Long-haul low-cost gazumped by the Gulf carriers

Consumers are flocking to the full-service offerings of the three big and relatively new Persian Gulf carriers such as Etihad.
Consumers are flocking to the full-service offerings of the three big and relatively new Persian Gulf carriers such as Etihad. 

When low-cost airlines began appearing in earnest around 15 years ago, it triggered a revolution in the number of people being able to afford air travel for the first time.

However, in presenting itself as a cheap alternative to full-service flying, it has always had one major blind spot: with few exceptions the budget airlines operate only on short-haul routes of six hours.

In Australia, only Australia’s Jetstar has been an unqualified success in taking over long-haul routes of up to 11 and a half hours from its parent Qantas.

But even Jetstar has struggled to find new markets for long-haul flying after the initial flurry of route launches to places like Thailand, Bali and Hawaii, preferring to set up new short-haul carriers in Hong Kong, Japan and Vietnam.

There were great hopes when it was first established in 2004 it would fly to far off destinations such as Europe and the USA. For a combination of reasons – mainly the sickness of the northern hemisphere’s biggest economies, which has cut people’s disposable income in the US and Europe – such hopes now look remote in the short term.

The idea of being able to take Jetstar to formerly popular Qantas European destinations like Athens and Rome has not been talked about since the advent of the 2008 global financial crisis.

In the other direction, the idea five years ago that Jetstar would be able to fly non-stop in both directions between Sydney and Los Angeles has been beset with performance issues affecting Jetstar’s purchase of new Boeing 787 Dreamliners.

Not that it has been plain sailing for Jetstar’s main rivals, Malaysia’s AirAsia X and Singapore Airlines’ low-cost offshoot, Scoot.

AAX went hard early expanding to include London and Paris non-stop from Kuala Lumpur.

But, to do so, the airline had to buy just two planes especially suited to the purpose, the out-of-production A340-300.

When just a few percentage points of the total bill can make all the difference to a low-cost carrier, the Europe routes never made money for the carrier and it pulled the pin on Paris and London in January last year.

AAX also axed services to Mumbai and Delhi in India, complaining of high airport costs. The airline is now focused on launching new services within Asia, which hasn’t had Europe and America’s economic problems.

That also applies to Scoot, which has lost interest in Europe to concentrate on Asia. But the Pacific routes linking Asia and Australia and mainland USA are a no-go for bargain hunters wanting to fly no frills. There isn’t a jetliner in existence that wouldn’t struggle to economically fly non-stop 18 hours from Kuala Lumpur to LA, with Singapore Airlines recently announcing the axing of its business-focused ultra-long-haul services to LA and New York.

Notionally AAX wants to fly to the US when it takes delivery of its new A350s, Airbus’s answer to the Dreamliner, but if it can’t fly the required 14,100 kilometres required economically non-stop it won’t be a goer. Putting a stop in would add up to 20% to the cost of providing the service, but flying non-stop also adds crucial operating penalties, like not being able to fully utilise the cargo holds.

Between Asia/Australia and Europe, consumers are voting with their feet in flocking to the full-service offerings of the three big and relatively new Persian Gulf carriers, Qatar Airways, Emirates and Etihad.

Far from low-cost, consumers are embracing full service, including state-of-the-art video entertainment (even though people increasingly are taking their own Ipads and tablets aboard to keep themselves amused) and, in most cases, high-standard meals.

Legacy carriers like the German giant Lufthansa are so worried about the Gulf carriers eating their lunch it is contemplating launching a low-cost long-haul brand to win back some of its lost business on routes to Asia.

Meanwhile the existing low-cost carriers are looking at many long-haul markets and getting cold feet.

As far as you’re concerned, what are the main negatives about long-haul low-cost? Were you one of the bargain hunters who scored return fares of less than $1000 from Australia to Europe with AAX before the airline axed the services? Are you prepared to do without the frills for an ultra-cheap long-haul service?

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