The potential of the long-haul low-cost business model and its impact on the Netherlands

It is expected that low-cost carriers (LCCs) will operate more on long-haul. However, the long-haul low-cost (LHLC) business model will not revolutionize the air transport market as the LCCs did on short-haul. That’s because many of the features which enable LCCs to compete so effectively with the incumbent full-service carriers (FSCs) are less applicable on long-haul. Cost savings are therefore smaller. Because of that only few airlines worldwide apply the LHLC business model successfully. Due to, among other things, the development of more energy efficient aircraft and new transfer options (such as self-transfer) it is expected that long-haul low-cost carriers (LHLCCs) will enter the Dutch market nonetheless, particularly at Amsterdam Airport Schiphol and (to a lesser extent) Eindhoven Airport. Its impact on the connectivity of Schiphol and the network of KLM is probably rather limited.

In this report the KiM Netherlands Institute for Transport Policy Analysis studies the potential of the LHLC business model in light of developments in the labour market, aircraft market and transfer market. KiM performed this research project because, from a policy perspective, it is important to have insights into uncertainties surrounding the potential of LHLC, and its possible consequences for the connectivity of Schiphol and the network of KLM. The report is based on a literature study complemented with several interviews with aviation experts of varying backgrounds. Furthermore, Airneth organized a seminar on the potential of LHLC.