The potential opportunity for transatlantic low-cost routes has been revealed in a new study by travel search firm Skyscanner.
The research demonstrates the importance for airlines to consider ‘price elasticity’ – the ability to understand and measure passenger intent to know how many more people would fly if prices were to drop.
The transatlantic market was found to be especially ‘price elastic’ with ample demand from travellers compared to other routes.
But to be profitable, airlines will need to operate under a significantly lower cost or increase ancillary revenues, the study found.
Traditionally, many airlines’ attempts to introduce low cost long haul services have fallen flat.
However, the transatlantic sector has seen renewed competition from several carriers, including Norwegian which is expanded from Gatwick, Edinburgh, Belfast, airports in Ireland and recently announced plans for Rome to New York flights.
The analysis, derived from Skyscanner’s traveller search and pricing data, shows that the market has the potential to be popular for carriers willing to drop their prices due to strong passenger intent for low cost tickets on transatlantic routes.
Faical Allou, head of business development for Skyscanner’s industry travel insight arm said: “Low cost long haul has been a segment that carriers have found challenging in the past, however our study underlines the importance of having data to understand ‘price elasticity’ – being able to consider traveller intent and how this links to pricing on demand for routes.
“The great news is that by using this data, we’ve been able to demonstrate that the transatlantic low cost segment, a market that has received buzz of late with the likes of IAG’s new Level brand, Jet2’s low cost approach, as well as Norwegian’s new US routes to and from Europe, has much potential for success as long as airlines are able to keep costs down and maintain strong ancillary revenue.
“This is certainly good news for both travellers who have long sought these services and for the carriers who may be able to capitalise early on this opportunity.”
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