ARC NEWS
How the world's long-haul low-cost airlines are faring
October 09, 2018
While most commentators agree that long-haul low-cost operators have had a disruptive influence in their respective markets, doubt creeps in when discussion turns to the model's economic viability.
Analysis of some of the key players indicates that those doubts are well founded. Few if any airlines have made true long-haul low-cost work in a sustainable manner, despite some achieving sporadic profitability.
The market's major participants operate mixed networks. In other words, no significant players have become dedicated low-cost long-haul operators.
Long-haul point-to-point services frequently fail to attract enough demand, hampered by the lack of connecting passengers, while having no true business-class products and passengers can fatally stymie revenue opportunities.
When new players do gain some traction, powerful network carriers have been quick with defensive moves.
These and other factors are causing some carriers to rethink their strategies entirely, often leading to the adoption of products more commonly associated with traditional network carriers.
The network carriers themselves are also embracing long-haul low-cost – but it is doubtful whether those units can be considered true budget airlines.
However, the sector remains in its infancy. Many of the markets developed under the long-haul low-cost banner may prove sustainable; but the operating model seems likely to be "lower cost", rather than true low-cost.
Ironically for a market so suited to pioneers, the odds seem stacked against entrepreneurial start-ups.
"Sadly, low-cost long-haul is the graveyard of ambition for start-ups," Ryanair chief operating officer Peter Bellew opined on Twitter after news broke of Primera Air's demise. "[It] seems almost impossible without business class or the deep pockets of a legacy carrier."
As fuel prices rise, the market is only likely to become more unforgiving.


Airlines rationalise US-China capacity
August 28, 2018
Capacity between China and the USA is beginning to rationalise after years of accelerated growth.
Air China, American Airlines, Hawaiian Airlines, Sichuan Airlines and United Airlines will or have pulled out of markets, while others, including Hainan Airlines, are reducing capacity on existing routes through the end of 2018.
"The two China routes… have been colossal loss makers for us," said Vasu Raja, vice-president of network and schedule planning at American, earlier in August on the carrier's decision to suspend service between Chicago O'Hare and both Beijing and Shanghai Pudong in October.
The Oneworld Alliance carrier opted to suspend the routes in favour of "focusing" – or rationalising, to put it another way – its Asia operation around its Dallas/Fort Worth and Los Angeles hubs, he says.
Rapid industry capacity growth between China and the USA, especially from Beijing and Shanghai, has put pressure on the market for the past few years.
At least as long ago as January 2016, then-American president Scott Kirby – he is president of United Airlines today – spoke of "weakness" to China due to competitive capacity growth. Despite this, the Fort Worth–based carrier continued to grow in the market adding new service between Los Angeles and Beijing in November 2017.
While data does not yet include all of American and Hawaiian's cuts, China-USA capacity will grow 6.7% this year. This is nearly 2.5 percentage points slower than in 2017 and the slowest growth in at least five years.


Boeing to convert F/A-18 E/Fs into Blue Angels
August 15, 2018
Boeing was awarded $17 million to convert nine F/A-18E and two F/A-18F aircraft into Blue Angel demonstration aircraft.
The Super Hornets are to replace the squadron’s McDonnell Douglas F/A-18 Hornets, which have been in use since 1986. The retrofit work will be done in St. Louis, Missouri and is expected to be finished in December 2021, according to the notice posted online 13 August.
The Super Hornet is 25% larger, has 40% greater range and can carry more weapons than its predecessor.
Previously the conversion of the F/A-18 into a Blue Angel aircraft meant having the nose cannon removed, a smoke-oil tank installed and a spring installed on the control stick, which applies pressure for better formation and inverted flying.



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