Sabre study shows 'hybrid' airlines in the Middle East edging out traditional LCCs

The global study of 540 airlines revealed that out of 123 self-nominated LCCs, 59% had added enough complexity to their business model in recent years that they had now evolved into a full service airline (7%) or were part of an emerging breed of "hybrid" carriers, which blend low cost carrier traits with that of full service carriers (52%).

Only 41% retained true LCC characteristics including point-to-point routes, single aircraft types, single cabin configuration, simple fares with no interline or codeshare agreements and direct distribution usually through the internet.

Furthermore, passenger numbers from 2007 show that these "hybrid" airlines carried 64% of all passengers in the broader LCC segment.

Maher Koubaa, Vice President of Sabre Airline Solutions in Middle East & Africa, said there had been a lot of speculation about the evolution of the LCC model, but up until now no quantifiable research existed to show how these airlines were changing their businesses to stay competitive.

"The LCC segment is one of the most competitive in the airline industry and this has spurred many pure LCCs to explore new ways of evolving their business to remain competitive and sustainable. For many, this has meant adopting some full-service carrier business practices to help grow their passenger base and expand their reach in the marketplace, although they have often added their own twist on how these business practices are implemented," said Maher.

The study shows that full-service carrier attributes being introduced by LCCs include: international routes, use of the Global Distribution System (GDS), code share agreements, connecting services, multiple fares available at any time, advanced ticketing procedures, multiple aircraft types, multiple classes of service, interline agreements, and long-haul destinations.

"Airlines that introduce more than three of these full-service characteristics should be considered a "hybrid" carrier because each attribute adds a level of complexity and cost to the operating model that is inconsistent with the fundamental principles used to define low-cost carriers,"

said Maher.

Within the Middle East, low-cost airlines that may be considered "Hybrid" carriers include Air Arabia, Rak Airways in the UAE; Red Sea and Nile Air in Egypt; Nas and Sama in the Kingdom of Saudi Arabia; Atlas Blue and Jet4U in Morocco; Jazeera Airways in Kuwait, and Bahrain Air. In Europe the trend is just as strong with easyJet, Germanwings, Norwegian Air Shuttle, bmi Baby, Sterling Airlines, KD Avia, Centralwings, Blue Panorama Airlines and Flybaboo also falling into this new category, joining global industry leaders such as Southwest Airlines, Jet Blue, West Jet, Air Tran, Virgin Blue, Air Asia and GOL.

"As fast as the LCC Middle East sector is growing, just as many are shifting towards a hybrid model to make a play for the more lucrative business travel market as demand for premium services, especially in the Gulf region, rises.

"That's why some have introduced GDS distribution, multiple products, and new classes of service and interline agreements. They are also willing to invest in sophisticated revenue management tools and techniques that help them maximize the revenue generated by every seat on every aircraft, every day of the year," Maher said.

"In comparison, pure LCC airlines don't use these tools. They stay true to the LCC model - a simple, no-frills offering using discounted airfares to appeal to a single travel segment, in this case the price-conscious leisure traveler."