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The economic viability of long-haul low cost operations: Evidence from the transatlantic market

Author

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  • De Poret, M.
  • O'Connell, J.F.
  • Warnock-Smith, D.

Abstract

The recent strong performance of long-haul low-cost carriers AirAsia X and JetStar have re-raised the question of the long-term feasibility of long-haul low-cost operations. For the first time, this study contains a detailed financial assessment of low-cost operations on the transatlantic market using best-in class aircraft technology, the Boeing 787. The study's main findings demonstrate how challenging the successful running of a European long-haul low-cost carrier can be. In particular, on-going operating profit appears to be very sensitive to variations in demand and fuel prices, despite the use of new, highly efficient B787s. The findings show any prospective long-haul low-cost carrier that pursuing a demand focussed network strategy can ensure financial viability. This involves the creation of higher seating densities, higher cargo revenues and additional ancillary revenues.

Suggested Citation

  • De Poret, M. & O'Connell, J.F. & Warnock-Smith, D., 2015. "The economic viability of long-haul low cost operations: Evidence from the transatlantic market," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 272-281.
    • Handle: RePEc:eee:jaitra:v:42:y:2015:i:c:p:272-281
    DOI: 10.1016/j.jairtraman.2014.11.007
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    References listed on IDEAS

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    1. Jiang, Hongwei, 2013. "Service quality of low-cost long-haul airlines – The case of Jetstar Airways and AirAsia X," Journal of Air Transport Management, Elsevier, vol. 26(C), pages 20-24.
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