Sabre: LCC focus is now on value
SINGAPORE: Andrew Powell, Sabre regional vice president Asia/Pacific, says the template for low cost carriers has been tossed aside as new and established budget carriers seeks way to offer a value-focused alternative to their rivals.
Powell says while the pure LCC models championed by airlines such as Ryanair still exist, there is a convergence towards value-focused models that are a hybrid of traditional airlines and budget carriers.
“This is giving us a refined value-focused carrier, the VFC, in which a value is placed on the flying experience, comfort and passenger loyalty.
“Virgin Blue has gone from an LCC to a VFC. Kingfisher in India is a VFC. These are carriers who are still looking for lowest possible operating costs, but they are now offering food, lounges and loyalty programmes to enhance their basic product.”
Powell said the situation in Asia is slightly different to Europe because diverse aviation markets demand that LCCs had to match their business models to the markets in which they were operating.
“If you are a basic LCC model you need specific market conditions to make that model work. You may get volume in the short term based on low price but converting that to profitability can be tough.
“An LCC needs a large domestic market, access to high volume city pairs, shortish routes, quick turnaround times and a target market which is able to procure tickets primarily through the Web.
“The main problem with running that model is that key trunk routes in Asia are already heavily serviced and obtaining access to routes can be difficult.”
Powell said there are also distribution issues when airlines attempt to sell their tickets outside their country of origin. “If a carrier isn’t based in the passenger’s own country, then the passenger tends to go to a travel agent.”
Ian Jarrett
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