2017 to be the year of the long-haul, low-cost flight.

by Clive Dorman - consumer editor
139
December 29, 2016

Long-haul low-cost air travel is set for a big expansion in 2017 as the world’s major full-service carriers finally accept — after years of doubt — that it can help them boost profitability and make loss-making routes viable.

After dabbling over the past two decades with short-haul, low-cost carriers (LCCs), two of Europe’s biggest long-haul airline groups, British Airways owner IAG and Air France, will launch long-haul LCCs flying to the South America, the Caribbean,  USA and Asia next year.  They will join Germany’s Lufthansa, which began flying long-haul low-cost in 2015 through its subsidiary Eurowings.

It has taken the European mega-carriers a decade of spectating before jumping in.

 Australia’s Qantas became the first established full-service airline to successfully launch long-haul low-cost through its subsidiary Jetstar in December, 2006,  with flights from Melbourne and Sydney to Honolulu, Hawaii, using 303-seat Airbus A330-200s (since replaced by 335-seat Boeing Dreamliner 787-8s). It expanded to destinations in Indonesia (Bali), Thailand (Phuket and Bangkok), Singapore and Japan (Osaka and Tokyo).

Singapore Airlines waited six years before biting the bullet, inventing Scoot Airlines in 2012.

Now the dam has been breached in Europe as some of the world’s biggest full-service airlines start putting together subsidiaries to compete with aggressive independent long-haul LCCs, such as AirAsia X and Europe’s Norwegian Air Shuttle.

The only hold-out region is the USA, whose full-service carriers and short-haul LCCs alike have shown little interest in launching long-haul low-cost.

The one North American LCC — apart from Montreal-based charter airline Air Transat  — that has embraced long-haul services is Canada’s Westjet, which runs daily services from Toronto and Calgary to the UK and Ireland.

However, in Europe, airlines face high operating costs that are forcing them to look at long-haul low-cost alternatives to save routes that are currently not viable — a similar strategy adopted by Qantas in 2006.

In that era, for example, there were no non-stop services at all between Australia and Hawaii, all destroyed by a bloody fares war in the late 1980s and 1990s.

There and elsewhere, the Qantas strategy was to let Jetstar take over routes axed by Qantas because its costs were too high. There were even hopes that Jetstar’s Singapore offshoot could be used to re-enter abandoned Qantas destinations in Europe, such as Rome and Athens. However, that has since been all but dashed by Scoot Airlines, which will begin flying from Singapore to Athens (abandoned by Singapore Airlines in 2012) in 2017, before expanding to other Euro cities, and AirAsia X, which will return to London and other Euro destinations in 2018 after withdrawing services earlier this decade.

Nonetheless,  Qantas has shown the sceptics over the past decade that low-cost no frills and full service are entirely separate markets —  so much so that, after an initial period of giving Jetstar exclusive access to domestic and international holiday markets for the Qantas group, the Australian company now has Qantas “competing” with Jetstar in medium and long-haul markets like Hawaii and Bali.

Foreshadowing a new long-haul LCC in 2017, Air France chief executive Jean-Marc Janaillac is talking about an aggressive switch to budget services to save much of its loss-making long-haul network – despite the opposition of militant unions.

Janaillac is proposing to give the new as yet unnamed venture Air France’s entire fleet of 10 275-seat four-engine Airbus A340-300s —identical in cabin dimensions to the A330-300 twinjet, into which low-cost carriers like the Philippines’ Cebu Pacific Air manage to jam 436 seats in a high-density nine-abreast configuration.

Air France hasn’t yet unveiled the seating configuration or the planned destinations, although the airline has no qualms about squeezing up to 178 seats into its domestic full-service A320s — virtually the same seat count as low-cost carriers like Jetstar and Tigerair.

In the meantime, Janaillac has his hands full getting unions to drop their opposition to the new venture. 

“My bet is that the (Air France) staff are ready to make a deal this time to secure the long-term future of the company and start growing again,” he told London’s Financial Times newspaper in November 2016. “It is a bet, though,” he added.

Protests by airline staff against management have sometimes turned violent. In 2015, Air France's human resources manager was "almost lynched" by striking workers, who stripped him of his shirt in a protest over the struggling airline's plan to cut 2900 jobs as they stormed the airline’s offices at Paris’s Charles de Gaulle airport.

Meanwhile, IAG group, which owns British Airways, Spanish national carrier Iberia, Spanish LCC Vueling and Irish national carrier Aer Lingus, announced just before Christmas 2016 that it would base a new long-haul LCC in Spain’s second city, Barcelona from June 2017.

The initial plan is to operate two Airbus A330-300s flying to a range of destinations that could include Santiago, Chile, Buenos Aires, Argentina, Havana, Cuba, Los Angeles and San Francisco, USA, and Tokyo, Japan, IAG says.

One of the options is to have the LCC operated by Aer Lingus — the airline that IAG chief Willie Walsh used to run before he took over at British Airways on his way to the top job at IAG group.

“I would point to Aer Lingus and argue that it (long-haul low-cost) works,” Walsh told airline trade publisher Routesonline.com. “Just look at what Aer Lingus does on the transatlantic – it is the lowest cost producer of transatlantic flying and it is very profitable.”

However, the full-service European carriers are playing catch-up behind trailblazing independent long-haul LCC Norwegian Air Shuttle, which flies to Asia, North America and the Caribbean from a range of Euro cities. It has just been granted permission to greatly expand services through an Irish subsidiary by the US Department of Transportation.

Apart from its fleet of a dozen Boeing 787 Dreamliners seating up to 344 people, which it flies from Europe to the US east and west coasts, as well as to Asia and the Caribbean, Norwegian has on order a new variant of the Airbus A320 family, the A321LR, which has a range of up to 7400 kilometres — enough to link much of western Europe to the US east coast.

With around 220 seats, the A321LR is small enough to tackle untapped regional US markets. The airline plans to fly them, for example, into Stewart International Airport, about 100 kilometres north of New York City, as an ultra-cheap alternative to Big Apple airports such as Newark, Kennedy and La Guardia.

Norwegian is promising $US69 one-way transatlantic fares between the US and Europe in 2017.