It was a piece of news that sent the spirits of the budget traveller soaring. In May this year, Icelandic carrier WoW Air announced the launch of long-haul low-cost (LHLC) services from New Delhi to US, at just Rs 13,499 for a one-way journey. Indian carriers have since joined the race, with market leader IndiGo unveiling plans to fly to long-haul markets in Europe and, at a later date, to US, and budget carrier SpiceJet following suit. After budget carriers revolutionising domestic aviation, it may now be the turn of international flying to go democratic. In fact, the global aviation industry has earmarked 2018 as the year of LHLC flights. For those who didn’t know, LHLC flights entail seven-eight or more hours of flying at eye-popping fares, sometimes even 50% lower than those charged by full service carriers (FSCs). A CAPA report of March, 2018, revealed that on average three LHLC airline launches have taken place every year since 2012, the most prominent among them being of Norwegian Air.
If there are concerns over the plans of Indian carriers, these have to do with viability. In 2013, a McKinsey & Co report said the cost advantages that had enabled LCCs to continuously under-price mainstream airlines and build a loyal customer base were difficult to replicate on long-haul routes — for instance, Norwegian Air, the pioneer in the field, has been facing mounting losses. Experts point out that with fuel constituting a larger share of total costs, the cost gap between low-cost and full service operators narrows on long routes, though new generation aircraft like A320Neo and Boeing 737 Max which are more fuel-efficient would aid LHLC operations. The critical component for Indian LHLC carriers if they are to succeed would be feed. Experts say that without a network, it would be difficult to stick to point-to-point flying (without stopover) and remain profitable.
18/06/18 Financial Express
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If there are concerns over the plans of Indian carriers, these have to do with viability. In 2013, a McKinsey & Co report said the cost advantages that had enabled LCCs to continuously under-price mainstream airlines and build a loyal customer base were difficult to replicate on long-haul routes — for instance, Norwegian Air, the pioneer in the field, has been facing mounting losses. Experts point out that with fuel constituting a larger share of total costs, the cost gap between low-cost and full service operators narrows on long routes, though new generation aircraft like A320Neo and Boeing 737 Max which are more fuel-efficient would aid LHLC operations. The critical component for Indian LHLC carriers if they are to succeed would be feed. Experts say that without a network, it would be difficult to stick to point-to-point flying (without stopover) and remain profitable.
18/06/18 Financial Express
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