4 ms·

The market response (at least in Europe, after liberalising the common airspace) has been the rise and utter domination of LCC airlines. Point-to-point flights,

by corford 10y ago

The market response (at least in Europe, after liberalising the common airspace) has been the rise and utter domination of LCC airlines. Point-to-point flights, standardised aircraft, super low fares and great coverage. The success of the model is now creeping in to medium/long haul routes with Norwegian (and very recently IAG) leading the charge. If you talk to airlines, the "cartel" they fear are the distribution gatekeepers (GDS providers and OTAs like Priceline and Ctrip). This world is rapidly changing too though with the arrival of NDC and airlines investing in their own direct to channel APIs (a practice, incidentally, pioneered by LCCs).

dingaling 10y ago
> The success of the model is now creeping in to medium/long haul routes I'm an old enough fogey to remember the launch of Laker SkyTrain back in the early 1980s that brought unbelievably low fares to the trans-Atlantic market, compared to the big airlines participating in the IATA 'tariff agreement' cartel. But Laker also discarded all the ticketing restrictions, you just bought your one-way fares and any extras you wanted. It was those airlines, such as TWA and BA, that ran SkyTrain into the ground by pricing in response with fares that were uneconomical for them; Laker held-on for several years but eventually went bust,and fares returned to 'normal'. So it's with great satisfaction to me that 30 years later the heirs of those airlines are scared of the modern-day Lakers.
lhopki01 10y ago
I wonder why deregulation within the EU led to such different results than the US? The article makes a point about how there were many mergers in the US which probably has reduced competition. However, this doesn't explain the fact that in the EU it has been newcomers like Ryanair and Easyjet that have really made the big changes.
- corford 10y ago
  I don't know enough about the US market to have an informed opinion, though there are a few differences I'm sure play a part: 1. Lots of different languages and cultures in the EU make it easier for startup airlines to quickly grow from their local base. So, for example, you see WizzAir and BlueAir competing successfully with Ryanair and Easyjet in Eastern Europe. Transavia from the Netherlands, Norwegian from Norway, Vueling and Volotea from Spain, Germanwings/Eurowings from Germany. 2. The population distribution in Europe lends itself ideally to the LCC model (point-to-point networks and sector times under 5 hours). We have lots of regional cities with sufficient populations to warrant basing a few aircraft and opening up profitable routes. That's why Europe has the densest regional/secondary route network in the world. 3. The LCC explosion really started in the early 2000's (despite Easyjet first flying in ~1995 iirc). It exploded thanks to a perfect storm of airspace liberalisation, cheap aircraft leases 'post 9/11', widespread internet adoption (so LCCs could cut out travel agents and GDS fees) and booming EU economies fuelling consumer demand for flights and travel. The open question is whether or not Europe will see consolidation within the LCC market but I personally don't think it will any time soon. LCC passenger count is still growing at ~6%/year.

by corford 10y ago

dingaling 10y ago

> The success of the model is now creeping in to medium/long haul routes I'm an old enough fogey to remember the launch of Laker SkyTrain back in the early 1980s that brought unbelievably low fares to the trans-Atlantic market, compared to the big airlines participating in the IATA 'tariff agreement' cartel. But Laker also discarded all the ticketing restrictions, you just bought your one-way fares and any extras you wanted. It was those airlines, such as TWA and BA, that ran SkyTrain into the ground by pricing in response with fares that were uneconomical for them; Laker held-on for several years but eventually went bust,and fares returned to 'normal'. So it's with great satisfaction to me that 30 years later the heirs of those airlines are scared of the modern-day Lakers.

lhopki01 10y ago

I wonder why deregulation within the EU led to such different results than the US? The article makes a point about how there were many mergers in the US which probably has reduced competition. However, this doesn't explain the fact that in the EU it has been newcomers like Ryanair and Easyjet that have really made the big changes.

corford 10y ago
I don't know enough about the US market to have an informed opinion, though there are a few differences I'm sure play a part: 1. Lots of different languages and cultures in the EU make it easier for startup airlines to quickly grow from their local base. So, for example, you see WizzAir and BlueAir competing successfully with Ryanair and Easyjet in Eastern Europe. Transavia from the Netherlands, Norwegian from Norway, Vueling and Volotea from Spain, Germanwings/Eurowings from Germany. 2. The population distribution in Europe lends itself ideally to the LCC model (point-to-point networks and sector times under 5 hours). We have lots of regional cities with sufficient populations to warrant basing a few aircraft and opening up profitable routes. That's why Europe has the densest regional/secondary route network in the world. 3. The LCC explosion really started in the early 2000's (despite Easyjet first flying in ~1995 iirc). It exploded thanks to a perfect storm of airspace liberalisation, cheap aircraft leases 'post 9/11', widespread internet adoption (so LCCs could cut out travel agents and GDS fees) and booming EU economies fuelling consumer demand for flights and travel. The open question is whether or not Europe will see consolidation within the LCC market but I personally don't think it will any time soon. LCC passenger count is still growing at ~6%/year.