The LCC experiment in a longhaul market

February 9, 2012

The never ending debate continues as to whether the LCC model would export itself into longhaul. Seemed like it was only a question of time before the likes of Ryanair and Air Asia would throw down the gauntlet to the legacy dinos. It was Air Asia, not surprisingly, which took the bold move. “Yeah so what!” I hear you say, “Isn’t everywhere in Asia longhaul?”  (so right, from experience, believe me). Europe represented a real dip into shark infested waters for Air Asia.

Speaking at the Low Cost Airlines World Asia conference, CEO Azran Osman admitted that the experiment has not worked, citing a number of key factors. The tried and trusted economics of LCC operations did not put enough daylight between the price and proposition of the longhaul LCC and full service carrier. It’s difficult to get customers to accept no frills and limited service on a longhaul journey. As a result it became more of a level playing pitch. Equally, severe fuel prices, high capital investments, curtailed utilisation, increased risk exposure and the necessity to operate into major airport hubs (no Spitfire airfields); the differentiators quickly disappear.

Hats off to Ryanair for resisting the temptation, and hats off to Air Asia for recognising that time and parameters no longer favoured the venture. Time to concentrate on where the markets and economics return the best rewards, and do what we have proven to do best. Datalex CEO Cormac Whelan’s favourite phrase again comes to mind; “Ever Tried. Ever Failed. No Matter. Try Again. Fail Again. Fail Better” (playwright Samuel Beckett).

Pity that many carriers don’t take the same bold decision making when it comes to non-performing distribution partners and technologies.

 

Peter O'Kelly

Commercial Director, Datalex