Long Haul LCC

[Sanjay Thaker 0]

hey guys,

 

it was interesting to read Dato Tony saying that he once did think about opening a long haul LCC but later opted for short haul flights cause he didnt believe in the model. I juz wanted to know, what you guys think of a long haul LCC in Malaysia or in the S.E Asia region in general..

[Edwin P K 0]

I read from this week's the Edge: -

 

Corporate: Budget long-haul airline set to fly

By Maryann Tan

 

A new airline that will operate long-haul flights at budget fares may begin service as early as next year, sources say. The idea was proposed by the same team behind AirAsia — Tony Fernandes, Kamarudin Meranun and their associates.

The new airline will be a privately owned one, possibly parked under the Tune group of companies. However, the market can expect a strong alliance between the new airline and AirAsia, serving mostly the leisure market.

A team is believed to be currently working on the business plan, which will be presented to the government. It is unclear if the airline has received an air service licence from the Department of Civil Aviation.

Fernandes and Kamarudin could not be reached for comment.

"Their challenge is to keep costs low to create a new market segment and encourage repeat travel in the long-haul segment," says a source

One of the routes under consideration is Kuala Lumpur-London. Malaysia Airlines currently flies 18 times a week to London from KL, charging roughly RM3,000 for a return ticket excluding taxes of RM850. It was one of the few profitable routes on its international network before it instituted its strategy to turn around the business.

It cannot be determined whether the government desires competition between this new airline and incumbent Malaysia Airlines. Sources say the new long-haul airline may not be allowed to fly to destinations already served by the national carrier.

However, that depends on how tight the conditions are. London, for example, has several airports. Malaysia Airlines' hub in the UK is Heathrow International Airport, the city's busiest. There are three other popular airports — Gatwick, Stansted and Luton — some of which are hubs of successful low-cost carriers (LCCs) like Ryanair and easyJet.

This low-cost long-haul ambition is not a novelty. When Fernandes first thought of getting into the airline business, he imagined selling cheap tickets for flights between Asia and Europe. That proposal was binned when he ran the idea past Conor McCarthy, an airline consultant and now director of AirAsia Bhd.

Now it looks like the team that made a success of no-frills air travel in Asia is resurrecting the idea and looking at ways to make money in long haul.

One of the reasons, it was argued, that the low-cost model wouldn't work for long flights was that passengers desired frills and comfort.

LCCs keep costs low by not serving inflight meals, doing away with inflight entertainment, exhausting an aircraft's flying hours and packing in the number of seats by keeping a single-class configuration.

The inconvenience and discomfort is easy to put up with when a flight is short. But passengers may get cranky if a flight extends beyond four hours.

As one airline executive says, "The economics just don't stack up." An airline can maximise aircraft utilisation of a 737 by making several trips a day from KL to Bangkok but it can't do the same with a 747 to London.

"It may not be in the current form that we're familiar with. Operating at low cost doesn't mean no frills," says an industry executive.

As the low-cost model matures and evolves around the world, airlines are finding ways to provide frills on board flights without having to raise ticket prices per se, charging instead for additional passenger services like in-flight entertainment, for instance.

Frequent flyers of LCCs are by now accustomed to the fact that the advertised price of a ticket is never the final price. There are plenty of add-ons in the form of taxes, travel insurance if desired, and lately, much higher fuel surcharges (although this applies to all airlines). Meals on board flights also have to be purchased.

Full-service airlines themselves are beginning to adopt the best practices of LCCs, especially in an era of punishing fuel costs.

In Asia, the low-cost long-haul concept is about to be put to the test. This month, Oasis Hong Kong Airlines will begin scheduled flights from Hong Kong to London for as low as HK$1,000 one way, excluding taxes. The airline will land at London Gatwick Airport.

With its two 747-400 aircraft acquired from Singapore Airlines, it also plans to operate scheduled services to Berlin, Cologne, Milan, Chicago and Oakland. The flights will have two seating classes, business and economy, and will offer some frills on board.

Oasis is headed by Stephen Miller, the first chief executive of another Hong Kong-based airline, Dragonair. Interestingly, Oasis' head of finance was formerly treasurer of AirAsia.

While the blueprint for the new long-haul airline is still work in progress, sources say there is a likelihood that it will be operated like a charter airline. The airline should be able to leverage on AirAsia's feed and vice versa.

Developing KL's hub status may have been a motivating factor for the government to consider allowing another long-haul carrier to operate. AirAsia carried 9.3 million passengers in the financial year to June. It is growing its fleet to 100 aircraft.

