But in Norse Atlantic, JetBlue Airways and Iceland’s Play, the UK and Ireland has gained three new entrants almost as quickly as it lost their forerunners. So have they finally cracked it? Do these upstarts stand a chance? And are they really, truly “low-cost long-haul”?
After five decades of trial and error, you’d be forgiven for thinking aviation would have had this sussed. Yes, Norwegian’s decision to quit the low-cost long-haul game was precipitated firstly by costly issues with the engines on its 787s and then by the pandemic, but Primera and Wow went under within six months of each other – a good year to 18 months before Covid grounded travel globally.
There are signs, though, that this latest breed are different. Founded in 1998, JetBlue took off in 2000 and has gone on to become one of the US’s leading airlines, earning the right to self-style itself New York’s hometown airline.
JetBlue spent years laying the foundations for its transatlantic debut, which eventually came in August 2021 when it launched flights to Gatwick and a month later to Heathrow. In August, it reported record quarterly revenues of $2.6 billion (£1.8 billion) following a 5.8% increase in capacity – and claimed it remained "on track to deliver a profitable year and record revenue performance".
Its fleet of cheaper, more efficient A321s has also helped it keep operational costs down.
Norse, meanwhile, was formed out of the ashes of Norwegian’s low-cost operation at Gatwick, with establishing investment from fighter pilot turned airline captain – and ex-Norwegian chief – Bjorn Kjos.
Its entrepreneurial chief executive, Bjorn Tore Larsen, knows a thing or two about travel too. After heading to sea aged 16, he bought a travel agency two years later to tap into the lucrative maritime crew market, and went on to found a highly successful global shipping firm.
Play is the UK and Ireland’s newest entrant, flying from Dublin, Glasgow, Liverpool, Stansted and Glasgow – via its Reykjavik base – to Baltimore, Boston, New York, Toronto and Washington DC, although its plans to serve Orlando fell through.
What it lacks in direct connectivity it makes up for in value; promotional one-way fares have dipped as low as £149pp. Play also managed to more than double its earnings year-on-year in the three months to 30 June from $32.5 million (£25.5 million) to $73.1 million (£57.3 million).
So far, so good. So what factors are in play here? And why aren’t the industry’s aviation experts entirely convinced low-cost long-haul is sustainable in the long run?
’Not for the faint-hearted’
John Grant, chief analyst at travel data company OAG, said low-cost long-haul carriers had benefited from several favourable circumstances in the wake of Covid, including shifts in people’s post-pandemic spending habits and lower aircraft leasing prices.
"There is still a proportion of travellers who are spending post-Covid and are in that ’revenge spend’ phenomena,” he told TTG. “I think it’s fortuitous – everything has worked out to airlines’ advantage in the past two years. But as the market hardens, it’s going to become tougher for them to create a space for themselves and survive.”
Other challenges for carriers include ramping up capacity sufficiently and the costs inherent in flying to bigger, more expensive airports. “When you’re offering low-cost long-haul, it’s difficult to have a massive cost advantage as you’re flying into major airports where the fees are higher,” said Ashley Quint, director of Berkhamsted-based travel agency TravelTime World.
Grant agreed. “It’s always going to be a struggle – those with the smallest market share are the most vulnerable," he said, while aviation analyst Sally Gethin cautioned low-cost long-haul was a “tough sell” and “not for the faint-hearted”.
In addition, the analysts agreed none of JetBlue, Norse or Play can be considered true "low-cost long-haul" carriers in the mould of those that have come before, with all three operating wildly different business models.
Gethin highlighted how JetBlue had built its low-cost transatlantic proposition off the back of a successful US domestic operation – "well before Europe had heard about them" – and waited more than 20 years to enter the transatlantic market, while Grant said JetBlue couldn’t be considered a low-cost airline because it was running codeshares and partnerships with both US and foreign airlines.
Grant added he didn’t believe Play’s model qualified either owing to its stopovers in Iceland. “Most of their services are no more than about four hours long and that makes them no different to a normal low-cost airline that you can see in Europe," he said.
New era?
Norse is perhaps the best fit. Its inaugural London-Miami service took off this week, but it has already signalled it will axe its Gatwick-San Francisco route just four months after it got under way.
According to Quint, Norse has taken all the lessons from Norwegian’s failure and “run with it”. However, he questioned whether Norse would be able to operate profitably outside the peak summer period.
"They can make a profit doing long-haul over the summer,” Quint said. “But their challenge will be to not make a loss bigger than the profits they make in the summer, which is something they haven’t cracked before.”
Nevertheless, Gethin believed a low-cost long-haul proposition could work in other markets such as India and Australia, where companies are already flying long distances at low prices. “Australia has a successful low-cost long-haul market, as does India and the US – they are very robust markets,” she said.
Australian carriers, such as Qantas’s Jetstar brand, offer services to south-east Asia while in India, flying from one side of the subcontinent to the other can cost very little.
Gethin added developing a low-cost long-haul proposition in vast territories is also easier regulation-wise. “It’s easier to secure as it’s all in one regulatory environment and market,” she concluded.
Low-cost long-haul has a notoriously high attrition rate. But with several different operational models proving fruitful during a period of market stability, is it time to embrace a new understanding of what low-cost long-haul means – and how it works? Only time will tell.
