Tuesday, October 17, 2017, 7:05 pm

Low-cost European airlines snatching share from American carriers

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DUBAI: Although full service carriers (FSCs) have been facing severe competition from low-cost carriers across the globe, China, one of the most important airline markets in the world, is still largely dominated by FSCs. In 2015, FSCs accounted for 92% of the total seats sold in China, PR Newswire reported.

The US was the largest market for full service airlines in terms of seats sold and revenues in 2015, followed by China. Mexico recorded the highest load factor of 89.9% in 2015. During the historic period (2011-2015), Peru led the race in terms of seats sold at a CAGR of 13.3% while New Zealand recorded the highest growth in revenue per passenger.

The transatlantic market, which is traditionally largely dominated by full service carriers, particularly the big three US airlines – Delta Air Lines, American Airlines, and United Airlines – is gradually being captured by European low-cost carriers such as Norwegian and WOW. The American airlines are trying to combat by placing pressure on a regulatory front, such as halting the expansion of Norwegian on these routes. Delta Airlines is also considering introducing cheap fares.

To face Sprint and Frontier on domestic routes, Delta Airlines introduced “basic economy” class in which passengers are not allowed to select seats in advance, while United and American Airlines plan to reduce fares.

In the wake of heightened competition from low-cost airlines on international routes, full service airlines are rolling out measures to attract budget-conscious customers.

For instance, Delta is considering redesigning cabins and reviewing fares. To attract cash-strapped Middle Eastern customers in oil-rich markets, who are hit by low oil prices, Emirates Airlines is introducing cabins set between coach and business class.

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