Lufthansa, Air France and IAG click on their "low cost" transoceanic flights

The European aviation giants have attempted to diversify their business and to position themselves in a nascent enterprise: low-cost transoceanic flights. Lufthansa and Air France-KLM's round trip, IAG's difficulties with Level, Norwegian's crush – the forerunner of this segment – and the bankruptcy of companies like Primera Air and Wow show that the Cost success on transatlantic routes is neither so easy nor so obvious.

After years of fierce competition, the old airlines have been able to familiarize themselves with and even apply the low-cost model, characterized by high aircraft turnover, maximum occupancy, low prices and payment for services that were not included until recently. on the ticket, such as seat selection, food on board or luggage.

Its application on longer routes however has drawbacks, because the rotation is reduced, the effort of filling the aircraft is more important and the cost is multiplied. For example, in the fuel. There is however a latent demand for this type of services, as shown by the Norwegian Scandinavian, whose exponential growth in record time has forced the major players to react with uneven results.

Double model
The first to take a stand was IAG, which launched Level in 2017 to limit Norway's entry into the Spain-US corridor via Barcelona and minimize damage to Madrid, where Iberia has its hub for international flights (hub).

A year ago, after settling in Paris, Level took a 180 degree turn. It has ceased to be a low-cost long distance radio to land on the intra-European market with links between Vienna and Spain, the United Kingdom, Italy, France or Croatia. In addition, this year, its network has been extended to Amsterdam. Although IAG maintains its confidence in Level, which started as a brand and acquires its own entity within the group, and is expected to reach 42 aircraft in 2023, Level remains in red. In 2018, it lost $ 9.3 million after tax, which equals $ 7.1 million compared to the previous year, its first. To revitalize the company, IAG, which had tried to buy Norwegian in 2018, has placed a specialist in the reorientation of airlines to the limit and a good connoisseur of low cost: Luis Gallego. From now on, the president of Iberia will reconcile his functions at the head of the Spaniard with the mandate to print a new route to Level, whose general director, Vincent Hodder – named last summer – will report directly to him.

The IAG project with Level adds the comings and goings of its major European rivals: Air France and Lufthansa Group. A few months after the launch of Level, Air France launched Joon. Initially geared towards the millennials, the French company offered a low cost airline – from the start, it avoided talking about low cost – with Air France pilots and a newly-built cabin crew, and a combination of European and transoceanic links. . With the decision to terminate Joon, called to perform all Madrid-Barcelona flights to Paris and whose growth had been limited to 28 aircraft until 2020, Benjamin Smith was released upon his arrival at Air France-KLM as CEO, last September. In his opinion, he added complexity to the French language and confused his clients. To say in action: June 26 was the last day that Joon operated as such. The following day, Air France took over these operations by integrating the crew of its subsidiary, whose aircraft are already painted in the colors of Air France.

The Lufthansa group, meanwhile, has also opted for withdrawal. A month ago, on the occasion of Investor Day, he announced that Eurowings, his low-cost subsidiary, would only be dedicated to European flights. It will transfer all its transoceanic operations to other group airlines as part of an accelerated restructuring process that will end at the end of 2020 and which targets Eurowings, become a drag on account result of the German giant, to reach the equilibrium point in 2021. With this reorientation, the first European air group in pbadenger volume completes a plan that had started in 2015, when it had decided that Eurowings landed on long-haul flights and which, he said, was a source of "complexity and distractions".

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