It’s been a tough quarter for long-haul low-cost airlines. After the unexpected announcement of the bankruptcy of Primera Air, we learnt this week that Icelandair had completed its takeover of WOW Air. That's not all, Norwegian Air, which was a resounding success in its early days, is now showing signs of weakness. Could the Scandinavian low-cost miracle be out of breath?
Picture by: Alan Wilson
Primera Air passengers left stranded after the airline went bust
Primera Air was a Danish long-haul low-cost airline, which operated several flights to North America (including a flight from Paris to New York). Shortly before its bankruptcy, a spokesperson had announced the launch of new routes (including a Paris-Montreal route and several American destinations from Brussels).
However, it shocked passengers last October by going into administration and announcing an immediate stop to all operations. Passengers were left stranded and had to sort their trips back to their home countries on their own.
A defective aircraft and some unexpected events were offered as the reasons why the airline had to cease of operations. Serious doubt was casted over Primera Air’s business model. So many where the questions left unanswered that they spilled over to other low-cost airlines and their business models. Are they just trying to apply a model that has proven its worth for short routes with quick turnarounds but can't be applied so easily to long international flights?
WOW Air, a low cost airline acquired by a flag carrier
We also found out that WOW Air, which has made Reykjavik a mini-hub between Europe and North America, will be taken over by its national competitor Icelandair. Certainly, the 2 companies will continue to operate under their 2 brand names. However, it is likely that many routes will be scrapped because both companies have services to the same destinations.
The first signs of WOW Air's exhaustion have been seen in recent months with the cessation of several flights. In addition, increased competition for North American destinations and rising fuel prices also affected the airline. We’ll learn soon enough if Icelandair is just picking up the spoils or if they believe there is still some money to be made in the long-haul low-cost market.
Norwegian Air, is the low cost model losing momentum?
Norwegian Air is also going through a rough patch. Due to its huge growth in 2016-2017, the Norwegian airline had decided to invest in increasing its flight capacity. More than 200 new Boeing and Airbus aircraft were ordered.
However, last September, we were informed that Norwegian Air have been looking for buyers to take over some of the aircraft they’ve ordered. Its debt is currently estimated at €2 billion. Will it be able to get out of it or will a takeover by Lufthansa or IAG be tempting enough to call it quits?
How do low cost airlines keep the prices down?
These are the typical measures that low-cost airlines take in order to be able to fly for cheap:
- Keep costs low (pilots and crew are paid less when working for low-cost airlines)
- High aircraft turnaround. A plane makes money when it’s flying and not when it’s waiting at an airport
- No connecting flights, that logistics headache is left to the traditional airlines
- Flying to cheap airports. The price of a certain time slot (for flights to arrive/depart from an airport) vary depending on the airport
- Pay for everything else. You know what we mean, in some airlines you don’t even get a free glass of water
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