Revenue characteristics of long-haul low cost carriers (LCCs) and differences to full-service network carriers (FSNCs). (April 2018)

• Record Type: Journal Article
• Authors: Soyk, Christian; Ringbeck, Jürgen; Spinler, Stefan
• Is Part Of: Transportation research. Volume 112(2018)
• Page Start: 47
• Page End: 65
• Publication Date: 2018-04
• Subjects: Airlines -- Revenue -- Point-to-point -- Long-haul -- Low cost; Logistics -- Periodicals; Transportation -- Periodicals; 388.011
• DOI: 10.1016/j.tre.2018.02.002
• Languages: English
• ISSNs: 1366-5545

Abstract

Highlights: We define a metric for bench-marking revenue per equivalent flight capacity. A revenue model combines traffic, fare, load factor and seat databases. We evaluate LCC revenue performance in comparison to FSNCs on North Atlantic routes. Long-haul LCCs earn comparable revenue per flight capacity on the analyzed routes. Lower direct yields of long-haul LCCs are compensated by multiple factors. Abstract: Low cost carriers (LCC) have smaller cost advantages on the long- than on the short-haul compared to network carriers (FSNCs). Hence, revenue competitiveness is critical. To evaluate long-haul LCC performance, this paper contributes a new metric for bench-marking the revenue per equivalent flight capacity. Second, a revenue model combining traffic, fare, load factor, and seat data is developed. Third, the revenue per flight capacity is evaluated across selected city-pairs. Long-haul LCCs earn revenue per flight capacity comparable to FSNCs. Lower direct yields compensated by fewer low-yield connecting passengers and significantly more passengers per aircraft have been identified as key factors.