The Viability of Long-Haul, Low Cost Business Models

Main Article Content

Mauricio Emboaba Moreira
John F. O’Connell
George Williams

Keywords

long-haul, low cost carrier, operating cost simulation, legacy carrier, LCC business model

Abstract

Recent events have confirmed the concerns that many within the aviation industry have held about the viability of the low cost business model for long-haul operations. This paper begins by reviewing the operating cost differences between low cost carriers (LCC) and legacy airlines in different regions of the world. This is followed by a summary of the various cost advantages of low cost carriers operating in short-haul markets. The main focus of the work, however, is a cost simulation involving the use of a Boeing 767-300 by both a LCC and a legacy carrier under varying operating assumptions. The research demonstrates that in none of the cases cited is the LCC cost advantage greater than 10%.

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