Smaller airlines offering low-cost, long-haul routes are suffering in today’s climate of ever-increasing oil prices, as evidenced by the recent demise of Primera Air – which left travelers stranded and confused at airports around the world – and others from the recent past like Air Berlin, SkyWork, and VLM.
On October 1, ticket holders for Primera Air flights faced a major issue: the airline had abruptly declared bankruptcy and no aircraft would be coming for travelers with booked flights. Primera was offering long-haul flights at a low cost, something many airlines are attempting to do these days. But will that business model ever work?
More and more budget airlines have been declaring bankruptcy or restructuring lately, even as they attempt to add longer routes. It’s a problem of fuel: oil prices are just too high. Up to 22 percent of a fare is fuel costs, and jet fuel prices have increased 50 percent in just the last year. Every airline, large or small, is struggling to keep up with the cost.
Plus, budget airlines aren’t getting the benefits of the corporate market.
“The bet they are taking is that they can make up for that corporate market revenue by filling the plane with more passengers and getting passengers to buy additional services,” ICF Aviation’s aviation economics expert and senior vice president Samuel Engel told Vox.
Having only a small fleet of planes can have a negative effect as well.
“It adds to your risk,” Engel told Vox. “You have less capacity to absorb the ups and downs of the business.”
Right now, Norwegian and Wow Air are the only two low-cost airlines successfully running long-haul flights.