Low Cost Long Haul becomes ‘an inevitable fixture’, the ‘party’s over’ in terms of interest rates, ‘loyalty is the key in corporate travel’ and ‘connecting the unconnected’ – insights from CAPA Low Cost Long Haul Global Summit

While LCCs are still a relatively young force they have massively disrupted air travel and the way all airlines now think about serving the public. Whether low cost carriers will create a similar transformative effect in the long haul sector remains to be seen. Last week this was discussed at the CAPA – Centre for Aviation Low Cost Long Haul Global Summit, the only strategy event dedicated to the new frontier of low cost travel: long haul.

New aircraft technologies, evolving passenger preferences and relatively stable fuel prices are pushing LCCs (and restructuring full service airlines) to consider new growth opportunities. High fare long haul markets are ripe for disruption and airports/destinations are aggressively courting new routes. New city pairs are emerging, and secondary airports are featuring regularly in the long haul low cost networks.

Here’s some of the key insights and observations from delegates during the event at the Barceló Sevilla Renacimiento in Seville…

CAPA: “The long haul LCC model is an inevitable fixture in modern aviation”
CAPA – Centre for Aviation , executive chairman, Peter Harbison shares CAPA’s outlook on the growth and development of Low Cost Long Haul Carriers. “The long haul LCC model is an inevitable fixture in modern aviation. It is no longer an issue to be argued – although defining it is complex and mostly unnecessary,” he explains.

LEVEL: “We are building a new business model for aviation”
“We are building the customer centric, technologically enabled, airline business model of the future,” said Vincent Hodder, CEO of LEVEL in his keynote address. He explained, the brand has a “unique organisational structure” as “LEVEL sits between production units and customer” that “breaks traditional ‘vertically integrated’ models.”

LOOK OUT… Exclusive executive interviews from Seville will be published on CAPA TV in the coming weeks, as well as full coverage of the agenda sessions.

BOC Aviation CEO on interest rates: ‘The party’s over’
BOC Aviation MD and CEO Robert Martin commented on increasing interest rates, stating: “The party’s over”. Mr Martin also noted world GDP growth is more balanced than at any time in history. BOC Aviation does not expect any global recession in the short term, but Mr Martin said there will be “pockets” of recession in individual countries and regions.

JAL’s new LCC may serve new and existing markets, to ‘create new demand’
Japan Airlines’ (JAL) new LCC executive officer Hiroyuki Uehara said the new low cost long haul carrier may serve markets currently served by JAL in addition to new destinations. Mr Uehara said the airlines may segregate large markets, or the new airline can enter new leisure markets. He commented: “We’re going to create new demand” and said JAL is yet to enter the price sensitive market.

Credit card companies create ‘huge cash flow challenge’ for start ups: ALC executive chairman
Air Lease Corporation (ALC) executive chairman Steven Udvar-Hazy reported some credit card companies withhold cash from ticket sales for small, start up airlines, in some cases until well after the service is operated, creating “a huge cash flow challenge” for start ups.

London Stansted Airport CCO: ‘Loyalty is the key in corporate travel’
London Stansted Airport CCO Aboudy Nasser said “loyalty is the key in corporate travel” and added: “Long haul low cost has got to find a way to generate loyalty” to attract corporate customers away from full service airlines.

Airports should be doing ‘much more’ in technology: easyJet regional director
easyJet regional director Javier Gandara said there is “much more that airports should be doing” in terms of systems and technology. He also said airport charges are “critical” for easyJet. Mr Gandara said competition between airports is a key element in the relationship between airlines and airports and that competition drives innovation and efficiency.

Amadeus: Airlines need data to make relevant offers to customers
Amadeus VP strategy and marketing airlines David Doctor said airlines need to offer relevant choices to customers on mobile devices and accessing data is key to doing so. He noted 60% of transactions in Asia are expected to be made on mobile devices by 2020.

Kiwi.com seeking to ‘connect the unconnected’
Kiwi.com CEO Oliver Dlouhy said the company aims to “connect the unconnected”, noting clear demand from customers for self connections. Kiwi.com is seeking to create a platform to connect all airlines.

London Stansted Airport developing fast track product for corporates
London Stansted Airport CCO Aboudy Nasser said the airport is developing a product, mainly targeted at corporate travellers, to fast track through security and direct passengers immediately to departure gates, skipping duty free retail areas. 

flyadeal CEO more optimistic than ever about low cost long haul
flyadeal CEO Con Korfiatis commented he is “far more optimistic about it than I’ve ever been” on the low cost long haul model and believes there is a role for corporates. The Saudi Arabian carrier has already received unsolicited interest from traditional corporate accounts and said “there is potential” to target corporate customers on a structured basis. He said there is “most definitely… significant” corporate potential.

MORE INSIGHTS…
CAPA – Centre for Aviation members were able to see live updates from the CAPA Low Cost Long Haul Global Summit and have access to over 100 briefs from the event. Find out more about how a CAPA membership provides a front row seat to global aviation news, analysis and data as it happens, with access to a comprehensive suite of tools that can be customised to your needs.