What Major Airlines Are Doing to Compete With Super-cheap Carriers
From lower fares to better service and more choice, the rise of low-cost competition in long-haul travel is good news for passengers.
Even though these newer, cheaper airlines come with strings attached, in the form of added fees and pared-down service, they offer a good-enough flying experience that many travelers find tempting.
Flights to Europe for $69? Who can say no to that — even if it does mean traveling light, bringing your own snacks, or a quick stop-over in Iceland.
Major carriers recognize the threat in this new business model, and are adapting by lowering fares tiers, increasing services, and even hatching baby brands.
Some flagship airlines, like American and United, have fought back against these incursions by introducing new bare fares which offer little more than a seat onboard for the price of the ticket, hoping this would attract more passengers who might fly with low-cost, long-haul rivals. This strategy seems to have worked really well. In fact, a new report by IdeaWorks and CarTrawler revealed that more than 50% of travelers booked full-service tickets even with “unbundled” bare-fare options.
One hedge traditional airlines have over their low-cost competitors is the frequent flier program. These can come with complex and changing rules which affect how much miles and points are worth. Norwegian launched its own Norwegian Reward membership program, which allows fliers to earn credit as CashPoints which towards future flights. But with alliance partnerships, and many ways to earn, even when shopping, the frequent flier programs of traditional airlines will still get you further.
Traditional airlines have also been improving their airplane cabins, adding better in-flight entertainment and Wi-Fi that works around the world for a relatively small fee.
While Norwegian offers great free Wi-Fi onboard most flights in Europe, it still hasn’t added this service to its long-haul fleet, but it does offer in-flight entertainment on seat-back screens. AirAsia X is adding Wifi and inflight entertainment on some flights. WOW Air offers none of the above, but there are power outlets on seats so you can bring your own without draining the battery on your tablet. But most traditional airlines are still at the lead, offering better screens and a greater variety of films, programs and music.
Traditional airlines are also betting that having to pay for food on a long-haul flight will be unappealing to most travelers. Just in case, they’ve improved their menus, added healthy options and locally sourced ingredients, and even offer unique dining options. KLM will let you add à la carte gourmet meals to your economy long-haul ticket for around $14.
Changing your appearance to fool predators is a strong survival tactic in the animal world, and some traditional airlines are giving this strategy a try. IAG, which owns Aer Lingus, British Airways Iberia and European low-cost carrier Vueling has launched its new long-haul low-cost brand LEVEL which aims to blend-in with competitors in this market. Air France has also found new feathers with Joon, an airline designed to appeal to millennials.
Traditional airlines are also changing their fleets to better compete with low-cost carriers by reducing — where they can — their heavy operating costs. New aircraft like the Boeing 737 MAX and Airbus A320LR will make it possible for airlines to serve some routes overseas more affordably.
There are still questions on whether long-haul low-cost is sustainable over time, because the costs to operate long-haul flights are high. But both the upstarts and traditional airlines are likely do well in the future. IATA expects demand for air travel to nearly double. By 2035, there will be 7.2 billion passengers to serve, compared to the 3.8 billion of us who flew in 2016. That huge increase will leave room room for further adaptation. With major airlines making billions on fees, most will have the economic strength to keep fighting.