ROUTES 2010: LFAs and charters can co-exist

Low-fare airlines are not about to replace tour operators, according to AirAsia X and other speakers at the Tourism & Air Services Summit (TAS), which was co-located with Routes 2010 – the 16th World Route Development Forum.

Senthil Balan, head of route planning and regulatory affairs, AirAsia X, remarked that tour operators and LFAs are totally separate things. “They have different approaches on how to reach the passenger and they offer different route types, with LFAs operating most routes all year round. So I believe a low-fare airline is an entirely different business model from a charter carrier.”

Session chairman Shaun Monnery, CCO, Astraeus Airlines, had put forward the proposition that the two airline types are moving closer, noting that recent comments from Ryanair chief executive Michael O’Leary had included talk about brand development beyond simple low fares. Monnery had even questioned the future of leisure itself.

Josef Formosa Gauci, CEO Malta Tourism Authority, agreed with Balan, believing the question almost assumed that tour operators are going to be replaced. “I don’t think they are,” he confirmed. “When the internet came about, it brought about new ways in which people perceived travel. Low-fare airlines went in and took a niche where tour operators weren’t really represented. In Malta, for example, LFAs were introduced mainly on new or underserved routes.”

Gauci noted that leisure travellers often like the stability of a tour operator. “So the charter airlines have a niche which will carry on,” he added.

Eric Oberhuber, head of planning and international relations, Condor Flugdienst, noted that leisure airlines have always been low-cost operations. “The difference is that we don’t get to choose the destinations, the tour operator mainly does that.”

Tour operators, especially in Europe, have developed a dual strategy, observed Oberhuber. “They offer regular package holidays, but now also offer more dynamic packaging, with favourable hotel rates.”

AirAsia X’s Balan pointed out that sometimes both strategies are tried. “We’ll use a tour operator type of frequency to test it. Tehran was done that way. And if it’s successful we’ll take it over fully. Now running scheduled flight to Tehran with 95% loads,” he commented.

Bernie Baldwin, editor, Low-Fare & Regional Airlines/
Vancouver, Canada

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