Can long-haul low-cost airlines survive?

The low-cost Icelandic long-haul airline WOW Air ceased operations without notice on 28 March. In fact, the airline has canceled all flights, leaving passengers stranded on both sides of the Atlantic.

The economic model of WOW Air was quite simple. The airline has offered cheap long-haul flights between Europe and North America via its hub in Keflavik, Iceland. Passengers were able to buy basic tickets at unbeatable prices. However, these tickets only allowed them to bring only one personal item.

Passengers had to pay additional fees for seat reservations, hand luggage and checked baggage. They were also able to upgrade their tickets for an additional fee to include various amenities such as meals, priority boarding and checked baggage.

WOW Air operated a fleet entirely composed of Airbus. Photo: Wikimedia.

WOW Air is not the only low-cost airline to have ceased operations recently. Primera Air, Germania and Flybmi have also been bankrupt in recent months. It's a difficult world for low-cost airlines, and it seems to be even harder for low-cost long-haul airlines.

Low cost airlines

Low cost airlines generally operate with a very low profit margin. Indeed, rising fuel prices can erase any profit and mean that they operate at a loss in no time. In addition, a high load factor is also very important for low cost airlines. Empty seats equate to lost revenue, which low-cost airlines can not afford.

Ryanair has an average load factor of 95%. It is one of the highest load factors in the industry. Photo: Wikimedia.

The major carriers are able to offer economy-class economy fares on long-haul flights, as these seats are not their true creditors. These airlines earn money by selling business and first class seats at a great price. However, low-cost carriers often offer even cheaper tickets than larger carriers, without having to earn extra income from premium seats.

Can low-cost long-haul airlines survive?

It is very difficult for long-haul low-cost airlines to survive in the long run. They might have a chance as long as fuel prices are low and they are able to take the most popular routes to reach high load factors. Nevertheless, it also means that there is not much room for expansion.

In addition, it also depends on the type of aircraft chosen. There is no doubt that widebody aircraft will make the competitiveness of low-cost airlines even more difficult. This is the reason why most low-cost airlines choose to operate exclusively narrow-body aircraft.

WOW air has attributed some of its financial difficulties to the decision to use a wide-body aircraft. Photo: Wikimedia.

Overall, it seems like it is becoming increasingly difficult for low cost long-haul airlines to survive. They are facing increasing competition from major carriers as well as other low cost airlines. As a result, airlines may be interested in serving a more diversified market, including short-haul and medium-haul routes, rather than focusing solely on long-haul flights. This will also give them more flexibility to adapt to customer requests during the off-season, when demand for certain routes is lower.

Do you think low-cost long-haul airlines can survive?