While some prominent industry voices have written off the low-cost carrier (LCC) model as fundamentally broken, IATA director general Willie Walsh maintains that discounters are proving the model’s effectiveness – outside of the USA.
Responding to United Airlines chief executive Scott Kirby’s recent declaration that the low-cost model has been vanquished by the low-cost products of United and other major US airlines, Walsh said during the IATA annual general meeting in Delhi that Kirby “maybe has a point” when looking at the US airline sector in isolation.
”If you look at the low-cost segment, definitely the model works,” he says. “You can’t deny that the model works, and it works very well, particularly if you look at Europe. Ryanair, EasyJet, Wizz, Vueling [are] very successful low-cost airlines growing at a very healthy rate and performing financially very, very well.”
Walsh asserts that the model is less effective in the US, where the operating costs of LCCs do not differ greatly from those of United, Delta Air Lines and American Airlines.
”I believe the low-cost model is an effective model and will continue to be part of the industry,” Walsh says.
Prompted to comment on Delta and United running away with the sector’s profits while most competitors, including discounters, fall behind, Walsh says the “Big Two” US carriers are “extremely well-run”.
“They’ve got very strong brands, strong networks, a good mix of domestic and international clients,” he says.
Regarding United specifically, Walsh says that the company’s massive aircraft orderbook gives Kirby “the ability to grow that some of his competitors won’t be able to do”.
In addition to declaring the demise of the LCC model, the outspoken Kirby has also claimed victory in wrestling away the brand-loyal customers of Southwest Airlines.
