AVIATION AND US

The true colour of the present generation low cost airlines.


Going by the spirit of the Chicago Convention 1944, airlines are there to provide means of air transportation to the universe. The principles and arrangements in order that international civil aviation may be developed in a safe and orderly manner and that international air transport services may be established on the basis of equality of opportunity and operated soundly and economically.
It will mean fair and economical air services to the people and freight to support the world economy but yet sufficiently profitable to provide returns to the investors.

The evolution from much regulated, controlled industry into the present liberalized one was a proof of the true spirit of the formation of the ICAO. The world governments opening of the sky also shows the need for the industry to support the globalization trends of the world economy.
The birth of low fares and low cost airlines was welcomed by many as air travel and air transportation has been made more affordable yet it support the spirit of entrepreneurial where profit motives are supported.
As the market environments are getting tougher, more competitive and costly fuel price, many negatives comments were raised to the way these are addressed by this new air transportation model that break the barrier of economic status. These ranging from those who are against the introduction of baggage fees that used to be part and parcel of air travel, through to onboard purchase meals and seats selections that is payable rather than first come first served.
What to some is greedy profiteering attitude, withstand the critics and today become the standard for air travel.
Then there is issue of non refundable fees for non performances. To many it is unethical for these low cost airlines to keep fees and funds collected when there was no performance delivered by the airline. The airport service fees, the baggage fees and even the air fares are fees payable for performance delivered.
The strong influence from the low cost travelers, who would rather have low fare but at risk, manage to keep these low cost airlines continue with the scheme.
The world population of 7 billion (October 2011- Worldometer.info) is predicted to have 9 billion passengers traffic by the year 2025. No wonder the support influence for cheap air travel is so strong.
I personally would not mind low air fare. It helps me with my travel for I will have more option on the flight schedule. Nevertheless it should be at any other expense. Check out this story.
Today when the industry are facing bad times due to higher fuel price and lower traffic demand, suddenly these new low cost airlines are showing its true colour. For the sake of profits, flights were cancelled with little consideration to the passengers travel plan. Destination that used to be boasted of by them today is not their choice destinations. Check out this story.
Is their business model questionable with the new development?
One of the business model component is pay now travel later. But what guarantee that there will be travel later? Those who have booked their flight for these not their choice destinations, long while ago, will now have to keep their finger cross and hope for their best to be able to travel as planned.
The problem with these low cost airlines, the work independently and do not have alternative carriage when such thing should happen. The full service airlines always have their interline arrangement to enable such rearrangement.

When these low cost airlines are offering promises for pay now and travel later, passengers are allowing a 43% profit margin or $0.43 for every Dollar paid for. The airline should be breaking even with the aircraft only 57% full. It is a great obligation that needs to be fulfilled at any cost. It is not an ordinary business concern, it is insurance. Failing to fulfill this promise will make a big dent on the creditability of the airline and its business model. I would feel fuel price and market slow down is not a big enough excuse as it is already accounted for in the business model.
My advice is, go back to the full service airline. Keep track of their best price offers. My recent experience, full service airlines may offer unbelievable price like business class travel for economy class pricing, for sector like Kuala Lumpur to Melbourne.
Doing so will safe you the worry of not able to fly when the time come. Full service airline with its networks and interline capabilities, will not disappoint you. The worse scenario would be transferring you to another full service carrier.
Who knows what will be their excuse next, the airline is losing money so have to stop flying!
Is this the final test for the low cost airlines business model? Or is it the end of the present era of low fare air travel?
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