The global low cost airline movement has undergone a fundamental change of direction in the past two years, but the biggest shifts in the model are coming, according to a landmark new study published by the Centre for Asia Pacific Aviation (CAPA), the leading global aviation intelligence service provider.

The Global LCC Outlook Report 2009, published in late 2009 by CAPA, covers over 130 LCCs from around the world, with commentary from some of the foremost thinkers on the LCC segment, including Professor Michael E. Levine, Professor Nawal Taneja, Bill Franke of Indigo Partners and Dr Julius Maldutis. The report also extensively cites LCC leaders, including Gary Kelly, CEO of Southwest Airlines, Dave Barger, CEO of JetBlue Airways, Michael Cawley, Deputy CEO and COO of Ryanair and Tony Fernandes, CEO of AirAsia among others.

Extracts from the report:

"In most of the more likely scenarios, yield will become increasingly attractive as a refuge for all but the lowest cost operators.

"High fuel prices – the main threat – are the most likely catalyst of change in the short term. With the unlikely levels already experienced despite the global financial crisis, speculative activity is tipped to push prices even higher as the economy improves. Surges in price can be highly destabilising and one of the few risk management options that most low cost operators have to guard against this is to search for higher yields.

"This and other uncontrollable externalities – both in cost and demand – will relentlessly force most low cost airlines towards reconstituting the network model, domestically and internationally”.

According to the report, the new network version will differ in two main ways:

• It will use unbundled pricing methodology; and
• Low cost mentality will pervade all phases of the operation.

Pages: 308, PDF

Table of Contents

1. An industry in turmoil
   1. How did we get into this mess?
   2. 2008/09: the pendulum swings to a new era
   3. Old airlines dying of sclerosis, new entrants sprouting
2. LCCs account for all global passenger growth since
   1. Two distinctive facets to growth
3. 3 (Not) Defining the Low Cost Carrier
   1. Proliferation and diversification
   2. Attributes common to low fare airlines and low cost carriers
   3. Innovation and Entrepreneurship: Making a difference
4. Distribution & sales and social media
   1. LCCs and Distribution
   2. Accessing corporate markets
   3. Social Media opportunities
5. The spread of LCC operations around the world
1. The growth of the Low Cost sector since 2000
   The Expansion of LCCs, 2000-2009
2. Drivers of Growth
3. LCC growth by region
1. North America
2. Europe
3. Asia Pacific
4. Other Emerging Markets
5. Country Performance
6. The evolving model
   1. Hybridisation and evolution
      1. Directions in hybridisation
      2. Other variations on the basic model
      3. The Future? Going international, going long haul
   2. Ancillary revenues
      1. Charges for Services: Up-Selling or Downgrading?
      2. Managing Costs or Chasing Revenue?
      3. What the consumer pays
      4. A simple equation: ANCILLARIES = PROFIT
      5. The prospects for ancillary revenue
      6. On-line Sales
      7. Beyond travel products
      8. The Leisure Line
      9. Cargo carriage
      10. Frequent Flyer Programmes
7. How the legacy airlines have responded
   1. Reduce fares: “low fare-high cost”, a dangerous formula
   2. LCC Subsidiaries by region
      1. North America
      2. Europe
      3. Asia Pacific
   3. Reposition: reduce costs and maintain yield differential
8. Airport responses
   1. A radical change in thinking by airports
9. Financial performance
   1. LCCs as Investments
   2. Investing in LCCs is risky business
10. Challenges to the low cost model
1. Fuel prices and airline performance
   1. Fuel prices – a changed risk profile
   2. Avoiding the cost trap
   3. The rising – and rising – price of fuel
   4. Varied airline exposure to fuel prices
2. The Outlook
3. Aircraft
   1. Narrowbody development
   2. Aircraft values: September-11 and ‘Great Recession’ downturns, and the Outlook
   3. One size doesn’t fit all
   4. The environmental challenge driving efficiency gains
11. The new economic environment
    1. Economic outlook
    2. Impact on aviation
12. The Outlook: Great Expectations
    1. The Outlook for LCCs - and the Airline Industry
    2. The main threats and opportunities for LCCs
       1. The Threats
       2. Opportunities
13. Conclusion: The world has changed – and so has the low cost carrier
14. Globalisation of LCCs
    1. Traffic Growth
    2. The Role of LCCs
15. North America
16. Europe
17. Africa
18. Middle East
19. Northeast Asia
20. China
21. Southeast Asia
22. South Asia
23. Oceania