Little Airlines Big Ideas

     One of the new interesting business model concepts listed in this article is LaCompagnie.  I think that they have a very promising business model of pricing themselves lower than any other first or business class offered by the airlines. By offering a cut-rate business class fare, they are able to entice fliers who can afford to pay for a bit more but are not in the ballpark of paying for first or business class on the airlines. Like Southwest, by only having one type of aircraft, the 757, they are able to control and predict fuel and maintenance costs on a much more consistent basis. The Other company, WOW Air, is also an interesting business model. They are doing trans-atlantic flights but stopping in iceland and are using A320's which are much more efficient to operate than long haul aircrafts. Their business model would not exist if it were not for the geographic advantage Iceland has. The fares they offer are well worth the inconvenience of stopping in Iceland before continuing on to your destination in Europe.

     One company I came across is WizzAir. This is the largest airline based in Hungary and currently flies to 35 countries. They are a European low cost carrier and are in competition with Ryanair, Easyjet, and FlyBe. They have many bases including Belgrade, Budapest, Bucharest, and many others. As is typical of low cost carriers, they have a fleet comprised entirely of A320's. They have 54 currently and 66 on order. Another low-cost airline is Tigerair. They are a based in Singapore and fly to all the country's an A320 can reach including China, Australia, Thailand, Vietnam, Malaysia, Cambodia, India, Taiwan, Sri Lanka, Indonesia and the Philippines and a few more. As is standard, they offer no meals unless you pay for them, and have an a-la-carte pricing system.

     Wizzair is more of a point to point airline. By having so many bases (19) they fly from those to almost any other city they serve. By having this extremely high number of bases but only 54 aircraft, they are able to pack their planes full and generate a lot of revenue. Tigerair, on the other hand, does all of their flights out of Singapore. They were the first non-Chinese airline to operate flights to Guagzhou, Haikou and Shenzen. These were 3 highly profitable routes and gave them a major leg up on their competition. It is hard to say, but I think Tigerair will ultimately be more successful than Wizzair. They both have plenty of competition but Wizzair is number 3 behind Ryanair and Easyjet in Europe and has too many other airlines on its routes. Tigerair will be hampered by the pilot shortage as Southeast Asia is going to be hit pretty hard, but they fly routes with less competition and the growth for airline travel in Southeast Asia and China, their primary markets, is expected to surge in the coming years.

     The economic impact these carriers will have on a global scale is very significant. They are essentially re-writing the way airlines market themselves. They are reaching out and creating markets by enticing customers who would otherwise be unable to travel. One of the dirty secrets of this whole low-cost operation at least overseas is the way they employ and pay pilots. Carriers like Ryanair set up third parties who contract out their pilots. They are not direct employees of Ryanair, but they are contractors. This means the pilots have to pay for their training and uniforms and have no union protection. The pay for pilots of low cost airlines around the world is an issue that will have to be addressed if they wish to continue to attract and retain the talent they need to have a safe and efficient operation.

   

http://www.theleader.info/article/45652/easyjet-and-ryanair-lead-the-way/

http://skift.com/2013/10/30/jetblue-worries-about-losing-pilots-to-better-paying-airlines/

http://skift.com/2013/10/23/european-pilots-with-lufthansa-dreams-must-face-ryanair-realities/