BARGAIN hunt

The growth of low-cost carriers, latterly on long-haul routes, has prompted legacy airlines to join the fray, writes Colin Ellson

Way back in the 1970s, Freddie Laker shocked the somewhat staid aviation world when he announced he would begin ‘no frills’ low-cost flights by Laker Airways’ Skytrain from London Gatwick to New York JFK. Consternation and disbelief was written on the faces of executives in boardrooms across the industry.

Sir Freddie, as he later became, had a fight on his hands, battling with British regulators and the bigger established airlines for years. Nevertheless, he survived the flak for five years, using 272-passenger MD DC10S, and gaining respect among peers, including Sir Richard Branson of Virgin Atlantic.

Beginning the Brits’ love affair with America, Skytrain charged an affordable economy return fare of £139.

Fast-forward some 40 years and some traditional airlines are undergoing structural changes to compete with their upstart low-cost rivals. The market segment is in transition and still reeling from the demise of low-cost Monarch Airlines in October last year, but others are only just taking off.

The most notable, perhaps, is Level, the new low-cost transatlantic airline from British Airways' parent group IAG. Its first flight was from Barcelona to Los Angeles, followed by Boston, and the airline will extend its coverage to Paris Orly from July this year, with fares starting at £99 one-way.

Premium economy fares include checked luggage, meals and seat selection, while passengers in economy can purchase food and drink onboard. Wifi connectivity is also available starting at £8.99.

“Level’s Barcelona operation has been an incredible success,” says IAG Chief Executive Willie Walsh. “Customers love it and Level will be profitable this year. Barcelona was always a first step and we’re delighted to launch flights from our second European city, Paris,” he adds. The group expects to have a fleet of 30 aircraft by 2022 and London is thought to be on the shortlist for new transatlantic routes.

In a two-class configuration, Level – like rapidly growing Norwegian – does not sit comfortably in the conventional image of low-cost carriers.

So what is a low-cost airline? Eurocontrol, an international organisation working to achieve safe and seamless air traffic management, describes budget airlines thus: “The low-cost model focuses on business and operational practices that reduce airline costs. That means using secondary airports with no taxes, offering no frills on flights, and charging for services like seat reservation and checked baggage.”

Eurocontrol also points out that such carriers typically stick to single-aisle aircraft and usually a single aircraft type – such as Ryanair's preference for B737-800s – in order to lower maintenance cost and improve crew flexibility.

But, crucially, the organisation also sees business models adapting in both directions. Low-cost carriers, for example, are increasingly flying from major airports to attract customers from the traditional airlines, and even Ryanair is now experimenting with connections.

Flybe has many hallmarks of a low-cost carrier but bills itself instead as Europe's largest regional airline. It caters to the corporate market with a variety of products but also operates from London's key business airports, Heathrow and City Airport, and has a network of legacy airline codeshare partners.

Meanwhile, traditional scheduled airlines are increasingly unbundling their offers like low-cost carriers, selling food, seat choice and separate checked baggage.

Carlson Wagonlit Travel is keeping a close eye on developments in the market on behalf of its corporate clients. “You only need to look at the expansion of 'business' offerings from low-cost carriers over the

Low-cost carriers are increasingly flying from major airports to attract customers from the legacy airlines – and the traditional airlines are taking note”

past few years to see there is demand for them,” says Dan Kelly, Director of Product Marketing at CWT.

“Easyjet was one of the first low-cost airlines to provide priority boarding, loyalty schemes and allocated seating, making the most of its network, which covers many popular business destinations.”

Kelly continues: “This was quickly followed by Ryanair so the product is there and businesses are willing to use it, especially with cost control still high on the list of priorities for buyers.

“At CWT we have seen demand grow for low-cost bookings and worked to offer a solution to our customers. This has resulted in rolling out the implementation of LCC content into our booking app, and this will be introduced in 2018.”

It is not just secondary and smaller cities which have benefited from the oxygen of publicity and finding their place on the map due to the growth in low-cost airlines. London Gatwick, for example, became the world’s top international low-cost airport in 2016, according to the Centre for Aviation.

Of particular significance is Norwegian’s low-cost long-haul services to North America and the Far East. Its service to Singapore is the longest low-cost airline route in the world, and its network of flights will be enhanced by new departures to Denver, Boston, and New York JFK, followed by routes to Buenos Aires, Chicago and Austin this year. The airline is growing rapidly.

Says Stephen King, Head of Airline Relations at Gatwick: “Norwegian currently offers over a dozen low-cost long-haul services from Gatwick, with other carriers Westjet, Air Transat and Air Canada Rouge flying to cities across Canada. These flights are all to important business centres.”

King adds: “Low-cost long-haul is here to stay and other carriers have seen their success and are following suit. It is also likely that we will see new low-cost longhaul services coming to London from Asia and other markets.” New York is another business destination grateful for the rise of no-frills services across the Atlantic. Norwegian launched its second daily flight from Gatwick to JFK in August 2017, and now London Stansted and the UK’S second city are also getting into the schedules thanks to Primera Air. The airline, whose background is in charter flights for the Scandinavian and Nordic markets, will introduce flights from Stansted and Birmingham in April this year to New York Newark. In the short-haul market, a significant development has been the launch of Worldwide by easyjet. It allows passengers to book and connect its own services and those of Norwegian and Westjet at Gatwick – and also with Norwegian and Neos flights at Milan Malpensa – using the airports' respective self-connect service. At the time of launch, easyjet said it hoped to extend the service to other European airports and that talks were “far advanced” with Middle Eastern and Far Eastern carriers.

Low-cost long-haul flights are here to stay and other carriers have seen their success and are following suit”