”In Scandinavia business travellers are used to a certain standard of service and while they are price sensitive, they are not willing to give up a lot of service features in exchange for a lower fare.” ”Paying less should not be synonymous with lowering standards,” adds Vueling Airlines, whose CEO Carlos Munoz asserts it too is a ”New Generation Airline.”
The term NGA was actually first coined by Jim French when he drew up the blueprint for Flybe. Interesting that of late then, Flybe, as it has got bigger, has adopted some of the more hard-core LCC principles such as charging for baggage in the hold. COO Mike Rutter quipped at the conference that when he saw the size of the toilet area aboard its new Embraer 195 he wondered if it could accommodate a slot machine ” so passengers could spend a penny!
The facts are that the LCC market - frills or no frills - remains the fastest growth sector in the industry. These players will account for 220m passengers by 2012, up from the 132m at present. Not only are they revolutionising travel, they are influencing aircraft design, said Wolfgang Kurth, LCC Congress chairman. This is evidenced by easyJet requiring a second overwing exit on the A319 so its passengers can disembark quicker, while Boeing has Ryanair, Brazil”s Gol and Southwest on its study group as it researches a successor to the 737. This influential group is also challenging airports to get their act together. They don”t want expensive Taj Mahal terminals and UK airlines, led by Mike Rutter and easyJet”s new boss Andrew Harrison, want to break the monopoly that is BAA. ”There should be a definitive intervention that if an airport is within an hour or two hours” drive of a second airport, it should not have the same owner,” said Rutter.
Delegates heard that Asia is an emerging market for low cost or NGA operators. Leading the development is Tiger Air of Singapore, headed by Tony Davies, one time of bmi. With a domestic market of just four million the airline is focusing on a much wider Asian market. It is very different because Asia is not a single market like Europe. Land transport is often not viable and aviation therefore becomes the most practical form of transport. Liberalisation has not happened as it has in Europe and as a result less than 5% of passengers fly on low fare airlines.
Davis noted that for every country Tiger serves it must have a different AOC. ”With four operating certificates, that is a challenge.” Tiger has just won rights to fly to the Philippines and wants to fly to Malaysia. Kuala Lumpur to Singapore has more bus services than air services. "If we could fly there we would fly up to ten times a day," he said. He also called for improved infrastructure, which could include making civil use of several underused military airports in Asia.
Kulula.com is South Africa”s first low cost carrier. Owned by Comair, a British Airways franchise carrier, it gets away with selling low fare tickets on a web-based low fare website, for services operated by BA. There is a lot of cross utilisation said CEO Gidon Novick, acknowledging that Kulula is studying 50-70 seat turboprop aircraft to start serving routes that are not big enough to support its Boeing 737 services. The airline is interested in acquiring SA Express, itself a Bombardier Q400 operator, which is up for sale.
The Middle East LCC market continues to make progress. Air Arabia marks its third anniversary in six weeks” time. ”We broke even in the first year, made a profit in year two and will carry 2m passengers this year,” said Adel Abdulla Ali, CEO. He highlighted that the airline was also the first into Alexandria, initially with three flights a week, now flying three a day. ”Qatar Airways and Emirates have followed us,” he said. Air Arabia will soon be joined by Sama, meaning to ”fly high”. Sama plans to start domestic routes initially with four leased B737-300 aircraft (from GECAS and Oasis), operating from Riyadh Airport. Backed by senior members of the Saudi Royal Family, Sama is looking to realise the opportunities that are expected when Saudi Arabian Airlines is privatised, noted CEO Andrew Cowen. He highlighted that Riyadh ” Dubai is currently served three or four times daily, compared with London ” Paris which boasts up to 34 daily services.
The last word goes to Patee Sarasin, CEO of Nok Air, whose bright pink aircraft with painted yellow ”beaks” have quite a following in Thailand. Focusing on the brand ” a dedicated music channel, a good distribution, including ticket sales at Seven 11 and DVD stores ” has significantly raised the profile. ”We are an LCC ” meaning lovable, charming and cuddly,” he said.
Over 40 low cost carriers will be represented at Routes in Dubai this week.