US low cost carriers are “struggling strategically like never before” as they face competition from established airlines having taken on larger aircraft on popular routes.
Speaking in a keynote session at World Aviation Festival in Amsterdam this week Breeze Airways founder and chief executive David Neelemen predicted imminent consolidation.
“The big guys have figured out how to deal with the LCCs [Low Cost Carriers”, he said. “Everybody has figured out the Spirit, Jet Blu South West model.”
Neelemen told delegates that rumours suggest Spirit Airlines is planning a pre-pack bankruptcy and will merge with Frontier Airlines, which he said “should be good for the industry” awash with capacity.
Meanwhile, Neelemen said, low cost pioneer are “struggling like never before”, and he said Jet Blu’s change of course to bring in premium classes will not be an easy transition.
“You cannot underestimate how difficult it is to change course. It’s a very long process to retrofit seats with the supply chain issues,” he said.
Neelemen said the challenge the US low cost carriers have run into is as they take on larger aircraft the more established players have found they are able to outcompete them.
When travellers have a choice of flying on a low cost carrier or a full service rival on the same route they choose the latter due to factors like loyalty, customer service and premium seats.
“There are about 25% of people who will pau up for the experience. People will pay another $50 for free bags or wi-fi and if you want a first class seat you can have it for $100. We are making people feel happier about flying.”
Neelemen said the market in the US contrasts with the situation in Europe where the continents largest carrier Ryanair has kept out of “think markets” by serving secondary airports.
Having been launched in the middle of the COVID pandemic, Breeze survived and now operates in 60 different cities in north America on routes 90% of which it has no competition on.
Neelemen said the carrier effectively operates two fleets of Airbus and Embraer aircraft which he said was “coming in really handy” due to the ongoing new aircraft delivery issues.
“We are flying in market where we do not have non-stop competition,” he added, “and we have NPS sores that are 60 or 70. There’s really no any airlines that rivals that NPS score.”
