How Low-Cost Carriers Can Thrive In The New Climate

The pandemic shook the aviation industry from top to bottom. It’s well-publicized that airlines of all sizes have suffered severely with their operations and finances since early last year. However, this factor hasn’t deterred startups from launching. Several new low-cost carriers (LCCs) have been preparing to commence services over the last few months. With this in mind, the executives of these companies have come together to share how they are ensuring that operations get off to a flying start.

Avelo 737
Avelo Airlines performed its first flight in April. Photo: Avelo Airlines

Norse Atlantic Airways, Avelo Airlines, Flyr, PLAY, and flypop are some exciting names to emerge in recent years. While not all of these brands announced their launch after the global health crisis, they have all been getting ready for operations in the new climate, with some already even in the air. From the beginning, there’s a consistent theme that they are following, which involves the vessels that are transporting their customers.

Streamlined fleet

During a talk with CAPA Live yesterday, it was clear that all five airlines are keen to keep it simple with their fleets. Norse Atlantic Airways is putting its faith in the Boeing 787 Dreamliner for its long-haul model. Meanwhile, flypop will use Airbus A330s for its long distances. PLAY launched services with its A321neos this summer and is expecting more of the type to join before the end of the year. Finally, Flyr and Avelo are concentrating on the ever-present Boeing 737.

LCCs are no stranger to this approach. For instance, Ryanair famously operates only the 737. Therefore, new players in the game are learning from those that have excelled in previous chapters while applying their own twist.

With mass groundings and ongoing flight suspensions, there was a plethora of aircraft available for newcomers to choose from at reasonable rates. So, these airlines were able to choose the perfect fit for their model without breaking the bank amid the reemergence of attractive aircraft agreements.

Flyr 737
Flyr already holds two Boeing 737s in its fleet. Photo: Flyr | NTB Kommunikasjon

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Keep it simple

It’s not only the fleet that needs to be streamlined. The narrow path plays out in other departments so that previous LCC mistakes are not repeated. PLAY CEO Birgir Jonsson used to be COO and deputy CEO of WOW Air. He explains that one of the core reasons why this Icelandic outfit ceased operations is because it grew too fast.

Moreover, startups are regularly founded by excitable entrepreneurs that are often not strategic in their thinking. Therefore, the core structure isn’t there to excel beyond the initial growth. Altogether, firms implode due to the quick transformations. With this in mind, airlines need to be tactical and bring daily operational management into the market.

flypop CEO Nino Judge resonates with these sentiments. He is also keen not to go repeat the same mistakes as his predecessors. Thus, he is eager to keep on top of the costs.

“It’s so easy to let those costs slip. And I think the lesson learned from other airlines – Jet and Kingfisher serving South Asia, was the costs were just out of control in the end. It became extremely bureaucratic, and they squeezed themselves,” Judge shared with CAPA Live.

“And the one thing we’re going to do is make sure we are absolutely 100% focused on controlling our costs so that we can offer the differentiating factor, trying to be 30 to 50% cheaper than our competitors. It’s as simple as that at all times. That’s our USP. We’re going to do all the smart moves to be able to retain that low-cost element.”

flypop Cabin
flypop sees value in focusing on precise markets. Photo: flypop

Consistency with the strategy

Aircraft and daily management factors form part of a wider consolidated strategy. As Norse CEO Bjørn Tore Larsen puts it, he’d rather take home one gold medal than try to cater to several different markets. The airline may not be a leader in transatlantic long-haul flights, but it wants to do what it does the right way. The executive explains that companies would like to make more money with fewer aircraft. This factor relies on focus across the business.

“There is a limit to how many aircraft you might put into operation at least in a short period of time and not to taking more capital commitments or leasing commitments than you can actually manage the proper way as part of our survival strategy,” Larsen told CAPA Live.

“And it’s about execution. You need to have people who are 100% competent and passionate, willing to go that extra mile to make this a success. Having said that, even if you have a good strategy, my theory is that if it doesn’t work, you have to change it. So, being nimble is paramount.”

Norse Dreamliner
Norse is expecting to hold up to 15 Boeing 787 Dreamliners. Photo: Norse Atlantic Airways

Stay on the right path

Overall, the focused approach is not exclusive to the internal structure. Low-cost leaders have to ensure that they are not pulled in too soon by prospects of significant expansion in new markets. The cause of many LCC failures is often due to ambitious managers trying to compete directly with legacy full-service outfits. However, if startups can accept that there can be a place for them and their counterparts, it could work wonders for all stakeholders.

Avelo chairman and CEO Andrew Levy express that his airline will stay away from what the legacy carriers are doing and focus on its own strengths. PLAY’s Jonsson backs this point and shares that he recognizes the important role that compatriot Icelandair plays in his nation’s economy. Therefore, he wants the flag carrier of Iceland to also succeed. The key is to work around the bigger companies while excelling in your own path. New opportunities will arise when the time is right.

What are your thoughts about low-cost carriers in the new climate? What do you make of their plans in the chapter ahead? Let us know what you think of the airlines and their goals in the comment section.

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