Will low cost #airlines acquire #market share from flag carriers?
Low cost airlines may benefit from the economic uncertainty surrounding European nations. In addition to the uncertainty, increasing fuel prices have also started affecting businesses worldwide. While tourists were already in favour of low cost airlines, now more and more business travellers are moving away from flag carriers in order to save costs.
Flag carriers have already started increasing their fares to compensate for rising fuel prices. Although low cost carriers might have adopted same strategy to tackle fuel prices, they have had a marginal impact on fares. This might be because flag carriers are aiming at large numbers while low cost airlines are looking at business sustenance.
Ultimately, competition will still continue to increase among the low cost airlines. However, this competition may require low cost airlines to acquire market share from flag carriers. This situation might accelerate cross segment competition. Have any low cost airline speculated this situation? If yes, what would be their strategy to enter the market which has already been established by the flag carriers for long years?
What is the probability of a flag carrier being able to establish its presence on new routes? There is a possibility that flag carriers have already identified this threat from budget carriers. This may be a reason why flag carriers are entering low cost business segment.
To know more about the competition between low cost airlines and flag carriers visit Low Cost Airlines Congress 2011.