LCCs, known for their unconventional approach, have challenged established airline industry practices with huge success. They often operate unilaterally, without forming alliances with full-service airlines that may adulterate their rigid procedures.

Perhaps it will be different when the LCCs call the shots.

Last week, Ryanair Holdings made a surprise 1.48-billion bid for Irish national carrier, Aer Lingus. Ryanair CEO Michael O'Leary said if the deal were successful, he would keep Ryanair and Aer Lingus as separate brands that would have the ambition, expertise, financial strength and cost base to take on European competitors. Analysts see it as an opportunity for Ryanair to channel long-haul passengers into its extensive European network.

 

p

 

Ops, this has been reported in another thread.

[Seth K 3]

Seriously AK considering KUL-LHR ..........allright, I'm going to sleep and have sweet dreams

[Woei Shen 0]

Seriously if AK's LHR-KUL is really cheap.. if it's cheaper by few hundred I'd rather pay more to go for a full service airline

[Y C LEONG 1]

if i am dato tony, i will wait n see how oasishk goes..

[Seng Lim 0]

He can wait and see how's Jetstar is doing as well in their regional long haul flights starting this Nov.

[Sandeep G 1]

could work as a platform to establish wider networks and build up business at secondary airports or secondary cities... actually.. the model is perfect to exploit, just not by AirAsia as Tony has rightly pointed out.

 

Jetstar's definately got it right, although at the expense of Australian Airlines.

 

it's Diversification which is the real beaut about the whole model.. don't put all you eggs in one business model. Any successful entrepreneur or businessman will tell you that the best hedge is diversification.

[Teoh Z Yao 0]

AK might wanna partner with Oasis HK and expand wider coverage across the globe.

 

Transit at HK should be a better choice because HK is more at the accessible side of the continent in terms of traffic. That might also open the chance for AK to fly HK direct instead for hte need to transit at Macau.

 

That sure benefits a lot of us (here) who travel to HK often and would subsequently fly off to Europe or across the Pacific.

[Sandeep G 1]

HK is very expensive and AirAsia is very intent on building Malaysia as a hub. Plus, what advantage do they have in terms of "traffic"... there are more than 1/2 a billion ppl here in South East Asia where AK already has a foothold - not to mention another 21 million odd ozzies who wouldn't mind such a carrier. But LongHaul is still a very dicey segment for the LCCs. short-medium hall i the way to go.. I would say AK expand their ring of connection from 3.5 hours - 5 hours and then see how that goes. You never know, there might even be a subsidary in the middle east one day that would allow interlining between AirAsia and its middle eastern partner on services between Europe and Asia.. the Arabs would love that! - more traffic!

[Fitri Shukri 0]

Those who complaint of being unable to fly and seated in cramped condition for a straight 12 hours might have never been on a intercity bus (in the 1980s and 1990s) in Malaysia and in some other third world country

[Sandeep G 1]

Those who complaint of being unable to fly and seated in cramped condition for a straight 12 hours might have never been on a intercity bus (in the 1980s and 1990s) in Malaysia and in some other third world country

 

yah, but the bus you can pull over and buy reasonably priced food right?? in the plane you can jog up and down the aisles... which isn't too bad I suppose!

 

anyway, good comparison Fitri I like it!

Imagine seeing an airbus A332 parked at klia with: BAS MINI and that beautiful pink colour livery!! HAHAHA

[Imran K. 0]

Imagine seeing an airbus A332 parked at klia with: BAS MINI and that beautiful pink colour livery!! HAHAHA

 

 

ROFL

 

Since AK likes to advertise its sponsors on their aircrafts (e.g Scotch, TimeCel last time...), i wouldnt be surprised if they painted a Mak Cik Curry Puff A330....

[Sandeep G 1]

hahahaha i'm waiting for someone to have festive season stickers.. like ketupat, or deepavali candles or chinese new year firecrakcers on some of the aircraft during the festive season.. not to mention Santa Claus lah.. even though I know Santa claus is not the true meaning of christmas.. but he's definately the commercialised and international face of it

 

back to topic.. Long Haul LCC.. Let's see how OASIS perfoms.. perhaps long Haul LCCs would be better with a stop in some exotic place for a few days holiday like in Dubai, or Karachi () or even Afghanistan! haha, but seriously, it could work. Anything's possible. Timing is not right though, especially for Malaysia.. we wanna see MAS stand on its own two feet and face its direct competition head on for a couple of years before unleashing the low cost long haul beast upon them.. let them stand firm... and I choose those words very carefully as oppose to saying let them cement their feet in the ground first.. then they'll never progress!!!

