Long haul low-cost airlines interview, John Strickland, Aviation Consultant - Business Traveller

Long haul low-cost airlines after COVID19. Tom Otley, Editor of Business Traveller interview with John Strickland, Aviation Consultant.
Tom Otley, Editor of Business Traveller interviews John Strickland, Aviation Consultant about what could happen with long haul low-cost airlines after COVID19.
- Hello, my name is Tom Otley, and welcome to Business Traveller. Today we're talking about long haul, low cost. It's allowed many people to see parts of the world that previously they would have struggled to afford, but it's a model that is currently in trouble because of the pandemic. To discuss this, I spoke with John Strickland, aviation consultant. So then, John, long haul, lost cost. There've always been question marks about it. Is this pandemic gonna mean the end of that model?

- I think this model is going to be significantly under pressure, as it has been for a long time because the challenge long haul, low cost has is it's popular with customers. It's provided access to probably new customers on many long haul journeys because it does want low cost, short haul flights offers low prices and a much more simpler way of travelling with all the extras that you pay for on top of the simple journey itself. The challenge being that most airlines offering have not made money. There are cases where perhaps it's part of a wider group, and in different market situations, some money's being made. For example, JetStar is an adjunct to the Qantas group, but Norwegian, the biggest protagonist in Europe has not made money. AirAsia X, the long haul part of their Asia group, which itself is very successful, out in Asia, has struggled over a number of years, and we've seen failures of smaller relatively recent long haul, low cost airlines like Wow based out of Iceland or Primera, another European low cost, long haul airline that failed too the last couple of years. And if we consider the high cost of getting the right kind of efficient aircraft to support this model, the fact that there are very few air routes that support traffic on a consistent year-round basis at high volumes, without topping it with feeder traffic, which often these low cost, long haul carriers don't have, and there's many elements that make it difficult. Now, we can look at it two ways. You could say either the challenges that are gonna follow the actual beating, hopefully of the Coronavirus, IE economic challenges of recession and so on, are going to be more people would not be able to afford to travel, and the market would be reduced, and equally those airlines who are strong, which are not these low cost, long haul guys will make sure they can't get back in again. Or you could look the other way and say, aircraft are cheap and gonna be available. Someone else might come around again for another go at least with a lower cost base, just at a time when people want low fares. My own instincts, but I am long in the tooth in this industry, is it's gonna be harder for it to work again, but who knows? It's a completely new world.

- Yeah, and I suppose if oil is very cheap, which it will be for quite a few years, that would help, and in the case of Norwegian, strangely enough, I read that unlike the other airlines, which had hedged against the cost of oil, Norwegian hadn't. So if it can survive, it will at least have the benefit of having both efficient planes and cheap oil, which it can buy right now to fill them up.

- A challenge Norwegian made its absolute foundation as business model have these new efficient aircraft that gave it a substantial double-digit margin of lower cost difference. Now, you don't need, at least at the present time, with lower oil prices to have the most efficient aircraft. You could, regardless of the environmental considerations, fly older, more gas-guzzling aircraft at very low fuel prices, and then you won't have expensive ownership costs. It's as simple as this. If you buy a hybrid or electric car, you're gonna save a lot of money on petrol costs, but you're gonna spend a fortune to get the car in the first place. So what do you do? Do you get petrol when it's cheap and drive a clanker or banger? Or do you fork out an expensive car? It's the same with aircraft and airlines. So the two don't generally go together.
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[Dog.eatdog]

Hopefully all these low-cost airlines will go broke!
Enabling everyone to destroy the climate in the most effective way possible, is an appalling "business model".