Conventional wisdom may be much maligned, but it is not always wrong. Almost from the day that Franco Mancasola sketched out his plans to launch a low-fares airline but keep the frills, the air was full with voices warning him that such a hybrid could never survive. This time they were right.
Debonair not only went bust last month but is rumoured to have left $70 million trailing in its wake. If true, that is an impressive amount for a small carrier, not long after its third birthday. Most analysts had written the airline off long ago for flying in the face of the gym-shoes and peanuts orthodoxy for which Southwest Airlines wrote the rules. Debonair did follow some of the doctrines. It contracted out almost everything, set up home at low-cost London Luton and had generally tried, though not always too steadfastly, to avoid the more expensive, congested hubs.
But with uniformed cabin crew, in-flight snacks and spacious cabins, it was visibly departing from type. The leased fleet of small British Aerospace 146 regional jets was also a departure from the usual Boeing 737 workhorse. It turned out to be an expensive option. Seat costs were higher and it ultimately constrained the airline's ability to grow.
The truth is that while Mancasola was often cast in the role of a low-cost pioneer, his intuitions were not those of the usual no-frills evangelist. He spoke more often of low fares than low cost, and shunned the tag of no-frills. At the outset he made clear his belief that passengers, especially in Europe, wanted ample legroom and smart service, just not at the alarming prices charged by a flag carrier. He was probably right. But they wanted other things more.
Above all, many simply wanted the lowest price. Although Debonair's fares were low, the carrier could not ultimately keep pace once British Airways launched Go and the price war heated up. Along the way, Debonair's subtler message about quality got lost amid the clamour for ever lower fares.
Ryanair has efficiently demonstrated that a $29 ticket is an easier proposition to sell to the public than a mixed message about lowish cost with frills. The early demise of fellow-traveller AB Airlines, with its mysterious promise of "value-for-money", would seem to confirm the point. After three months in receivership AB ceased services at the end of September - a day before Debonair.
Independent business travellers would have approved a more promising target for the Debonair message. It did attract a small following, even launching a modest frequent flier scheme and starting experiments with something close to a business class. But frequency and range of destinations are bigger attractions - as a rule of thumb it takes two or three daily flights on a route before business traffic starts to rise. Debonair again could not keep pace with its much faster growing rivals.
Ultimately, although Debonair was caught up in the hype surrounding Europe's low-cost experiment, it seemed to fit better with the older-style model of a small independent. Perhaps ironically, the market deregulation which encouraged Debonair to set up in the first place, has also created market conditions in which independents struggle to survive.
The experience in a post-deregulation US market illustrates the choice that such carriers have had to make. Either to throw in their lot with the majors as regional partners, or carve out a low-fares niche. In choosing the latter, you need to achieve a cost base which the majors cannot match, and sufficient scale, quickly enough, to avoid being beaten off lucrative routes. Debonair did not achieve enough of either.
Analysts in Europe are already watching keenly to see how far other low-cost carriers have strayed. Ryanair has clearly kept the faith with a ruthlessness that would not shame Southwest. EasyJet too has followed the model, although it may now be feeling a little more exposed at Luton as it keeps up with an ambitious aircraft delivery schedule. Virgin Express is still striving to shift its cost base from Brussels for the cheaper shores of Ireland, but its finances have yet to recover their original sparkle.
Despite attacks on its parentage, Go also appears to be succeeding in the low-cost game from London Stansted. KLM uk too has been provoked to join the fight, rebranding a slice of its fleet under the Buzz name but apparently keeping much else about the operation the same.
Whether or not they take heed, all have now had a graphic reminder not to tinker with the formula.
Source: Airline Business
