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Conventional wisdom will have you believe that low-cost and ultra-low-cost carriers are disrupting the airline industry worldwide with their cheap fares, striking fear in established carriers, while changing what passengers expect.
Undoubtedly, much of that is true. From the Americas to Europe to Asia, discount airlines not only have delighted customers with pricing, but have also changed how legacy carriers interact with their own passengers. Many big airlines have unbundled their products, charging for stuff such as food, bags, and assigned seating that was once free. They claim discounters have proven that’s what passengers want.
But the low-cost and ultra-low-cost models are not a panacea. While successful airlines like Ryanair, EasyJet, and Air Asia receive much attention for transforming the industry, other carriers have been less successful. Many discounters come nowhere close to the disruption they promise, and lose massive amounts of investors’ money. Some do OK, but never record the profit margins they expected.
New entrants may misread the market. Or they may grow too quickly with inefficient aircraft. They might also fly to the wrong cities, where they may face a marketshare battle with a legacy carrier that has no interest in repeating past mistakes. Some new entrants may even fail because they let their costs rise too fast.
Seth Kaplan, managing partner of Skift’s newsletter Airline Weekly, and Brian Sumers, Skift Senior Aviation Business Editor, will discuss why some low-cost carriers thrive while others fail during a conference call at 11 a.m. ET on Friday, Oct. 12. The call is free and open to the public. We’ll share slides and set aside time for the audience Q&A.
Slides from the presentation can be found below: