OUR NEW Regional LCC Model

Traditional / Hub Airlines 

IATA standards, rules and regulations for the exchange of passengers, baggage and money lead to high complexity and costs but captures transfer passengers and maximises yield; i.e. higher passenger numbers by leveraging scope and (global) reach.

Low Cost Carriers (LCC)

Carrier specific rules and high standardisation allow simple procedures and low unit costs. LCC reach high passenger numbers by leveraging price elasticity in demand. However, they miss connections and transfer opportunities.  

With rising competition and price becoming the dominant factor for passengers all carriers had to retire small aircraft as the unit costs were simply too high. This has led to a decline in traffic to and from regional airports, as many thin routes could not be served any more. 

Due to the Corona crises traditional carriers will become weaker and will leave small niches unserved as they do not have the right sized aircraft any more or have to use their smaller aircraft on stronger routes due to lower demand than before the crises. This leads to a window of opportunity for new entrants as customer flows will be distributed in a new way and market shares will change. Also from an operational point of view, there is a great chance to start a new operation:

• Mid-sized aircraft with reasonable seat costs due to lower lease rates 
• Pilot labour market is currently attractive for employers
• Slots are available including congested airports.

However, to be successful regional carriers need to offer:

• Direct flights to the most important local point to point markets
• World-wide coverage of their home market through transfer connections via one or two major hubs
• Seasonal flights / charter operations to strong touristic outgoing and incomming markets 

Due to competitive reasons they have to achieve this with a 

• competitive cost structure and
• a simple system with easy processes and no complexity

This can be achieved with our new Regional LCC Model.