Flip through the latest issue of Gulf Weekly.
ANUMBER of airlines are unveiling plans to start low-cost long-haul carriers, but analysts are raising scepticism about their feasibility.
“That’s a lot of peanuts,” said Scott Carson, head of Boeing’s commercial airline business, at the thought of flying from Singapore to New York on the latest offering for cost-conscious flyers: the low-cost long-haul carrier.
Despite jetting in to London overnight from the States, Carson was functioning well last week, making speeches, meeting British Airways boss Willie Walsh to talk about planes.
Had he made the trip from Boeing HQ in Chicago to London on a no-frills flight – let alone from Singapore to New York – he would not, he suggested, be so sprightly.
So, despite the fact that Ryanair’s Michael O’Leary recently talked of launching a low-cost long-haul operator and has talked to Carson about ordering his long-range, fuel-efficient new 787s, the man from Boeing is not yet convinced.
He thinks it’s unlikely travellers will want to make long journeys on bare-minimum services like Ryanair’s, or those of Southwest in the US. There might be a market for low-cost transatlantic flights; any further and some creature comforts will be required.
So, while short-haul low-cost carriers underpinned the success of Boeing’s 737 jet, Carson believes the 787 is unlikely to benefit from the same phenomenon. Low-cost airline customers “may make up 10-15 per cent of the total, a few hundred aircraft,” he says.
Carson’s guardedness – and it is shared by many analysts – has not prevented a string of launches.
There are, despite the doubts, now several operators offering longer routes at low prices.
Some of them are even making money.
Zoom, for example, was founded in Canada in 2002 by a group of travel industry executives headed by chairman Hugh Boyle.
It now flies from eight Canadian cities to five UK airports and Paris.
In June, it is launching a London Gatwick-New York service for £129 one way. According to Boyle, Zoom makes a profit on £150 million (BD120 million) of turnover.
Flyglobespan was started in the same year by Scottish businessman Tom Dalrymple, who runs Globespan, a travel agency. It flies from 13 UK and three Irish airports. Glasgow-Orlando is advertised at £99, Gatwick-Toronto at £49. Last year it made a £4.7 million profit – down 24 per cent from the previous year because of spending on new planes.
Meanwhile, Australian carrier Qantas is behind Jetstar, which flies from Australia’s east coast to, among other places, Malaysia, Thailand, Indonesia and Japan. Brisbane-Osaka costs £100 one way.
Flyglobespan has ordered two 787s, Jetstar has ordered one, and O’Leary has talked of buying up to 50 787s or the Airbus equivalent, the A350.
One leading analyst, Andrew Lobbenberg of ABN Amro, says there are clear openings for these operators.
“The network carriers have very high head-office costs, mature staff with difficult working practices, and strong unions – so there is an opportunity to do better on costs.”
