Travel: Second time around

Written by on June 3, 2013 in Leisure, Perspectives - No comments

The tales of low cost carriers and how the low cost model is becoming de facto the norm across Europe and other parts of the globe and talk often expands to when and if the same business model will evolve for transport between Europe and North America.

The answer is that it will come, and already US-based carriers are slowly but surely moving to the ancillary based cost principle – you pay extra for everything. Yes, we will probably see Ryanair’s and the like flying across the Atlantic and we will also see traditional carriers fighting their corner with the same principles.

However, what many people overlook is that we have been there before! Turn the clock back to 1983, when an airline called People’s Express established a successful business by flying cheaply across the Atlantic and charged a modest low base price and charged extra for baggage, drinks and food – even in business class. Tickets were priced either one way or return with no minimum stay rules.

Sound familiar? This is pretty much how the Ryanair and Easyjet operations now operate.

So what happened to People’s Express? They became too successful and over-ambitious, is the simple answer. The big boys of aviation left them alone while they took a nominal market share of the Transatlantic traffic that focused on leisure destinations, but once they stated to expand into traditional American business city hubs, the big boys of American aviation threw their muscle into the flight and squeezed them out by entering into price wars; a war only the big and mighty could ever win. The airline was eventually taken over by Continental Airlines in 1987.

So really it’s a case of “been there before” when it comes to long-haul travel and this time around, rather than the big boys spoiling for a flight to maintain their own business model, they are perhaps focusing on other rivals’ business models.

(Photo: Pablo Barrios)

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About the Author

Mark Thomas is Managing Director of Jamadvice HRG Bulgaria, one of Bulgaria’s leading Travel Management Companies with a 20 years market leading presence on the Bulgarian market.