Originally Posted by
HangTen
It puts Icelandair on notice that the free ride comes to an end, and remember, WJ has Cdn domestic feed out of the yang yang into YEG and can/has developed partnerships in Europe. Icelandair has no feed at the Cdn end of the pipeline. They need O&D traffic and will have to generate it solely on price. That will only succeed if they have the lowest unit costs, which, when operating 757 vs 767 equipment together with their labor costs, is unlikely to be the case.
Um.. Icelandair has never depended on O&D traffic. Look at their network and their equipment. A majority of fliers are connecting through KEF and the 757s have one of the lowest operating costs among aircraft. Their business model is more akin to COPA than any kind of premium airline.
I suppose they could end up Rouging all UK service from western Canada to LHR to stay price competitive at the low end they now seem to be completely obsessed with, but that won't do much for the premium passengers who pay the freight and who underwrite much higher cost mainline route profitability, especially during the summer when the sun is shining.
Exactly: rouge is how they will stay competitive. While yes "premium passengers" will suffer and move away, AC has done the cost-benefit analysis and their numbers are few and far, especially outside of Toronto. FT has always overstated the role of leisure premium traffic. But the majority of people are buying based on the lowest price. Most high-value airline routes are decided by corporate contracts and business fliers, not premium economy fliers.
Premium traffic, who obsessively resist any service that has them having to interface with budget travelers at any level will move over to BA, LH. or KLM for their Western Canada to the UK and beyond premium service.
It will be very interesting to watch this all unfold.
This is a little bit insulting to "budget travelers", AKA the majority of travelers and the majority of the world. We can't all be 1%. You're still flying commercial.
And look at any BA/LH/KL configuration flying into Canada and you tell me that we're a "premium market"
