Long haul low-cost has revolutionised air travel in recent years but profits were elusive and COVID-19 poses huge challenges, says Brendan Sobie.
SINGAPORE: Budget airline options on long-haul routes will decline significantly for at least the next few years, impacting air fares in popular markets such as Southeast Asia-Australia and Europe-North America once international travel resumes following COVID-19.
Most LCCs operating widebody aircraft also have narrowbody aircraft, which are mainly used for short haul flights of under five hours although in the last few years some five to seven hour routes were launched by LCCs using new generation longer range narrowbody aircraft.Prior to the pandemic there were approximately 200 widebody aircraft operated by over 20 LCCs, including more than 100 aircraft operated by 12 LCCs in Asia Pacific.
The short haul low-cost segment is more established, much larger and has partially recovered while the less mature long-haul low-cost segment cannot even start recovering until borders reopen and quarantine restrictions are lifted.The largest three long-haul low-cost operators – AirAsia X, Norwegian and Air Canada Rouge – have indefinitely suspended all their scheduled widebody passenger flights.
Norwegian began long-haul flights in 2013, when it took delivery of its first Boeing 787 aircraft, and has since pursued rapid expansion in this segment, focusing almost entirely on the transatlantic market. Norwegian was the second largest widebody LCC after AirAsia X, which was operating 39 Airbus A330 aircraft as of the beginning of 2020 including 24 in Malaysia, 13 in Thailand and two in Indonesia.AirAsia X was established in 2007 as an arm of AirAsia and the two companies have had separate stock exchange listings since 2013.
Only charters have been operating from Indonesia since early 2019, when the Indonesian affiliate suspended scheduled flights. A collapse of AirAsia X would represent a huge overall setback for the long-haul low-cost segment given it is considered the pioneer of the model along with Jetstar. AirAsia X was one of five foreign LCCs serving Australia prior to the pandemic along with Scoot, Cebu Pacific, Beijing Capital and Citilink.It could be several years before Australia, which has shut its borders until at least mid 2021, again has 5 million long-haul, low-cost passengers.
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