Is flying low-cost the new normal? Within Europe but also on longer flights? And how do the traditional airlines follow this trend?
How to fly “low-cost”?
One of the characteristics of a low-cost airline (for short and long haul) is their skill and continuous quest to save costs; in labour (lower salaries, more working hours), in automation (by having loads of automated processes), in liability (not offering connecting flights) and in onboard services (because you usually get nothing except a seat). On the other hand, they tend to invest highly in a way to generate extra (ancillary revenue); suitcases, extra services, wifi, the use of the entertainment system and even (if Ryanair’s Michael O’ Leary could ever get it through legislation and public opinion) the loo.
Their competition; the traditional legacy network airlines do everything in reverse; they offer connections, they offer some onboard products, often have free services included in the price and try to offer a relatively luxurious product to get you from A to B without too much stress. And yes, they have higher operating costs. Much higher. But not anymore if it’s up to the CEO’s of KLM, Lufthansa and British Airways. There are two ways to do it:
Transforming to Low-Cost
One of Alex Cruz’ first acts as new CEO of British Airways was to stop the free meals on European flights. These days; passengers are offered luxury food & drinks supplied by Marks & Spencers that are hardly sold at “competitive prices”. Add up that seat selection and luggage check-ins have disappeared from the list of free amenities and one wonders what the difference is between the UK’s Flag carrier and easyJet…
New Airlines and “new services”
Each of the three big European Legacy Airlines have created a low-cost airline in the past years; Air France-KLM has Joon, IAG (British Airways/Iberia) has Level and Lufthansa has Eurowings. Low-Cost airlines owned by the legacies to compete with the big low-cost players active on the European markets. Free suitcases? Nah, Meals on board? Have a credit card ready and seat selection as a nice gesture? Hell no!
Even though these airlines are full low cost-low frills airlines, they often operate under code-shares (<– click to find out what this word means) with their owning airlines and so it may become a future thing to fly your first European part of your long-haul flight with a low-cost airline.
Low-cost is coming to long-haul
A report by McKinsey published in 2013 deemed Long Haul low-cost an absolute no go. “Long-haul low-cost will never work out”. Fast forward to 2018; multiple successful long haul low-cost airlines are active between the USA and Europe and over 200 widebodies are still on order by these airlines.
Traditional “legacy” couldn’t stay behind; KLM announced light fares to the USA, removing a free suitcase from the included service. The next logical step is to start charging for other “services”. Or to start a “real” long-haul low-cost airline such as Joon (Air France), Level (IAG) or Eurowings (Lufthansa).
Bottom line:
The future is low-cost; like it or not. Traditional Airlines have to comply with the changes and customers have to get used to the fact things don’t come for free anymore. “Want comfort” Pull out that credit card and enjoy.
What do you think will happen in the near future?