Can low-Cost Long-Haul Flight Operations be Profitable?
May 9, 2011 Leave a comment
By Jost Daft and Sascha Albers
Hitherto, sustainably profitable low-cost operations can only be observed among short- to medium-haul airlines. Even though various carriers have launched attempts to extend the low-cost carrier (LCC) business model to long-haul flights (LHF, see the subsequent chapter for a definition), most of them failed before flight operations were initiated or went bankrupt after three to five years if flight operations started. However, the frequency with which new low-cost LHF airlines are founded is still considerable (see Tab. 1). Entrepreneurs as well as established airlines seeking new growth paths are among those in the industry that follow what seems to be a trial-and-error process in launching and operating LCC LHF airlines. This is not particularly surprising, since little systematic guidance on preconditions for and design options of a LCC LHF business model have been advanced. Rather, the scholarly literature has given only scant attention to the challenge of adapting the low-cost model to LHF, and the question of whether the low-cost long-haul model is economically viable has not been unanimously answered yet.