Wednesday, September 19, 2007

Better late than never

As I am nearing the inevitable completion of my PhD I have been deeply buried in data and analyses which is my excuse for my distraction from posting here. I have though found the time to travel to London to attend the World Low Cost Airline Congress. This is the second time I have attended the event which always attracts a number of CEOs and airlines, so it makes for an interesting time to hear the developments that are taking place. The most interesting presentations I heard were from the Air Asia X CEO who handled the role in stride. It is certainly an exciting time to hear about long-haul low cost, and it will be interesting to watch the development of the industry. It reminds of those "old timers" who when asked about their initial reactions to LCCs said, "We never thought it would work. Passengers expected a certain level of service. We expected them to last a year or less." Well, those exact same sentiments are being repeated again in 2007. So, we'll see if there will be a repeat. JetBird, an up and coming low cost on demand charter company is very, very interesting. Rather than going the seat-for-sale option this carrier will be charting their Embraer Phenom on an per aircraft basis. They aim to cut the costs associated with traditional business jet charter and offer it to the "masses." Of course, the price won't be near Ryanair, but it will be near a business class seat. We were told that many corporations have approached JetBird about shuttle services, which reminds of Intel and PG&E in the Bay Area that had similar contracts. Looks promising.

In addition, we heard from Ryanair's representative who repeated the findings about my post regarding industry cycles and aircraft acquisitions. Airlines must learn not to purchase aircraft when everybody else is doing the same; the price is increased beyond what is acceptable.

The other development I wanted to address was JetBlue's announcement that it was going to increase focus on ancillary revenue. This was a hot topic at the conference and a number of LCCs are talking about adding 10-20% of ancillary revenue to their operations. The focus alone on this subject produces interesting developments as it opens up a world of opportunities. Cross branding, innovative concepts and ideas all help to push the industry in a direction it hasn't been before.


Anonymous said...

Hey !

You have incredible insight in to airline industry!

I had fun reading ur insights/observation..!let me know if you want some "food for thought" business assignments..!

airlinebusinessmodels said...

Thank you for the compliment. I hope you gained something from the time you spent on my blog. If you have some interesting topics I would love to look at them. Throw them up here and let us see what we can come up with.