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Spotlight on: low-cost long-haul travel

It’s been a turbulent time for the airline industry, with takeovers, high-profile collapses and devastating crashes shining an unwelcome spotlight on the business. But that hasn’t stopped growth in the low-cost long-haul market, and it’s set to continue. Here’s what you need to know

Low-cost carriers – known as LCCs in the airline business – have changed the way we travel drastically. Not just by how much it costs, but also down to the way we pack our suitcases and how often we take holidays. According to the Centre of Aviation, low-cost flights make up 33% of global air capacity, with that rising to 41% in Europe alone.

The long-haul sector of the low-cost market has grown significantly in recent years, too, with the likes of Norwegian now serving over 36 million passengers annually on flights across its transatlantic and European routes, and Scoot selling Singapore to Berlin for €280.

Isn’t low-cost long-haul on its way out?

The sector has also seen its fair share of difficulties. In October 2018, Primera Air ceased operations and cancelled all flights, leaving thousands stranded on both sides of the Atlantic, and in March 2019, WOW Air ceased operations. It doesn’t spell out a brilliant future for the low-cost long-haul market, but Skyscanner’s Senior Director of Strategic Partnerships, Hugh Aitken, thinks otherwise: “In general, we still see significant growth in this sector. If you look at long-haul low-cost it’s opening up a new area of travel. Low-cost does one thing exceptionally well - it lowers the cost of travel.”

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Airplane view

Photo: Eva Darron, Unsplash

This means, he says, that people are more likely to travel further and more often. Jack Sheldon, Founder of Jack’s Flight Club – a service that’s dedicated to finding cheap fares and sharing them with its database of millions of travellers - has seen a similar trend.

“You see a lot of travellers going further afield to destinations that are cheaper to vacation in because the flights now make it affordable. Distance is no longer as much of a factor,” he explains.

Good news for hotels

Just because these travellers are buying cheap flights, though, doesn’t mean they’re after budget accommodation. Hugh Aitken says there are different segments of travellers, and low-cost is helping people save money on travel so they can spend more on the ground. “We see quite a large segment who will use a cheaper price to enable them to travel more often, but equally they’ll choose to stay in a higher star accommodation when they get there.”

DT Minich, President and CEO of Experience Kissimmee – a Floridian destination management organisation – says the popular area has seen significant growth thanks to the cheap routes on offer, and spending habits have changed too. “We have seen an increase in passengers from the UK since Norwegian started flying directly from London Gatwick into Orlando offering great value, affordable-to-all airfares. We are noticing these travellers are spending more on our variety of accommodation options and on visiting our attractions.”

While much of the conversation around low-cost long-haul has been around transatlantic routes, the industry also stimulates regions that might not have had such strong tourist arrivals previously, and it opens up destinations to new groups of travellers from different regions of the world. Aitken refers to a recent internal study by Skyscanner which explored the impact of low-cost long-haul routes arriving in a destination. It found that propensity to fly long-haul can double when cheaper flights are available.

This means hotels in that destination need to start considering a whole new market for their product and alter communications efforts accordingly. “It’s about being where the traveller is,” explains Aitken. “[Hotels have to] think about how they’re appealing to travellers in very different origins, so the sites that travellers will use in China are very different to the platforms travellers use in the US and Europe.”

In for the long-haul

Sheldon describes the low-cost long-haul business as a “race to the bottom”, with other non low-cost airlines getting in on the discount action by unpackaging their offering. The likes of British Airways and even Virgin Atlantic now have basic economy prices that don’t include seat selection and checked baggage, and he puts it down to Norwegian’s presence on the popular transatlantic routes.

This is certainly changing the way people travel – while many might have lugged a big suitcase for their week away in New York, travellers are now packing light and choosing carry-on only to save significant spending money. This is a prime opportunity for hotels to step up and provide the amenities guests can’t put in their hand luggage, such as high quality toiletries, hair straighteners or beach towels. These little extras are simple to add, and will no doubt improve guest satisfaction immeasurably.

The USA, Europe and Asia are seeing plenty of growth thanks to low-cost long-haul, but Africa is one region that’s yet to benefit from the presence of LCCs altogether – just 12% of global low-cost carriers operate on the continent. Aitken says he expects there to be significant changes there in the near future, especially with such cost efficient jets as the A320 Neo and the Boeing 787 offering longer range, so it’s one to watch for the hotel industry as demand may well begin to grow quickly.


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Hero image: credit to Ng 7976

Takeaway
  • Low-cost long-haul routes stimulate new markets and open up destinations to new groups of travellers
  • Those flying on low-cost long-haul airlines don’t necessarily want cheap accommodation too – this sector has enabled increased spending on the ground for many
  • The arrival of a low-cost long-haul carrier into a new market can double a travellers propensity to visit

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