No longer "Cheap & no frills"

[Blastor]

...or how to turn your back on your own philosophy

Welcome aboard 'new-world air'

Budget carriers tap into upscale perks




Aude Lagorce, MarketWatch


Lounges, leather seats, extra legroom, speedy boarding and frequentflyer miles: New-style low-cost airlines aren't skimping on the extras in their effort to woo high flyers.

The age of the blanket budget model, with low fares as the selling point, is over, industry observers say, and a new breed of budget airline is spurning the golden rules of the tried-and-true low-cost formula, such as having a single type of aircraft and offering point-to-point service only. The new model introduces paying perks, such as extra inches to stretch the legs, as a way of differentiating from competitors and sweetening the margins.

"We think the first phase of lowcost is over," says Thomas Winkelmann, CEO of Germanwings, the budget offshoot of Deutsche Lufthansa, Germany's leading airline. "The new low-cost carriers are offering amenities to passengers who are willing to pay for the extra comfort. They are also sometimes flying to central, expensive airports."


Brett Godfrey, the chief executive of Virgin Blue, agrees there's a new kind of low-cost airline. Launched in 2000, Virgin Blue, based in Brisbane, is Australia's second-largest carrier. It has 50 aircraft, and has started moving upmarket by offering services such as extra legroom, a frequentflyer program and lounges.

"The definition of what is a lowcost carrier has changed over the past three to four years," Godfrey says. "I'm convinced low-cost must be a state of mind, but that cost cannot be the only criterium. He has even coined a new designation for carriers that share this philosophy: "the new-world airline."

A survey published last year by Amadeus, a provider of technology and services to the travel industry, and research firm Leflein Associates suggested passengers were willing to pay more for better service or more air miles. It found that 52% of customers would be willing to pay more for the ability to use points to upgrade ticket class, 49% would be willing to pay for the ability to get more frequent-flyer miles than the ticket class allows, 40% would be willing to pay more for the use of an airline's exclusive club and 30% would be willing to pay more for meals and snacks ordered from a menu.

In Canada, several lower-cost carriers have been quick to introduce paying perks. For an added charge, Calgary-based WestJet offers lounge access, bar service, complimentary newspapers and business facilities. Porter Airlines in Toronto offers free entry to the passenger lounge, complimentary coffee and tea and access to workstations.

While observers don't dispute the upmarket trend sweeping the lowcost airline industry, individual players disagree on the best strategy to attract customers with bigger wallets.

At Germanwings, Winkelmann is convinced success lies in the airline's ability to win over the business customer. "No low-cost airline can survive without the business customer in the long term."

So, in an effort to cater to the higher flyers, Germanwings uses major airports. It has also adopted a program called Corporate Flex, which allows business travellers to rebook flights for free and cancel on short notice. The frequent-flyer program, called Boomerang, allows members to accumulate miles and redeem them against free flights, albeit with a lower level of complexity than those of legacy carriers such as American Airlines or British Airways.

Still, budget airlines say they're wary of adding services that create too much operational complexity, or end up costing them money. So enjoy those leather seats while they last. As for the more complex elements of upscale travel, it may be some time before they take off.



On the earnings front, shares of WestJet and BCE Inc. fell after the companies reported third-quarter results before the bell.

Wednesday, November 07, 2007 (12:27)
WestJet Airlines WJA.A-T 19.500 -0.280 -1.42

[Four1oh]

a good read, despite the village idiot posting it, and his bolding attempt to draw attention away from the article.

[Legacy]

Sorry I can't get my focus of this article
http://www.stockhouse.ca/news/news.asp? ... 8&tick=WJA


WOOOOOHOOOOOOOOO

[Huge Hammer]

...or how to turn your back on your own philosophy

[Captain Esq.]

Is it just me who is amused by Blastor and the way he hacks on WS for not sticking to their 1996 ideals? I wonder where WS would be if they stuck to their guns on those. Never east of the Peg? Never into Toronto? I'm guessing they'd be nowhere now. Thank God they've been able to adjust their motives based on present day, or none of us, or not many of us, anyway, would have a job there.

[Four1oh]

Don't worry, I think 'New Air' will stick to their ideas.

[Flightlevels]

Very true. Any business must have the flex to mold to different environments. Looking back from the first few years when Westjet was the new kid on the block some major issues in the industry have occurred such as no more cheap oil, collapse of Canadian and other bigger players. Inflation has jumped and Alberta has boomed, just to name a few. Adjusting to things like this takes quite a bit of forward thinking. All in all their have been many mistakes made by westjet, however I think the good has far outweighed the bad. To top it all I still enjoy going to work too!