Tag Archives for ultra low cost carrier.
United CEO Scott Kirby predicts Spirit Airlines won’t survive past this year, saying bluntly “Off the cliff they go” and declaring their business model already dead. Here’s why he’s right – and where he’s wrong.
United’s Scott Kirby has been predicting the demise of low cost competitors for years. So far he hasn’t been wrong. On Wednesday morning’s earnings call, he placed the blame for this on the airports and the federal government as he explained why his airline would outcompete them in the major cities where they have their biggest operations.
Some airlines are silly ideas from the start. A local business leader decides the best opportunity for a new airline happens to be flying from their city. But even where there are good ideas for an airline – an underserved market, a new product, a lower fare that stimulates demand – many such markets aren’t good all year round. And upstarts have a more difficult time since it’s harder to diversify their flying across more routes and established bases of customers.
The challenge any new airline faces, starting up to serve a highly seasonal set of routes, is what do you do during the off-season?
This has to be the most absurd fee ever charged by an airline. Startup carrier Breeze Airways, founded by the creator of JetBlue and several other airlines around the world, will hit you with a $27 “technology development fee” when buying a ticket. The reason why – and how to avoid it – will really take you beyond the looking glass of the U.S. airline industry.
It almost always seems better to solve the structural problems of the mainline carrier than to start a new airline. That seems harder ex ante but given the track record of ‘creating new airlines’ and walking away from economies of scale in the process the airline within an airline model hardly seems the uniquely better option.
Indeed, British Airways has already altered its short haul product to be more like a low cost leisure carrier, with less seat pitch than Ryanair (even in business class). They’ve reduced their labor costs through a series of contracts, B scales, and labor actions over the past dozen years – a process which accelerated during the pandemic.
French long haul low cost airline French Bee plans to outfit two new Airbus A350s they’ll take delivery of this year with 488 seats, about 50% more seats than most airlines put on the plane. This plan is likely to fail. Here’s why low cost carriers work on short flights, but fail when trying to fly long haul.
Mom Air has sent out a press release, and promises a press conference November 11, announcing the launch of their new budget airline offering transatlantic flights out of Iceland. Bookings are supposed to open November 9 for travel March 1, 2021 onward.
In nearly every respect, including the logo, this appears to be a copy of Wow Air which failed even during better times for the airline industry – except they promise two free seats on every flight (you’ll be able to go to their website and search for available free travel), they’re putting gender equality at the forefront, and they plan segregated flights for those who have Covid-19 (or have been exposed and are quarantining) and those who do not.
United’s CFO left two years ago, put together $125 million in capital, and bought tiny XTRA Airways which had just one old Boeing 737-400 left but which had something a lot more valuable: an operating certificate. They’re already allowed to fly scheduled service.
Their first Boeing 737-800 arrives next week.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
