I have been talking (and thinking) about the future of the low-cost market around the world with many friends as well as colleagues from the airline industry for a few years. I’m happy to see one of the ideas I always mentioned in these conversations actually happening.
The equation is very easy to understand. In the beginning there was one, then there were two and by today there are a large number of low-cost carriers. Some of them have a really strong brand, but let’s face it, the average is only known to a certain region -close to their home base(s)-, where they concentrate all their branding and advertising. But you have to get business somehow, so you -as just one of the zillions of low-cost airlines- will eventually be forced to add some extra service to be different from the rest. You will either offer a frequent flier program, or drinks on board, or sandwiches on board, or guaranteed seating or satellite XM radio or TV or something, that differentiates you from the other low-costs. Maybe you team up with another low-cost to offer a wider network, more destinations and connections, one of the things that still keeps the costs of traditional airlines a little bit higher than of the low-costs. Until now low-costs only offered point-to-point flights, or maybe a single connection in their hub from their own flight, to their own flight. But now this is changing!
As ATW News reported recently American JetBlue Airways and Aer Lingus from Ireland unveiled details of their strategic partnership late last week, nearly one year after the “alliance” initially was revealed, proving that it will actually happen. The tie-up will take effect 03APR2008 and will feature a booking engine on the website of Aer Lingus (airline code: EI) that will allow customers to purchase tickets on EI flights to the US and onboard JetBlue services from New York JFK in one transaction. EI will have a transfer desk in the arrivals lobby of JFK‘s Terminal 4 where passengers can check in and drop their luggage upon clearing customs. Those flying to Ireland will be able to check their bags through from their initial US departure point when first checking in for a JetBlue flight. “Our partnership with Aer Lingus is a perfect fit with our brand and culture and we are thrilled to extend our network,” JetBlue CEO Dave Barger said. Aer Lingus CEO Dermot Mannion said, “We are proud to be pioneering the model of linking low-fare networks.”
It’s interesting to see this latest step in the transformation of Aer Lingus. The story so far: a state-owned, traditional airline, that has a domestic, low-cost rival named Ryanair… The strategy has been laid a few years ago: EI needs to move towards the low-cost model to be able to compete with Ryanair and escape bankruptcy. Well, they kept their long-haul operations as the flag carrier of Ireland but have really transformed to a low-cost airline on short-haul routes. They used to be a member of the oneworld alliance, which they quit just more than a year ago, due to being too “low-cost-ish” and not fitting the requirements of oneworld anymore. But it looks like they still need the help of other airlines’ networks, and having the experience of a global alliance membership for years, they are now starting their own new alliance, which happens to be in the low-cost market. Just look at any of the currently operating alliances, they all have a strong European and a strong US founding member. This alliance follows the same idea, but in a different market. Let’s see how far they will go with this alliance, whether if it will remain a marketing solution only (linking booking engines, issuing tickets in one transaction (with internal accounting between the two members) and allowing through-check-in of passengers and luggage), or if they will soon link up TrueBlue and The Gold Circle Club to allow frequent flier point/mile collection on each other’s flights and will roll out other joint services? Maybe new, smaller members will be revealed later on? We’ll see.