The economic viability of long-haul low cost operations: Evidence from the transatlantic market

M. De Poret, J. F. O'Connell, D. Warnock-Smith

Research output: Contribution to journalArticle

20 Citations (Scopus)

Abstract

The recent strong performance of long-haul low-cost carriers AirAsia X and JetStar have re-raised the question of the long-term feasibility of long-haul low-cost operations. For the first time, this study contains a detailed financial assessment of low-cost operations on the transatlantic market using best-in class aircraft technology, the Boeing 787. The study's main findings demonstrate how challenging the successful running of a European long-haul low-cost carrier can be. In particular, on-going operating profit appears to be very sensitive to variations in demand and fuel prices, despite the use of new, highly efficient B787s. The findings show any prospective long-haul low-cost carrier that pursuing a demand focussed network strategy can ensure financial viability. This involves the creation of higher seating densities, higher cargo revenues and additional ancillary revenues.

Original languageEnglish
Pages (from-to)272-281
Number of pages10
JournalJournal of Air Transport Management
Volume42
DOIs
Publication statusPublished - 1 Jan 2015

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