Magazine article Marketing

Low-Cost Airlines Battle for Skies

Magazine article Marketing

Low-Cost Airlines Battle for Skies

Article excerpt

The inclusion of new flight routes is looking likely to put budget airlines on a collision course. Danny Rogers assesses the future of one of the fastest-growing sectors of the UK economy

With the holiday season well under way, the skies over London are pulsating with the roar of jet engines. And for those who have not yet booked their flights, the choice of carrier into the wide blue yonder is growing rapidly.

The smouldering low-cost airline sector caught light in May when British Airways launched its 'no frills' airline Go. This was stoked further last week when the same airline announced an acceleration of its operation.

It has added two new destinations - Edinburgh and Bologna and plans to increase the number of its flights to Milan and Copenhagen. The new Edinburgh route pits Go directly against rival EasyJet for the first time.

The Scottish addition is a potentially inflammatory move at a time when EasyJet is waiting for its case accusing Go of predatory pricing to reach the High Court.

Go has now completed its first quarter in operation. It's too early to gauge how well the airline is performing for two reasons: Civil Aviation Authority statistics have yet to be analysed; and few industry analysts have yet to get a grip on this burgeoning sector.

Targeting Debonair

Mike Stoddart, analyst at stockbroker Charterhouse Tilney, says: "It's still early days. From everything that BA has said, we estimate Go's load factor (seats compared with capacity) at around 70% and revenue in the single millions, which is what we expected."

David Magliano, Go marketing director, says Go's flights are full at the moment but admits he would be disappointed with anything less during peak season, particularly after a wet summer in the UK.

"We are slightly ahead of forecast for the period but our marketing plan remains the same," says Magliano. He won't be drawn on the detail of the plan, but it is likely to involve two new routes by March 1999.

When Go launched, its decision to fly to Milan was seen as an early strike against Franco Mancassola's Debonair, the airline that many people perceive to be the weakest player. So does the addition of the Edinburgh route suggest an increasingly aggressive marketing stance?

Magliano denies this. "We do not choose routes based on where EasyJet is flying. We are a customer-based business and Edinburgh is the right city for our brand," he says.

Young sector takes off

Tony Anderson, EasyJet's marketing director, takes this response with a pinch of salt: "You can be too conspiratorial about such things, but with so many low-cost routes to choose from, their choice so far seems a bit more than a coincidence. …

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