Legacy carriers restructure short haul to take on LCCs

CAPA have a couple of interesting articles currently looking at how legacy carriers Royal Brunei, IAG, Lufthansa and Air France – KLM are restructuring and reorganising their short haul operations to better tackle the threat from LCCs.

It strikes me that:

1) This is essential. On a 45 to 90 minute flight no passenger in their right mind will choose quality of service over price as long as the service is reliable and timely. Therefore legacy carriers with their higher cost bases must reorganise their business if they’re to have any realistic hope of retaining, let alone growing, market share.

2) A lot will depend on renegotiating pay, benefit, and in particular pension arrangements with pilots, cabin crew and ground staff. The struggle going on at IAG with respect to the launch of Iberia Express is one example of this, but there are others.

3) The pilots, cabin crew and ground staff unions are doing precisely their job when they push hard to retain their benefits. Airline leaders will need to do a much better job of communicating to their employees how change is essential and ultimately in the interests of all. They will also need to do a better job of talking over the heads of the unions to the public at large and making clear the benefits of change.

CAPA’s article notes how “the French social system doesn’t really lend itself to large iconic  legacy airlines making drastic restructuring moves”. Transavia of course could play a role here.

September’s World Low Cost Airlines Congress looks like an interesting forum to debate these issues further (I would say that because it’s my event) and in particular the session on Growth strategies for consolidated and hybrid airlines looks interesting.