Strategic Meetings Summit London, 26 September,
September 29 2022, Kimpton Fitzroy London
Friday 30 September 2022, JW Marriott Grosvenor
Airlines seem to be enjoying a boom time with revenues increasing as more and more people fly.This includes legacy airlines like BA, Iberia, Lufthansa and Finnair which have all in recent weeks reported increased load factors and revenues if not always better profits.But it also applies to the low cost carriers (LCCs), like easyJet, which this week also reported a rise in passengers of 12.9% in the 12 months from July 2005 (28.7m) to July 2006 (32.4m) as well as a leap of 21.8% in revenue over the same 12 months from Â£1,289m to Â£1,570m.But against many predictions, many of these extra travellers seem happy to use the legacy airlines as well as the no frills. Willie Walsh, BA's ceo, made this point in his statement accompanying his airline's results and it deserves a closer assessment."On short haul our new low fares have been a big success," Mr Walsh said. "While competition in this market is brutal I am delighted to see we are winning customers with record seat factors."We're now even more competitive on price whilst keeping ahead of the game by offering full service flights, more frequently to more convenient airports."The major European legacy airlines like BA, Air France/KLM and Lufthansa have always outstripped the LCCs on the last three: full service, better frequency and nearer airports. But they have not, previously, had the advantage over them in terms of price.If Mr Walsh is now saying that this has changed or is changing, this could be serious news for no frills carriers like easyJet, Germanwings and Air Berlin, which all actively seek to attract business travellers. There has been a consistent drift by business travellers to LCCs in recent years. In the UK alone, according to the Barclaycard Business Travel Survey of 2006, 30% of all business travel flights are with no frills carriers. The main reason is the cost.Lower pricing by the likes of BA could well halt this ebbing away of business to the LCCs, stacking the odds even more hreavily in their favour for the business travel market. For while price is important, it is not the only measure. And it is this that Mr Walsh is citing. Convenience and frequency also play a crucial role â€“ why travel from West London to Stansted when Heathrow, on the doorstep, offers similar fares.Business travellers also like at least a measure of comfort and service on their flights, like a drink for which they do not have to pay. (Judging from the growing loads on Eos and the success of Lufthansa's private jet service, they don't seem to mind being pampered either).What they don't want is also equally clear. They don't want noisy planes, they don't want to scramble for a seat and, most of all, they don't want to be taken for granted, to be treated as self-loading cargo.If LCCs are losing the battle on price, they are partly to blame themselves with some charging for checked-in baggage or for a fast track service to the plane. These little extras tend to add up and erode any price advantage the LCCs have. If Mr Walsh is right and the Barclaycard survey also pointed out that service and comfort are becoming more important to business travellers, the LCCs may have some thinking to do if they are to go on attracting this lucrative market.To compete with the legacy carriers for this market might mean they even have to change their business model. The next year could well see an interesting battle develop between the no frills operators and the legacy carriers for business travellers.
* see BTE's recruitment site www.businesstraveljobs.com