OneWorld LCC Affiliates

[samh004]

While this idea would mainly be a boon to Jetstar (Qantas), I wanted to explore it a little more to see what others thought. What I propose, is that OneWorld would at some stage in the future launch an LCC-tier of member-affiliates. This wouldn't accept those that aren't already part of the alliance, unless they have a full service offering to contribute too. While this might only mean Jetstar (Qantas) for now, this could give other carriers a chance to convert an existing affiliate to a different model (if they're not already there with having to purchase bags and food onboard).

According to The Economist, in October 2012 OneWorld only had 12.2% of global seat capacity, so they're not the biggest by any stretch, there's time and space to grow.

First to set the scene. In the past, air travel was a luxury. It cost a lot of money to fly long haul or short haul, and you got a lot for what you paid, relatively. Onboard product continues to improve in the premium classes, seems to have stalled in standard class, and you now have to pay for extras, but may also pay less for your ticket. More people are travelling by air than in the past. This also means that destinations are serviced according to their market, and sometimes that market is more LCC than you'd expect.

The considerations are, how do you treat loyalty to the alliance, while taking into account this is a completely different model to the full service carriers?

Well to start with, I'm not suggesting a new tier (Ruby, Sapphire and Emerald are safe), and I'm not sure how earning would work on those airlines, though QF's Plus/Max bundles seem a good option to consider. Burning is already sorted by QF, at a lower rate than you'd expect for full service, which obviously wouldn't be a OneWorld directive either but makes sense.

Check-in
Would priority check-in work? I have it in my mind that if JQd opened a priority lane for Ruby and above, or even Sapphire and above, the line would be longer than the regular line. I think a priority line would be a benefit to have, if only because it just feeds back into the regular pool of counters and probably wouldn't be any faster.

Baggage
Carriers probably make a ton on this fee alone, so giving it freely would be a major income loss. Does this mean discounts for status, or 10kg for Ruby, 15kg for Sapphire and 20kg for Emerald with extra being a cash component. It might just be easier to leave that to individual airlines. Also, no priority obviously. Now I was talking a standard baggage allowance with the ticket, but Emerald recently had a revamp to include an extra baggage allowance benefit, so could this be the solution, only Emerald members get a free bag?

Lounge Access
Here's the contentious one. I think Sapphire and Emerald should have access to the Sapphire lounge. I know this doesn't tie in very nicely with matching the disc on your card to the sign at the door, but for one thing, it would solve QF's F lounge drama, but two, why should you be in the F lounge if travelling on an LCC.

On the other hand, playing devils advocate, I did say that loyalty to the alliance shouldn't be forgotten, after all, it's not your fault your full service carrier doesn't fly to Bali (yes you could connect). So an Emerald member should get F lounge access, as they're flying with the alliance instead of a competitor? It's an interesting dilemma, as you want to reward and also limit at the same time.

Seating
Another area of consideration is seating. Access is usually guaranteed to status members of OneWorld, yet LCC's charge to select seats, admittedly not as much as baggage. Could forgoing seat selection fees result in such a large revenue drop?

There's also priority boarding and waitlisting. But the gist is that it probably wouldn't affect an LCC too much to implement these changes, and wouldn't affect other carriers too much outside of Asia, though I can see Cathay Pacific being uncomfortable with this, unless they gave Dragon Air a revamp.

So, how could this work for OneWorld?
For starters, as above, it wouldn't affect any carriers that don't have an LCC operating near them, as they wouldn't have to worry about someone using their lounges etc. It could possibly expand the network, and even the clientele. Say you have a frequent LCC traveller who then moves up to destinations such LHR or JFK where they can be tapped and introduced to more partners.

Current full service carriers with affiliates could change the model of their affiliate, or perhaps the model is already there, but just move it from one group to the other, thereby limiting benefits, but still providing some. After all, the idea is to provide a reward for flying the alliance, and to fly it to more destinations. I'm sure BA would love that idea. AA maybe too. Jetstar (Qantas) has Asia covered, but perhaps they could find a partner in the Middle East.

