LCCs to undergo fundamental change - CAPA
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(Sydney, 3 November 2009). The global low cost airline movement has undergone a fundamental change of direction in the past two years, but the biggest shifts in the model are coming, according to a landmark new study published by the Centre for Asia Pacific Aviation (CAPA), the leading global aviation intelligence service provider.
The Global LCC Outlook report, published today by The Centre and available for download at www.centreforaviation.com/lcc/report, covers over 130 LCCs from around the world, with commentary from some of the foremost thinkers on the LCC segment, including Professor Michael E. Levine, Professor Nawal Taneja, Bill Franke of Indigo Partners and Dr Julius Maldutis. The report also extensively cites LCC leaders, including Gary Kelly, CEO of Southwest Airlines, Dave Barger, CEO of JetBlue Airways, Michael Cawley, Deputy CEO and COO of Ryanair and Tony Fernandes, CEO of AirAsia among others.
Looking to the future, “in most of the more likely scenarios, yield will become increasingly attractive as a refuge for all but the lowest cost operators”, said Mr Harbison.
“High fuel prices - the main threat - are the most likely catalyst of change in the short term. With the unlikely levels already experienced despite the global financial crisis, speculative activity is tipped to push prices even higher as the economy improves. Surges in price can be highly destabilising and one of the few risk management options that most low cost operators have to guard against this is to search for higher yields.
“This and other uncontrollable externalities - both in cost and demand - will relentlessly force most low cost airlines towards reconstituting the network model, domestically and internationally”, stated Mr Harbison.
According to the report, the new network version will differ in two main ways:
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