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LCC

This tag is associated with 9 posts

SUMMARY: Canada’s WestJet Airlines, is planning to start a new ultra low cost carrier (ULCC) later this year with 10 x B737-800’s. This will be the first time that a low cost carrier (LCC) that re-positioned itself into a hybrid airline, goes back and starts a ULCC and goes after a market segment they abandoned years before. This is so badly needed in Canada where the top two airlines have a duopoly and control 85% of the domestic capacity, and till today there is NO real low cost carrier (LCC) in Canada, the only major developing country in the world not to have one. In fact, NO US based low cost carrier competes in the Canadian market (yet), and its why +5 million Canadian passengers drive across the US border every year to fly from US airports to save on air travel, by using lower cost US airlines. A ridiculous passenger spillage that no one seems to care about, while the only low cost airline right now coming into Canada is Iceland’s fast growing WOW Air with very low priced deals to Iceland and Europe. The ultra low cost model is growing and even now the US big 3 airlines (DL, UA and AA) are experimenting with their new “Basic Economy” pricing, no amenities, everything ‘extra’ approach, good idea or a dilution of their brands ?

So WestJet Airlines, once Canada’s LCC is starting all over again with another LCC airline of its own ? is this to counter the growing competion from Air Canada’s “LCC” rouge, and the new Canadian planned start-ups like Canada Jetlines, Fly Too (Enerjet with Indigo partners) and NewLeaf now that foreign ownership of a Canadian … Continue reading

SUMMARY: The 1st Half 2016 numbers are out for Air Canada and Westjet Airlines, the “duopoly” that controls +85% of the Canadian market, where Canadians still have NO domestic or transborder access to a low cost airline. A brief analysis of the financial performance of the 2 Canadian airlines this year with a introduction to airline economics on how a few key numbers drive operating profit. Seems Air Canada does not make an operating profit from passenger services alone, and why its LCC (low cost carrier) rouge has not really cut costs, with the vast majority of savings being higher density seating, and like other Major airline attempts at an in-house LCC in North America like TED (United), Song (Delta #2), Lite (Continental), Express (Delta #1) the cost cutting has NOT gone deep enough, and hence why ALL the North American in-house LCC “experiments” ultimately failed. Lastly, Air Canada’s decision to buy 45 x CS300’s was a politically coerced deal with legal and legislative changes promised by Quebec and Ottawa, and the recent Air Canada threat to “walk away” from the deal if promised legislation was not forthcoming soon, said it all, Air Canada’s EVP Kevin Howlett said it best, “there are alternatives to the CSeries, there are other manufacturers that make comparable airplanes”, meaning we can take it or leave don’t matter as they do have 61 x B737Max firm orders (33 x Max8’s and 28 x Max9’s) to replace its older A319/320’s and E190’s in due course.

The 1st half 2016 numbers are in for Air Canada and WestJet Airlines, and it’s worth looking at how the 2 airlines that control 85% of the Canadian domestic market, which also has NO low cost airline as of yet (the only OECS) whose citizens have no access to a domestic or transborder LCC (low … Continue reading

SUMMARY: Canada’s charter airlines struggle, CanJet Airlines (owned by IMP) future in serious doubt while Air Transat limps along in its recovery, but Air Canada’s Rouge is growing and on its heels. Meanwhile the 3 ultra low cost airline candidates struggle to raise money, with Jet Naked (Enerjet) lost its 3 star ULCC (ultra low cost carrier) executives and now Enerjet is being sued by them for breach of contract. Meanwhile, NewLeaf Travel Co. Inc. ties up with Flair airlines to operate 2 x B737-400’s for it, IF and WHEN it raises sufficient start-up capital. Over in Vancouver, Canada Jetlines orders 5 and options another 16 Boeing B737Max7’s before it even has start-up financing in place ?? Interesting developments in this segment, and worth watching, as Canada needs a ultra low cost airline (ULCC) to offer low cost air travel to Canadians. Canada is the ONLY large country left without a LCC, and is controlled by a duopoly. Troubled CanJet Airlines has the potential to be a ULCC and save itself from doom, but right now it looks like no ULCC will start-up in Canada this year and CanJet will most likely be shut down, leaving NO low cost champion in Canada, and 34 million Canadians are prisoners to only 2 airlines domestically, a country that is only 2% smaller than all of Europe put together !

