Getting With the Program - Carlson Wagonlit Travel

CWTvIsIon Issue 3 - January 20083Asia-Pacific carriers were among the first to move low-cost services up-market, creatinga hybrid “low fares + services” approach or in some cases, a “low fares + full service”model that competes head-on with legacy carriers. Notably, Australia’s Virgin Bluecoined the term “new world carrier” to make the distinction between its full-serviceoffering and the “no frills” product of carriers such as AirAsia. Other carriers that fallinto this “new world” category include Virgin Blue’s sister operations Pacific Blue(Australia and New Zealand) and Polynesian Blue (Pacific Islands), as well as JetstarAirlines (Australia and Singapore), Kingfisher Airlines (India) and Oasis Hong Kong.Typically, the hybrid approach breaks away from the original low-cost model byintegrating most, if not all, of the following features:In-flight service quality is close to that of traditional airlines, with meals andentertainment bundled into the fare. Carriers also propose business class or“premium” cabins with designated seating.Primary airports are used, with priority check-in and special lounges for businesstravelers. (This said, the use of secondary airports is not always a disadvantage, asthey can be less congested and in some cases more conveniently located for thetraveler.)Interlining and codeshare agreements on international segments offer travelersseamless connecting flights, as well as a larger choice of destinations and schedules.Although only a handful of low-cost carriers (e.g., Jetstar and Virgin Blue) codeshareat present, the practice is likely to become more common, especially if low-costcarriers join alliances.Reservations via global distribution systems (GDSs) are possible, instead ofthrough airline Websites only. This is a key service for companies, who can accessflight information efficiently, reserve flights, receive invoices for payment at a laterdate, refer to traveler profiles and better track travelers.Corporate deals can be negotiated, with special payment options andcomprehensive reward programs available. For example, Virgin Blue offersvolume-based pricing, combined with a range of “soft” benefits for companies.Another example is Qantas enabling companies to include traffic with its subsidiaryJetstar in overall market share targets.(See the sidebar on Page 39 for specific examples of corporate offerings.)At the same time, low-cost fares can be 25-40 percent lower than comparable fullserviceeconomy fares, especially when they are booked in advance.