news & views

How low can you go?

Posted on the 27th of August 2007 by Christopher Goddard, Managing Director

Allegiant Airlines, Sky Express, Air Berlin, Air Andalucia – have you heard of these?

It’s my business to know about airlines flying people from A to B but even I struggle to keep up with the amount of LCC’s that are currently in the air.

Oh you’re not sure what an LCC is? You’re not alone!

I had no idea until a little while ago either. An LCC is the “shining light” in today’s travel world. We all love them (or so we are told). They make travelling accessible to everyone (or so we are told). They are the Democrats of the airline industry (keeping the bastards honest – or so we are told). They are LCC’s – Low Cost Carriers.

Promises abound with fares that are “cheap as chips”. Air Asia X for example hinting at fares of Eleven Australian dollars from Australia to theUK. Others letting us know that they will offer One Dollar fares from Sydney to Melbourne. This is absolutely amazing. I’ll buy twenty tickets right here right now.

Hold on a minute, I can’t get on to their website, must be congestion
No wait, I’m in
Great
Oh – shame all sold out. Others must have beaten me to it !

I just wonder if that has happened to many others because from experience, I can say that it has happened to me 100% of the time. And they say we love these LCC’s – I beg to differ.

What I do acknowledge about LCC’s is their claim that they keep the big boys honest and to a degree I believe this to be true. For those of you who used to travel domestically a few years ago, we had to jump through countless hoops to afford ourselves a cheap fare. Book 7, 14 or 21 days in advance, stay a Saturday night at your destination and you were home and hosed. Bargain ! With the advent of the LCC, all of a sudden the restrictions seemed to melt away like butter in a hot fry pan. They claim you can book last minute and you will still be travelling far cheaper than what you would have ever paid under the old regime.

I believe this to be true. Where the problem occurs though is in what are our expectations for these cheap fares? We say we want cheap fare but unless the airlines have a lounge to visit, a frequent flyer scheme to be part of and the ability to upgrade to business class, are we really interested? From the results recently announced by Virgin Blue (profit of $216 million), I think yes we are. The question though: Is the Virgin Blue of today far removed from the Virgin Blue at its launch? The answer to that is an emphatic Yes.

At their launch, Virgin Blue had no frequent flyer scheme (they now do), no lounge (they now do) and whilst they do not have business class, they do have blue zone (pay a bit extra for a more comfortable seat. Therefore my question is – who pays for this? You are an LCC, you are not supposed to have all these frills – that’s why you can keep your fares low – isn’t it?

So maybe the fares are not as low as they could be!

I think as travellers we need to decide where are our priorities. Bringing travel to the masses is fantastic and should be applauded, however, bringing it to the masses on the basis that the fares have been inflated because of others needs of frequent flyer points and lounges is at odds with their core ideals. Either they stand for no frills and cheap fares or they don’t. This is where Virgin Blue and Jetstar are going to have some real problems in the next few months.

With the introduction of LCC after LCC into the Australian aviation market, there may be some turbulance ahead for our existing carriers.

I guess their continued success or demise will depend on how much we decide to tighten our belts.