The first 4 months of 2015, have brought mixed results for some of Canada’s airlines. In big trouble is one of Canada’s leisure and ad hoc charter airlines, Halifax based CanJet Airlines, owned by IMP Group International, a diversified conglomerate owned by the Rowe family, that now employs 4,500 employees in 6 Divisions in Aerospace … Continue reading

ABSTRACT: Canada Jetline and Jet Naked are racing to be Canada’s first ULCC (ultra low cost carrier), both looking to start this summer but funding the initial $50 million start up costs is dragging on, yet Canada Jetline orders 5 x B737-Max7’s and purchase rights on 16 more but delivery is not till 2021 and start up will be with old B737-300’s, can one of them do the same that Westjet Airlines did 19 years ago when it WAS a low fare airline with 3 x B737-200’s ? and when Air Canada failed to crush it early on with its failed LCC ZIP, presently Air Canada is busy with its low cost but not low fare subsidiary Rouge, while Westjet is building up its regional network with Encore and its wide-body fleet with B767-300’s (???) for flights to Europe and Hawaii, current distractions at AC and WJ are good for the ULCC hopefuls, Canada needs a LCC as we live in the ONLY major country in the world without a locally based LCC we can turn to for low fares as the duopoly here (AC and WJ have yields of +/- 19 cents/RPM) and have NO incentive to lower theirs, it is why +4.9 million Canadians drive to US border airports to fly on US carriers every year !

Canada’s new ULLC (ultra low cost carrier), I prefer to use the term low fare airline (LFA), but anyway Canada Jetlines Ltd has signed an agreement with Boeing for 5 new B737-Max7 airliners for delivery in 2021, and has purchase rights for 16 more, while it is in the midst of raising $ C 50 … Continue reading

ABSTRACT: IAG (International Airline Group) acquires Ireland’s Aer Lingus and gains 23 valuable slots at Heathrow, while oneworld partner Qatar Airways buys 10% of IAG, Europe’s highly fragmented airline industry with 200+ airline groups where the top 5 airlines by traffic have a 46% market share compared to 87% in the highly consolidated and concentrated US market, and a new stage of European consolidations will soon begin, as state aid is all but gone now, and already in 2015 both Cyprus Airways and EuroLOT are shut down, Lufthansa Group and Air France-KLM Group both struggle with sustainable profitability and many of the remaining small carriers are waiting for a “white knight” before they go bankrupt, meanwhile most of the recent European airline acquisitions have been from outside of Europe, the industry is changing, and many airline bankruptcies are expected as there are no more “white knights” around like Etihad Airways to rescue the weak and struggling airlines.

The Irish national carrier, Aer Lingus is being acquired by IAG (International Airline Group, LSE:IAG), the 6th largest airline group in the world with revenue of $US 24.7 B (billion) and the parent of British Airways, Spain’s Iberia and LCC Vueling, valuing the airline at Euro 1.36 billion (+/- $US 1.53 billion). Under current CEO … Continue reading

Canada’s cozy airline duopoly is about to face new challengers in the form of newly emerging ULCC’s (ultra low cost carriers) Jet Naked (Enerjet) and Canada Jetlines that want a piece of the Low Price Segment in the $11.2 billion a year domestic and transborder market, and free Canadians from high fares !

Well, it is official, we now know of 2 ULCC (ultra low cost carriers) that plan to enter the Canadian market in the near future, as Calgary based Enerjet, owned by WestJet co-founder Tim Morgan and now operating 3 B737-700’s on charters has announced its intent to enter the Canadian ULCC market with Jet Naked, … Continue reading

Is the Overly Optimistic LCC Bubble in Southeast Asia about to Implode after a Splurge of Speculative aircraft orders and a Spree of new LCC’s Recklessly adding too much capacity too quickly ?

Too much of a good thing is not always good in the long run, in Southeast Asia you have LCC’s (low cost carrier) that have over expanded and added to much capacity and ordered too many aircraft and signs of trouble are now popping up, and fast.  The rise of low cost travel in SE … Continue reading

PART 2 of 2 – A Look at the Business Models of the 2 established US based ULCC (Ultra Low Cost Carriers) Spirit Airlines and Allegiant Air as well as newcomer Frontier Airlines

In this part of my discussion of LCC, I will examine the business models and strategies of the 3 ULCC in the US market today (Spirit Airlines, Allegiant Air and new comer to the ULCC club Frontier Airlines), as well examining and bench marking their financial performance against each other. This topic can become a … Continue reading

European Regional Airlines in Turmoil, Once High Flying FlyBE is Restructuring, while Air France and KLM gave up on Irish based City Jet, and sold it

UK’s regional airline FlyBE is in the process of restructuring its business model as the once high flying regional airline suffers from 3 years of widening losses. This case shows how regional airlines are struggling around the world, trying to find their market place between full network airlines (FNA’s) and low cost airlines (LCC’s), and … Continue reading