With the appetite for low-cost flights rising, now could be the best time for airlines to enter the low-cost, long-haul market: especially for those targeting travellers visiting friends and relatives. However, flypop’s intention of operating an all-economy class aircraft without a premium cabin could be a barrier to success, says GlobalData, a leading data and analytics company.
Gus Gardner, Associate Travel and Tourism Analyst at GlobalData, comments: “The lack of a premium cabin could hamper the company’s efforts to generate sufficient profits. With no high-margin cabin to subsidize the low-priced economy fares, the airline could encounter similar problems to Norwegian. Even with a higher density of economy seats than Norwegian, flypop is still relying on price-sensitive, low margin economy passengers. This places great emphasis on maintaining a high load factor and, though this will likely not be an issue during peak periods of demand, the airline could face difficulty in the off season.”
flypop’s plan to target UK travellers visiting friends and relatives (VFR) in India could be a smart move. According to GlobalData, in 2019 23.6% of UK outbound travelers did so for VFR purposes. Although India is currently in the midst of a second COVID-19 wave, and with the current travel ban between the UK and India, it may present a challenge to flypop’s plans in the short term. However, VFR travel is likely to be one of the first purposes of travel to rebound post-COVID with travelers keen to reconnect with their loved ones across the world.
Gardner continues: “The long-haul low-cost model will be attractive to the price-sensitive VFR traveler. By targeting secondary cities across India, the airline will gain a unique selling point on routes due to a lack of direct flights to the UK and may become an attractive operator in the process. With a fixed-price structure inclusive of baggage and meals, the airline could become a leader in VFR travel. VFR travelers tend to plan trips much further in advance than leisure travelers, opt for flights with a generous baggage allowance, and travel at the same time each year, giving flypop consistent market demand.
“However, flypop could encounter a lack of additional revenue opportunities. The inclusion of so much within the base fare will reduce the possibility for ancillary revenue generation as it negates the need for passengers to purchase extras. That said, these extras will be attractive to flypop’s target traveler and could be the key ingredient the carrier needs for its success. For many low-cost carriers (LCCs), meals and baggage are often sold as add-ons providing an easy way to squeeze more cash out of customers.”
flypop had recently announce signing of a multiple aircraft A330-300 lease deal with Avolon, the world’s third largest aircraft lessor.
Based in Ireland, Avolon provides lease and lease management services to airlines and airlines investors globally. The flypop team have been in discussions with a number of leasing companies over the past few months, however Avolon offered the most competitive rate and a pipeline of aircraft into 2023.
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