[zealich 0]

LCC..for long haul?...unless they have a better plane...i wont bet on riding on it..it will give me back pain before even reach LHR.

[Sandeep G 1]

LCC..for long haul?...unless they have a better plane...i wont bet on riding on it..it will give me back pain before even reach LHR.

 

I think the use of the term LCC for the carriers like Oasis and Jetstar international is perhaps wrong, because they have stated that for such flights, passenger comfort cannot be marginalised and there are indeed some services aboard.. I'm not sure if meals are purchased or served "Free", but I belivee beverages are to be complimentary - of course they will pack the cheapest stuff la... black and gold mate, black and gold!

 

 

[Robert 0]

Seriously AK considering KUL-LHR ..........allright, I'm going to sleep and have sweet dreams

 

They would never get a slot at LHR - its so congested.

 

LGW is also pretty full but it seems some slots maybe available.

 

 

[Sandeep G 1]

They would never get a slot at LHR - its so congested.

 

LGW is also pretty full but it seems some slots maybe available.

 

would be better off at Stansted?? they are a more LCC friendly airport with fewer flights and quite a well established facility.

[Azuddin 1]

I would suggest that they don't go very far at first. Try to get the route which the current fleet can go. Maybe oriental site like HKG, Beijing, Seoul, NRT, Bombay, DXB or DOH. Or get as far as Australia.

 

They will at least need a 757 or 767 if wanted to make KUL-LHR. It's not about the range, it's about the number of pax.

[Sandeep G 1]

I would suggest that they don't go very far at first. Try to get the route which the current fleet can go. Maybe oriental site like HKG, Beijing, Seoul, NRT, Bombay, DXB or DOH. Or get as far as Australia.

 

They will at least need a 757 or 767 if wanted to make KUL-LHR. It's not about the range, it's about the number of pax.

 

Australia is well within your range of destinations, but competition is HOT! even with the other places... plus do remember that Asia has very restrictive freedom rights and thereby, an LCC would face huge problems in acquiring landing rghts without govt. support - which would be further hampered by the perception that the LCC is directly competing with the national carrier... and so you've a catch 22... better for the national carrier to have its own LCC i say!

[Azuddin 1]

Australia is well within your range of destinations, but competition is HOT! even with the other places... plus do remember that Asia has very restrictive freedom rights and thereby, an LCC would face huge problems in acquiring landing rghts without govt. support - which would be further hampered by the perception that the LCC is directly competing with the national carrier... and so you've a catch 22... better for the national carrier to have its own LCC i say!

 

agree. One more thing is that the LCC is located at the same location where the hub of the national carrier. Both at KUL. If Subang were given to AK, i don't think it will be too much competition since most international flight will be operated in or out from KLIA.

[Sandeep G 1]

agree. One more thing is that the LCC is located at the same location where the hub of the national carrier. Both at KUL. If Subang were given to AK, i don't think it will be too much competition since most international flight will be operated in or out from KLIA.

 

it would cost too much to "rebuild" Subang anyway... RIP terminal 1...

[KK Lee 5]

 

T3 at SBZ is available for pax operation. If SZB is open to public, KUL will be deserted. The Government and MAB won’t permit SZB to back to life except for prop operation.

 

As ticket price on long haul LCC won’t be much cheaper than regular airlines, hence the business model is yet to be proven. Believe it is more viable to operate as charter, which is proven and successful among holiday makers.

 

[Sandeep G 1]

T3 at SBZ is available for pax operation.

 

 

 

Been there lately? it's like the worlds biggest hole! half of it is cordoned off.. the roof leaks and there is absolutely no maintenance.. they would need to do a lot of refurbishment to ever re-use it as a terminal.

[Azuddin 1]

Been there lately? it's like the worlds biggest hole! half of it is cordoned off.. the roof leaks and there is absolutely no maintenance.. they would need to do a lot of refurbishment to ever re-use it as a terminal.

 

my dad been there every week returning from Kerteh. He said at least subang is not as bad as Luanda International terminal

[Tony 1]

I think the use of the term LCC for the carriers like Oasis and Jetstar international is perhaps wrong, because they have stated that for such flights, passenger comfort cannot be marginalised and there are indeed some services aboard.. I'm not sure if meals are purchased or served "Free", but I belivee beverages are to be complimentary - of course they will pack the cheapest stuff la... black and gold mate, black and gold!

HAHAHAHAHA :rofl: Good one, Sandeep! I like the "black and gold" bit... Simply hilarious!

 

Oh well, heard that Jet* Intl is serving complimentary hot meal.