The economic viability of long-haul low cost operations: Evidence from the transatlantic market

M. De Poret, J.F. O'Connell and D. Warnock-Smith

Journal of Air Transport Management, 2015, vol. 42, issue C, 272-281

Abstract: The recent strong performance of long-haul low-cost carriers AirAsia X and JetStar have re-raised the question of the long-term feasibility of long-haul low-cost operations. For the first time, this study contains a detailed financial assessment of low-cost operations on the transatlantic market using best-in class aircraft technology, the Boeing 787. The study's main findings demonstrate how challenging the successful running of a European long-haul low-cost carrier can be. In particular, on-going operating profit appears to be very sensitive to variations in demand and fuel prices, despite the use of new, highly efficient B787s. The findings show any prospective long-haul low-cost carrier that pursuing a demand focussed network strategy can ensure financial viability. This involves the creation of higher seating densities, higher cargo revenues and additional ancillary revenues.

Keywords: Low-cost carriers; Long-haul operations; Financial viability; Transatlantic market; Ancillary revenues (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:42:y:2015:i:c:p:272-281

DOI: 10.1016/j.jairtraman.2014.11.007

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