There are two distinct schools of thought about how low fare airlines will evolve in the future. According to departing IATA boss Bisignani talking to Aviation Week, in Europe the model used by the low cost carriers, namely opening new point to point connections to secondary airports, will run out of steam within a year or two with all possible connections spoken for. They will than have to move closer to the model of the legacy carriers which is built more on a network of connecting flights. And higher costs. Though he did not say this, but one can almost hear the silent wish: and they will fade away.
In the same edition of Aviation Week, Pierre Sparaco quotes a study from York Aviation which predicts that by 2020 low cost carriers will increase their point-to-point market share in Europe to 60 % and the overall traffic share to 53 % with further growth a near certainty. This optimistic outlook is based on the clearly identified preference of large numbers of passengers for no frills, low cost service that is unlikely to wane in the coming years. The impact of low fares is bigger in Europe than in the US because there fares had been lower to begin with.
With most hub airports, homes to the legacy carriers, reaching their capacity and the chances of building new runways scant, competition from their low fare brethren will be the least of the problems legacy airlines will be facing when contemplating growth.
A white paper published by the EC recently clearly stated that capping traffic was not an option in the future and of course this bodes well for those able to meet increasing demand. Suddenly, flying to less constrained smaller airports will look even more attractive once the hubs get truly saturated… as they soon will do.
Members of the European Low Fare Airlines Association (ELFAA) carry more than 150 million passengers per year and York Aviation forecasts say their seat-miles offered will grow by 72 % by 2020. That is a lot of airplanes whichever way you count it.
Regardless of what Bisignani may be hoping for in my view this latter type of future is the more likely scenario.
If this is indeed true, the implications for air traffic management can be profound.
In some ways, the situation is not unlike what it was in Europe a few decades ago when most airports were still unconstrained and en-route capacity shortage was a rare occurrence if it happened at all. But the writing was on the wall: the European population’s propensity to fly was growing and forecasts said demand would increase to levels never before seen. Yet, little was done to make the air traffic management infrastructure ready to meet the challenge. The result is history.
To-day we have SESAR and a whole new concept for doing ATM. The need to meet demand head on is also recognized across the board. However, does this new approach still work if we consider that most of the growth will come from low-fare airlines and secondary airports?
Anyone familiar with the SESAR Concept of Operations will tend to say that it does. This is probably true but only if a number of timely measures are taken by the industry. Here are some to ponder:
• Low-fare airlines are even more reluctant to invest in aircraft equipment up front than their legacy brethren; at the same time flying into secondary airports may initially create the impression that there is no need for new gear after all… It is too late to scramble when the crunch arrives. We have seen in the past how low-fare airlines swimming in cash ordered scores of brand new aircraft without available options like CPDLC. This way, instead of becoming industry tail-blazers while future-proofing themselves, they acted like most legacy carriers who tend to postpone ATM related investments to the very end even when there is a clear business case;
• It is natural that these days every decision to invest must be based on a business case. However, ATM business cases can be a major hindrance to progress, as described here. If low-fare airlines decide to wait for a business case to invest they might very well find that it is impossible to create one taking the current scenarios into account. But with growth happening as steeply as forecast, there is no real choice but to invest up front to be ready in time. The experience in the past must be used to temper the over-reliance on business cases for ATM related investments. A healthy dose of common sense can do wonders…
• Designers of the new ATM tools in SESAR must remember that the future will not be as tidy as we might want it to be. Devising solutions to stream traffic into the major hubs in the Amsterdam, London and Paris area is not enough. A much larger percentage of traffic than originally thought will want to get into and out of secondary airports scattered among the hubs and they will want service that is anything but secondary!
• EC White Paper or not, building new runways in Europe is a tough job, read all but impossible. With demand for point-to-point services growing, more and more single runway secondaries will get pulled into the network while operations at the existing ones will be fine-tuned to an ever higher degree of sophistication. With the typically very high level of aircraft utilization and short turn-around times of the low-fare airlines, the pressure on the ATM network and those single-runway airports to provide efficient service will be enormous.
• Big hub airports tend to become shopping malls and at some places more than 50 % of their revenue comes from the concessions rather than direct aircraft operations related income. This fact will not be lost on the operators of secondary airports and no doubt they will look for concessions that cater to a more cost conscious public… But they must keep in mind that a new terminal and finely tuned concessions will only work if the business side of the airport, the part where aircraft operate, does not end up being a place of perpetual misery in the form of delays and poor service.
• Collaborative Decision Making (CDM) and System Wide Information Management (SWIM) are the mainstays of the SESAR concept. As originally defined, they are both scalable and fit for serving both big and small airports and operations. Yet there are almost no secondary airports where thought has been given to the introduction of the CDM way of working or information sharing supported by the SWIM principles. Those things are for the big guys, they seem to be thinking. Nothing could be further from the truth. With secondary airports expected to handle more and more of the traffic, their integration into SWIM and the efficiencies afforded by CDM practices is essential. What is more, SWIM and CDM bring benefits even at relatively low traffic levels so there is no need to wait until the crunch actually hits.
• If there was one lesson from the past of ATM developments is that airspace users must stand up for their interests because nobody else will do it for them. In this specific case, low-fare airlines must take care of themselves in particularly tricky circumstances. On the one hand, legacy carriers will be pushing for their own interests while the major hub airports will be doing the same at the cost of the interests of secondary airports and the low-cost airlines. Formidable foes with a lot of power…
Tackling the above issues is not rocket science but it can be time consuming. There is no doubt that there is nothing in the SESAR Concept of Operations that would prevent proper handling of more distributed traffic patterns but the focus of the solutions to be implemented needs to be properly adjusted. Not done in time can lead to major extra costs later.
ELFAA is in SESAR so I guess they are doing their homework…