Legacy airlines will become increasingly reliant on budget carriers to provide feed to their long-haul networks - and the long-haul, low-cost model is pretty much dead in these times of high oil prices.
These were the main conclusions reached during a World Route Development Strategy Summit session to discuss the ever-blurring line between low-cost and legacy airlines.
In capacity-constrained airports such as London Heathrow, legacy carriers can still be profitable without relying on low-cost feed, said Javier Suarez, senior manager network planning at Spanish carrier Vueling.
However, he does not believe this to be the case in airports with room to grow, such as Madrid-Barajas.
"Iberia faces competition here from Ryanair and EasyJet. [Airlines in this situation] will have two airlines operating for them - a regional airline and they will also need a low-cost carrier to compete with the existing low-cost carriers," said Suarez.
Moving on to the subject of the viability of airlines with a long-haul, low-cost model, Virgin Atlantic commercial director Edmond Rose said that while there is a possibility of success on shorter sectors, with fuel representing such a "massive chunk" of costs it would be "difficult to compete" on the longer routes.
"Long-haul, low-cost may work in the 5-8h sector, but for all long-haul airlines fuel represents 35-40% of their costs and it's difficult to come in with a higher aircraft utilisation [on longer sectors]," said Rose.
However, in an obvious dig at certain Middle Eastern carriers, Suarez said he "considers Gulf carriers as long-haul, low-cost carriers" because "they don't pay for fuel". Ouch.
Source: Flight Daily News