The reach that LCC's have into some areas now, and in the future will be far more than a full service carrier could manage, and is potentially out of reach for all alliance members right now. Jetstar may be included in the OneWorld Explorer fare, but you don't get much out of flying with them. If the experience was more positive for an alliance member, who knows...

OneWorld can still be "An alliance of the world's leading airlines working as one" with LCC member-affiliates, as they're providing leading services to new destinations, and working as one. The fact they're LCC's doesn't change the premium vibe, it expands the possibilities.

 

[moa999]

Apart from Qantas with Jetstar, and JAL with interest in Jetstar Japan, who else in oneworld does this help...
For any other LCC (say Air Asia or Cebu Pacific) I can't see how suddenly enabling a oneworld elite with status to have lounge access (that will get charged to the LCC) is going to make sense when selling tickets for under $50 a segment.

The reason the LCCs can be so cheap is they don't have all of these other benefits -- and not for elites this generally means the ticket prices are a bit higher so everyone who is not an elite status member is effectively subsidising your lounge access.

The other big issue is that all of the LCCs (including Jetstar) run on simplified GDSs that don't have the features to do much in the way of what is required for alliance membership.

 

[samh004]

Okay, so we're establishing that lounge access cannot be a benefit, as it would cost too much to provide, and undervalue lounge access for those paying a full service fare. That's fine, I'm just trying to work out if it would work on any level, and what benefits the alliance would see from it.

In terms of the GDS, I'd say they don't need to do everything the full service carriers do, so depending on what benefits were proffered, it wouldn't be such a big issue. You'd work with what you could give. Consider what Qantas can and can't do with Jetstar right now as an example.

 

[Melburnian1]

LCCs differ.

For instance PALExpress (2P) (which used to be Air Philippines) is now essentially owned (as is Philippine Airlines - PR) by San Miguel Corporation, and PALExpress now serves snacks on board, and usually has fares that are counted for PR's Mabuhay Miles frequent flyer program. Both these 'enhancements' (a word that I hesitate to use on AFF because contributors normally use it sarcastically in respect of QF or VA) are quite recent.

PR only now flies on a small number of domestic air routes in Philippines: most flights are 2P. To complicate matters, PR lately offers 'discount economy' fares that do not qualify for Mabuhay Miles points, but its slightly more expensive Premium Economy fares do.

In contrast, Cebu Pacific (5J) abolished its frequent flyer program to lower its costs, and is the leading carrier in Philippines domestically.

So given that Philippines has the highest penetration of LCCs in the world (in excess of 80 pr cent domestic airline market share), does that country offer some guidance as to a 'hybrid' future.

At times, VA has tried the 'hybrid' route.

 

[harvyk]

Whilst it's certainly an interesting idea, the basic premise of the LCC is it is a low cost carrier. They appeal to the segment of the market where price is king. As such their standard traveler does not want (or more correctly is not prepared to pay for) lounge access, food, drinks, entertainment, baggage or any of the other things we take for granted when flying a full service airline as part of the base fare.

The problem with having a OW-LCC division is that it costs money to do so for ultimately a very small percentage of customers who would be willing to pay, and since the core demographic of LCC customers are only really interested in price, been an LCC in an alliance like OW will do them no favours since that pax who chose JQ for one flight because it was the cheapest would happily fly AAX the next day if it was going to save them $50. They would be unlikely to spend an extra $50 to fly JQ again just because it keeps things in the OW family.

Now it certainly sucks big time when a full service airline (let's for arguments sake call them "Qantas") replaces it's full service service with a lower cost airline (let's call them "Orange Cancer"), where nothing is included in the base fare.

That said I have no doubts that should a route still be profitable as a "Qantas" route, there is no way that "Orange Cancer" would ever be given a look-in, at least not with "Qantas's" blessing as is often done now. The problem with leisure routes is that the overwhelmingly large majority of pax would chose a LCC alternative to fly for $59 over the full service option. There is only so much discounting "Qantas" can do before it becomes unprofitable for them to contest the route (at least as a full service airline, which is what they bill themselves as). So whilst it might appear that there are loads of people who are willing to pay the price premium, it does not make enough people to make it commercially viable as an actual route, and since people these days are asking for frequency, a few token flights per week is probably not going to cut it.