Can low-cost airlines replicate short-haul success on longer routes? Steven Greenway, former Head of Commercial at Scoot, shared his thoughts at Aviation Festival Asia 2016. Here’s a brief summary of his session.
What are the biggest challenges for LCCs when considering long-haul?
- Financials – long-haul operations are very costly.
- Utilisation – you can get the hours, but you can’t get the “cycles”.
- Long-haul LCCs get hit harder on fuel prices.
- Aircraft size – you can’t fly 400 seat aircraft everywhere.
- You can’t cancel services – rather than 3 services a day you might have just 3 services a week. Cancellation would mean serious implications for traveller plans.
- “Hidden costs” – turnaround times, catering, staff overnights.
- It is no longer point-to-point service.
How is Scoot overcoming these challenges?
- Have a mix of long-haul, medium and short-haul flights to increase utilisation. Scoot operates flights to Bangkok and Taipei to utilise their aircrafts when not in use.
- Connectivity is required. Scoot is working with Singapore Airlines and Tiger Air to offer their customers a wide network of connections and destinations.
- Consider distribution. 100% online may not work for varied markets, for example, groups of labour workers who require group bookings through agents.
- Ability to offer additional services typical for long-haul at a cost, such as meals, seat selections, in-flight entertainment. Scoot also has Business Class for their long-haul flights.
- Having the right aircrafts to operate long-haul is key. 787 and A350 have been game-changers for Scoot.
How can you compete on routes served by FSCs?
- Maintain the lowest unit cost wins discipline.
- Offer “perks” that are within reach (affordable), that are relevant to the consumer and are varied.
- Make sure that consumers understand your value proposition clearly.
- Live and breath the difference.
Scoot clearly have some exciting plans, as did many of our attending LCCs at Aviation Festival Asia 2016. It remains to be seen who else can make the economics of long haul low cost work – join us next February 21-22 in Singapore for the Aviation Festival Asia 2017 and see who’s leading the race.