Discussion:
Do low cost divisions of legacy carriers ever work ?
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JF Mezei
2013-06-14 03:45:39 UTC
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Was reading a BBC article http://www.bbc.co.uk/news/business-22840790 on
a norwegian low cost carriers with long haul ambitions.

The article points to the number of failures for such carriers startyed
with Sir Freddie Laker,s "Skytrain" which lasted only 5 years.

I look at Air Canada which tried a low cost division and quickly folded
it back into its mainline fairly quicily and is trying again with "Rouge".

Qantas has tried with Jetstar, and isn't doing particularly well
(perhaps because Jetstar is hurting Qantas). They were also supposed to
launch a long haul low cost division, not sure if they ever did.

Are there examples of a legacy carrier having succesfully run a low cost
division that has worked without cannabalising its high cost operations ?
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John Levine
2013-06-14 04:01:17 UTC
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Post by JF Mezei
Are there examples of a legacy carrier having succesfully run a low cost
division that has worked without cannabalising its high cost operations ?
In the US, carriers have foisted off thin routes on commuter
subsidiaries that use smaller planes and much lower paid crews,
largely to circumvent union rules.

I can't think of any lower cost "airline within an airline" that ever
worked anywhere, ever. Song, Ted, and so forth were all quietly
folded back into the parent after a few years.
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Roland Perry
2013-06-14 08:39:01 UTC
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Post by JF Mezei
Are there examples of a legacy carrier having succesfully run a low cost
division that has worked without cannabalising its high cost operations ?
What's in danger of being eroded is the airline's public image, rather
than the unlikely event of competing with themselves over a particular
route.

As a result they are too nervous about being ruthless enough to cut
costs (on their "low cost" half), especially for direct customer-facing
operations.

The resulting compromise then always seems to fail.
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Roland Perry
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