Page 6 - AAA MARCH - APRIL 2016 Online Magazine

COVER STORY
CO VER S T OR Y

Cost Conscious

Low cost carriers are making the best of low fuel prices
and Long-Haul LCCs are emerging into profitability
By Atul Chandra

NOWHERE ON THE PLANET HAS THE utilisation with low turn around times, mainly
low-cost carrier (LCC) business model economy class seating with direct sales in
seen as much success as in the Asia-Pacific the aircraft providing additional revenue
region. The low fares offered by the LCCs and no frequent-flyer programs, has helped
has supercharged the aviation environment keep both costs and fares low. The benefit
and led to established full-service carriers for passengers has been massive as it has
having to play catch up for over a decade also driven down the fares charged by full-
now. According to Boeing’s Current Market service carriers. As an example: Compared
Outlook 2015-2034, “Over the past 10 to a decade ago, Qantas Group domestic
years, the region’s LCCs have generated an fares are on average 20 to 25 per cent lower
average annual growth rate of 24.5 percent. today in real terms and international fares
By comparison, Europe’s LCCs grew 13.4 on some Qantas routes cheaper by 50% and
percent annually during the same period, and customers paying less than $150 account for
North America’s grew a modest 2.2 percent 70% of Jetstar passengers. The LCC model
annually.” has been particularly successful in India, and
The formula has rarely varied but LCC carriers have a market share of almost
the adherence to a single aircraft type 60%.
(typically, Airbus A320, Boeing 737 or ATR/ Airlines in the Asia-Pacific region have
Bombardier Q400 family), maximum aircraft also accounted for 31% of all Airbus’ single-
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