Since the days of Lucky Lindbergh, flying across the Atlantic has been a big deal. Considered some of the most coveted airspace in the world, you’d be safe to say passenger loads have substantially increased since the days of that soloed Spirit of St. Louis flight. While it doesn’t take much to fill up a single-seater plane, selling enough tickets to fill up the likes of a modern 787 Dreamliner in an already saturated market is a tad different. But that tall task isn’t stopping emerging low-cost-carriers from trying to slice off their own share of the transatlantic pie.
An Outlook on the Turbulent Transatlantic Aviation Market
It’s easy to see why it’s worth the try. British Airways rakes in over 1 billion dollars annually on its New York-JFK to London-Heathrow (15 times a day) service alone. In fact, it ranks as the single most lucrative air route in the world according to OAG, accounting for nearly 6% of UK flag-carrier’s total revenue.
In the aviation market, it’s the goose that lays the golden egg.
That’s why it comes as no surprise that other airlines want to snatch it from the roost by providing competing service of their own. In an announcement earlier this month, JetBlue became the latest challenger to enter into the cutthroat world of transatlantic travel, (albeit not until 2021). While JetBlue believes they can be the newest game-changer in the market, let's take a quick look at how other low-cost-carriers have fared in their endeavors flying passengers across the pond.
Last month, Icelandic low-cost-carrier WOW Air’s dream of disrupting the transatlantic market came to a sudden halt. But the writing was on the wall months before the carrier went belly up. Sleek marketing and insanely low fare deals can only grab consumer attention for so long before they begin to feel a little too gimmicky.
The airline was great at grabbing headlines by adding new destinations almost monthly, but breakneck expansion contributed to its demise. Spreading itself too thin and placing too much of its finances on ordering newer aircraft, WOW found itself overpromising and underdelivering to both customers and shareholders. While $99 or less one-way flights to Europe are a surefire way to sell tickets quickly, the budget carrier’s long-term business model was simply not sustainable. Finding itself deeply in debt, WOW sold most of its fleet and turned to negotiations with rival Icelandair and investment firm Indigo Partners for a buyout. The talks ultimately failed, and so did the carrier’s venture in bringing a sustainable budget alternative over the Atlantic.
A similar fate befell upstart Primera Air in the fall of 2018. Although sizably a much smaller operation, the budget airline's short-sighted business model of selling insanely low tickets connecting North America and Europe and hoping to fill in the margins by selling add-ons never materialized. Neither did it’s promised route network. The budget airline began selling fares to destinations it likely had no intentions of actually flying as a last-ditch revenue influx to impress investors. That lifeline didn't work, and the airline folded much like WOW would months later.
Up in the Air
Major player Norwegian Air has probably brought the most significant threat to traditional transatlantic monopolies, but the path hasn't been easy, and there's a fork in the road up ahead. Starting as a solely European based carrier, Norwegian earned its stripes on the continent for years before its decision to take on the transatlantic market; a move that the airline is still hoping will pay off.
Norwegian’s long-haul expansion to North America in 2013 has been much better for consumers than for the company’s ledger books. As with WOW, quick expansion and airplane orders have impacted the airline's bottom line as it works on restructuring routes and scaling back in many markets. Unexpected hits by the current grounding of its Boeing 737 MAX airplanes and issues with 787 engines certainly haven’t helped either. But even before the MAX groundings, Norwegian required a financial infusion earlier this year to keep its operations afloat.
Today, Norwegian finds itself shifting from a growth model into one of profitability. Norwegian’s forked path will either leave the company riding out the storm as a more cost-conscious consolidated company or giving in and accepting a takeover bid from an airline conglomerate. Either way, the road may be bumpy now, but there is little likelihood the airline will go kaput overnight like Primera or WOW.
While IAG (International Airlines Group) has toyed around with the idea of taking over Norwegian, it has its own low-cost-long-haul operation LEVEL airlines to focus on. LEVEL is one of the rare instances of a budget carrier that is backed by bigger brothers —Iberia and British Airways. More of a side project than a serious contender, LEVEL offers competitive prices but wouldn’t be classified as a market disruptor. If the low-cost-transatlantic market evaporated, LEVEL would most likely get absorbed into other IAG owned fleets than compete head-to-head against its older siblings.
Related: How to Fly Norwegian Air
Waffling for what seems like years, JetBlue announced its intentions to become the latest low-cost carrier to throw its hat in the transatlantic ring in a company-wide meeting in April. Specifics are still vague at the moment, but the New York-based carrier plans on converting several of its Airbus A321 on order to the long-range version of the aircraft the A321LR. Following the delivery of these models, the airline plans on tackling the already heavily contested Boston and NYC to London links in 2021.
JetBlue has yet to disclose which London area airport it will serve and how often, but if it wants to have a fair shot at making its Atlantic expansion profitable the carrier will have to pony up for an expensive slot at Heathrow or sell its biz class clientele that Gatwick is a better alternative. And much of JetBlue’s success in the region will come down to how much of that clientele will fill up the front the plane in its Mint business class cabin. Unlike other low-cost-carriers who have struggled, JetBlue has a top-ranked premium product to entice transatlantic flyers, helping it turn greater profits on its European experiment. If the London routes prove successful, we will likely see the airline add other cities across the Atlantic like Paris and Amsterdam.
But that’s a big if.
The list of low-cost airlines that have been quashed by the behemoths of the industry is twice as long as the success stories. However, if there’s any carrier poised to take on the challenge, it’s JetBlue. The company has an already entrenched strong domestic network and solid brand recognition, so by dipping its toe in the water on flights across the pond, the airline isn’t taking as big of risk compared to foreign-based carrier or upstart.
But that’s not to say another won't come along; there will always be an airline that thinks they have the key to unlocking the transatlantic low-cost-model success secret. Hopefully, they’ll learn from previous incarnations that offering dirt-cheap one-way fares for $99 or less is a great way to sell tickets fast it ultimately doesn’t amount to a long-term model for sustainability.
The Legacy of Low-Cost-Carriers?
Ultimately the indelible imprint the low-cost-carriers might’ve left in the transatlantic aviation market is the opening of the door for the major airlines to step their standards down.
While we’ve seen the average airfare on flights to Europe drop to some of the lowest levels in years, so has service and amenities.
Many of the eye-popping low fare prices come with stringent Basic Economy guidelines. Firstly introduced in to mimic what the LCCs offered, the expansion of these fares now extends to almost all flights to Europe, even on routes not catered by a budget alternative. American, United, Delta, and their alliance counterparts have all implemented some version of these lowest bucketed fares that restrict checked bags, seat assignments, and ticket changes.
This has been a sweeping change for the negative on the entire transatlantic marketplace, leading to what could potentially be the worst possible outcome for consumers.
If the current trend of budget European airlines going bust continues and the cheap flight boom bursts, course correction will undoubtedly take place. Without the pesky budget carriers challenging and keeping traditional airlines accountable on fare pricing, the halcyon days of routine sub-300-dollar roundtrip journeys across the Atlantic will be relegated to rare mistake fares. Today’s competitive transatlantic tickets may quickly be replaced by the higher $800-900 base fares from yesteryear. But this time around, minus the previously included checked baggage, seat selection, and other perks.
It's a long con from the mega-conglomerates of the airline industry. Reap all ancillary revenue tactics that the no-frills LCCs introduced but without the trouble of having to reduce ticket prices to match once they’re all dead and gone.
If you’ve been on the fence about taking that Eurotrip, there’s no better time than now. Competition has kept fares low, but there’s no guarantee that will last. We may soon be waving adios to those trips to Spain costing less than a domestic coast-to-coast itinerary.