The World Low Cost Airlines Congress gave the chance to air industry stakeholders to meet with leading global carriers to understand what they are doing to get the competitive advantage in over-served markets, to continue to increase yields and expand to new networks, what are the marketing campaigns they come up with to enhance digital interaction with passengers. This year’s congress was held in London, United Kingdom on September 16-18, 2013. In the current cut-throat market conditions with the so-called legacy carriers cutting jobs, renegotiating staff contracts, the concept of customer loyalty to a brand is becoming obsolete as the lines between full service carriers and low cost ones are getting blurry and price has become the key factor for customers when it comes to choosing a short haul flight,
The congress opened up with a Focus Day on route development and the possible opportunities in Africa.
Thomas Winkelmann, CEO of Germanwings talked about its independence from Lufthansa and how the airline is planning to take over all the domestic and European non-hub flights of Lufthansa in Europe, more specifically those that don’t feed its Frankfurt or Munich hubs. He stressed that Germanwings will do these high-frequency point-to-point flights more profitably as it will provide safe, quick and efficient airport services.
Ms Helene Abraham, EVP Commercial of Hop Airlines,-a regional subsidiary of Air France. It is a merger of Airlinair, Brit Air and Regional-in her presentation about Hop’s plans to compete for European travelers said that they new airline will focus on more hassle-free network of point-to-point traffic, incorporating the hub airports of the three operating airlines which make up HOP!. “The new airline should set new standards becoming a market leader and preferred alternative to link Regional French & European cities, on behalf of Air France-KLM. We expect high demand from local dynamic businesses as well as a stronger demand for individual travel” She also said: “one of the biggest competitors in the fragile French market is substitutes; high speed rail and road. The network must adapt and include destinations not served by rail.”
In the panel discussion that followed the CEOs and Managers of Network planning of KLM, CITYJET and Germanwings and the Director of the route development of Copenhagen Airport had a positive attitude towards the expansion of their market share in a already mature region such as Europe. The main theme boiled down to cost savings through aircraft selection, airport selection, reducing complexity and improving efficiency, all with a focus on the point-to-point traffic customers want.
Another panel discussion came along to point out the impact of the traditional carriers on the short haul market. The main theme was the advantages and disadvantages of mother and daughter carriers. Low-cost daughters can focus on point-to-point traffic with independence from the mother carrier, which uses short-haul services to feed its hub networks. Codeshares between the two allow daughters to benefit from the mother’s selling power, whilst the legacy increases connectivity. The issue is achieving the balance between convergence and differentiation.
Mr. Richard Bodin, COO of Fastjet talked about last year’s performance of the airline and went on with the opportunities in Africa. After pointing out some characteristics of the African market-artificially restricted markets due to bilateral agreements- and of African customers, many of whom have never flown, he concluded: “A deregulated, efficient and competitive air transport industry providing safe, reliable, good value travel to all Africans must be the ultimate goal for consumers, airlines and governments. We, the industry must lead the way in breaking down the traditional barriers.”
Day 1 of the main conference started with a very interesting discussion between CEOs of four strong airlines in Europe. Ryanair, KLM, Norwegian as well as IAG talked about opportunities and challenges in an age of consolidation and how they respond to to a challenging environment and maturing market. While KLM and IAG are implementing consolidation steps in their Business Plan, Ryanair sticks in its initial motto: Lower the fares but its CEO announced that Ryanair plans to revamp its website to make more user-friendly.
The day continued with another panel discussion regarding the position of alliances in the low cost airlines business model. As the LCCs are sharing their aircraft in some occasions to minimize their costs they seem already to have organized a special connection between them, they have also developed a large network of codeshare agreements with the other airlines, which has proven highly successful but no airline seems to have an interest in joining a particular alliance.
In the third panel discussion the top executives of Wow Air, Southwest Airlines, Sun Express and Sabre Airline Solution shared their strategies to improve their margins. It is very interesting how joint ventures with bigger traditional carriers have helped the LCCs to expand their market share and attract new routes.
Source:Air Transport News
