It is well know that the invention of low cost airlines over the last 20 years has severely dented the power of full service airlines in Europe. Those weaker ones including Malev, Sabena and Swissair have disappeared, some to be replace by versions, some not.
Those which have been left have found a survival of the fittest, with the low cost airlines, especially Ryanair driving down costs and lowering fares. Those airlines have to compete and the compromises are clear – you only have to look at the likes of British Airways, KLM and Lufthansa to see this.
There is a new battle though, and one which is going to change the industry yet again – the invention of the Low Cost Long Haul airline. At first it was rubbished as not feasible, and Air Asia tried and failed to make a London to Kuala Lumpur route work, but the tide is now turning. Not able to increase utilisation to the same extent as short haul – the long haul model is very economy centric, but still with a premium offering. More nimble and effeceint than previous carriers, they are able to offer lower fares, and also drop complicated rules, such as staying a Saturday night to get a cheap fare to America.
That is causing a problem for the network carriers, as their prized profit making parts of the business are being eroded. Norwegian has been the pioneer of this in Europe after a rocky start taking on brand new 787’s, but Lufthansa is following with Eurowings – again facing problems, and other players such as WestJet in Canada and Air Asia and Scoot in South East Asia.
A Low Cost Virgin isn’t something new, in fact the very roots of the airline were to compete like Freddie Laker in the 70’s, although the product going upmarket has meant competing against the likes of British Airways, American and United.
Little is known so far about the offshoot of the main airline, but rumours have suggested a fleet of ex-Delta A330’s will be based at Gatwick on leisure orientated roots, possibly only featuring Economy and a revised Premium Economy cabins. This would put the carrier right up against Norwegian who has had a head start and could see new routes opening to the Caribbean and Indian Ocean.
Even if this doesn’t see the light of day change is coming, and it needs to keep up, even if that means going downmarket.