HYBRID AND LOW-COST LONG HAUL AIR TRAVEL ON THE RISE

With Air France announcing in late October that it is to create a new air carrier with simplified service, the trend in Europe initiated by Scandinavia and Germany continues, seeing the emergence of a parallel offering to traditional airlines on long-haul services.

With Air France introducing “Project Boost” – a new “hybrid” carrier (a compromise between a legacy and a low cost airline), the trend in Europe over the past five years towards hybrid and low cost air transport is even further confirmed.

With the rise of low cost airlines in point to point services, traditional carriers have seen their market in short haul service eroded by large LCA’s such as Easyjet or Ryanair. The counter offensive was for some legacy carriers to create their own low cost subsidiary (Germanwings – now Eurowings for Lufthansa, Transavia France for Air France); to absorb an existing carrier (Spanish Vueling became part of Iberia and consequently of IAG); or to mix both low cost and traditional service inside the same aircraft (Aer Lingus, Brussels Airlines or SAS Scandinavian Airlines).

The next step was to move into the long haul low cost model. In Europe, the first airline to move into the long-haul low cost market was Norwegian Airlines. The carrier took the opportunity of SAS Scandinavian Airlines’ restructuring to step into the long haul business. Many Scandinavians escape their harsh winter by flying either to Florida, the Caribbean or Thailand for holidays. Although this generates a high volume of passengers, it brings mostly low yields.

The carrier has been flying long haul services from all Scandinavian capitals (except Helsinki) to the USA and Canada, the Caribbean, Latin America but also to Africa, China and Southeast Asia. The carrier is offering a two-class product with a Premium Class, which is a compromise between a Premium Economy and a Business Class. Norwegian has today 12 Boeing 787 and is expanding abroad. The airline flies to a dozen long-haul destinations from the UK and opens last July flights between Paris and the USA. The carrier flew already 2.2 million passengers between Europe and the USA.

Another carrier is certainly turning into a source of inspiration for Air France: Eurowings (Germanwings until last year), an offspring of the German national carrier Lufthansa. The carrier is dedicated to serving the point to point market with a fleet of 60 aircraft (mainly Airbus A319 and A320) at seven German airports, the most important of which are Cologne / Bonn, Düsseldorf, Hamburg, Berlin-Tegel and Stuttgart.

Since 2015, Eurowings has also been moving into long-haul routes out of Cologne / Bonn with regular services to the Caribbean, the United States, Dubai and Thailand. The airline offers a two-class product: a low-cost economy class and a Premium economy class on Lufthansa. Lufthansa management indicated recently that the long-haul network generates strong demand and would soon reach its financial balance. In 2017, Eurowings will further expand by adding Orlando and Seattle out of Cologne. From January to September, Eurowings carried 417,000 passengers on long-haul routes with a load factor of 91.9% and operating costs 40% lower than Lufthansa.

Another successful low cost long-haul carrier includes Wow Air, an Icelandic carrier specialising in flights from Reykjavik to North America. Wow Air already serves seven North American routes with easy connections to the rest of Europe.

And finally, there are the non-European carriers flying long haul to the continent. Starting with Air Canada Rouge, an Air Canada subsidiary with limited service on board. The airline already flies to a dozen destinations from Canada including France, Germany, Portugal, North Africa, the UK and Ireland. Next year, Singapore based Scoot will launch its first European route to Athens and plans to eventually extend its network to Italy as well as Spain. While AirAsia X already announced to come back to Europe with flights to London but also Istanbul and Barcelona.

The changing market with a new category of long haul passengers keen to travel with limited comfort overseas is creating a vast range of new opportunities. The sky is the limit.