can long haul low cost airlines be successful

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Research in Transportation Economics, Volume 24, Issue 1, The Economics of Low Cost Airlines, 2008, Pages 61-67 Can long-haul low-cost airlines be successful? Dr Peter Morrell Cranfield University, Beds MK43 0AL, UK Phone: +44 1234 754242; Fax: +44 1234 752207 Abstract A key question is whether the very successful, largely short-haul LCC business model can work over long-haul sectors? This paper compares the cost and other advantages of LCCs and evaluates how far they might be applied to long-haul sectors. It is estimated that cost advantages might be much lower than the 50-60% on shorthauls. Other factors such as the adoption by network airlines of some LCC features and their likely…show more content…
Ryanair’s and AirAsia’s announcement of their intentions to move into long-haul markets has added to interest in the potential for such services. A previous paper addressed the degree to which the low-cost model could be applied to long-haul operations (Francis et al, 2007). That study (based on 2003 data) concluded that a low-cost long-haul operation could only achieve a 20% cost advantage over network carriers compared to 50% on short/medium haul flights. Their definition of long-haul flights will also be adopted here: any sector that cannot be operated by an 3 unconverted A320 or B737, the workhorses of the low-cost business model to date. This effectively means flights of six hours or more.1 The head of Boeing’s commercial aircraft division thought that ‘there might be a market for low-cost transatlantic flights; any further and creature comforts will be required’ (Morgan, 2007). However, existing long-haul Y-class cabins offer seat comfort that is scarcely better than many short-haul LCCs. Furthermore other in-flight amenities would certainly be available for purchase on a long-haul LCC. This paper examines the potential for long-haul LCCs, first by reviewing previous proposals, looking at costs and competitive reactions before assessing market stimulation and the need for feed. Regulatory

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