Are Legacy Carriers Dead ?
Do you remember when was the last time a legacy carrier posted a record profit ?
Nowadays, 99% of new airline startups are low cost carriers and you rarely see a new legacy carrier born.
It is no secret that every legacy carrier has seen their passenger numbers go down lately. Most of these airlines assume two things,
1. The recession discourages people to fly
2. Their passengers are off to LCCs
Let’s talk about RyanAir, easyJet and AirAsia for a moment.
easyJet increased its total revenues by 32 per cent to $885m during the first quarter of this year while RyanAir saw a nine per cent increase in passenger figures for June’s year-on-year figures meanwhile British Airways took an eight per cent slump in passengers during the same period. AirAsia is thriving as usual, recording a 328% increase in operating profit for 2009 Q2.
I can give you a ton of examples for legacy carriers that made record losses in the same periods ranging from FinnAir to SriLankan to Air India.
So what are all these legacy carriers doing wrong to make losses while most LCCs are making record growth ? Is it only the price ?
No. It is called lack of innovation .
Imagine what would have happened to AirAsia if they failed to innovate ? I very well remember many critics suggesting AirAsia will not succeed when they entered the market right in on 9/11. But making all those critics false, they are now bustling with success. If they feared the situation, did not respond and approached a ‘wait and see’ direction, they would have been already history. But AirAsia innovated – beginning from the innovation of low fares to this part of the world, on to that beautiful red on aircraft to ticketless travel to the region.
Have you heard of anything that Air India innovated in recent times ? Definitely not.
” It is not the strongest of the species that survives, nor the most intelligent; but the one most adaptive to change ”
The above quote by Charles Darwin applies in the same way to aviation too.
Like Lord Buddha said, the only definite thing in this world is change.
When an airline still tries to survive on a business plan that they drew decades ago, using the same principles, it does not work. The market changes and they have to be adaptive, and to take the lead, be innovative.
We have seen a couple of legacy carriers such as LAN and Emirates still successful through these turbulent times and they certainly are the ones who have adapted, innovated and redefined the term legacy carrier in a way that matches their local population.
The other legacy carriers really are, dying.
And by thinking that legacy carriers cannot innovate, they really are committing suicide.
Hence, if someone thinks that legacy carriers are dead, that is not correct. But in fact, they are dying, and in most cases by their own will.
What is your opinion ? Please leave a comment.