Why Long-Haul Low-Cost Airlines Always Go Bankrupt

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Wendover Productions

4 сарын өмнө

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Writing by Sam Denby
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Select footage courtesy the AP Archive

carl rowland
carl rowland 2 өдрийн өмнө
Not really fair comparisons as condor and tui’s passengers are mainly from the companies own travel agents.
Maximus 9 өдрийн өмнө
WestJet wasn’t a low cost airline in my opinion. They’re the second largest airline in Canada
jeturner99 9 өдрийн өмнө
4 ads during one video... Wendover what are you doing??
Arvind 11 өдрийн өмнө
I like Half as Interesting more for the humor content
YourPalAL 11 өдрийн өмнө
Suspiciously low prices make me nervous, especially when flying.
Robert Michaels
Robert Michaels 12 өдрийн өмнө
Because fuel costs money
YouDontKnowMe 22 өдрийн өмнө
Always huh?
Mudhaffar Adhwa
Mudhaffar Adhwa Сарын өмнө
"stimulate demand on routes with low demand* Low cost, long haul airlines: opens Pyongyang to Washington DC route
QuarioQuario54321 Сарын өмнө
The captions think he’s speaking Vietnamese
Alestra Сарын өмнө
Im sure TUI and Condors passengers are around 80% people who booked a whole Holiday with TUI or another company. Only a little percentage is booking only the flight which is why i wouldnt call them low-cost Airlines
DOM solanke
DOM solanke Сарын өмнө
As a Canadian we all know Westjet is not a low cost longhaul Airline, its literally the same prices as the legacy carrier Air Canada
NekoRocket Сарын өмнө
Aircraft Utilization also has a high R2 at 0.1439. Is there a reason this isn't considered in this analysis?
Dukie Blade
Dukie Blade 2 сарын өмнө
You need to show us the regression because we need to see whether your linear model fulfills core assumptions in order for us to believe you inferences.
Noah 2 сарын өмнө
More ✈️ Plane ✈️ Videos!!! ✈️
Serg 2 сарын өмнө
"statistics" on a dozen of observations
Arya Pourtabatabaie
Arya Pourtabatabaie 2 сарын өмнө
Please do a collab with TIK on the logistics of the WWII Eastern Front.
aswler 2 сарын өмнө
So interesting and clearly explained! I stopped travelling on a few European low-cost carriers because they started charging even for your standard-sized carry-on bag, only allowing a "purse" for free. I do not like this approach that they force me to reduce the size of my baggage even more. I am talking about Wizzair and Ryanair.
jasonsuresh 2 сарын өмнө
Norwegian made this mistake in the north of the UK. They started flights from Manchester, the most saturated market in the north of England, rather than going to nearby big cities that had no long haul flights (Leeds/Liverpool) where they could have swept up a burgeoning market. The airline industry is often held back by not enough out the box thinking and too much focused on the tried and tested - where success has been achieved it has been through changing the system like with Ryanair going into all the smaller airports that flag carriers hadn't even given a second thought to.
Milan Svitek
Milan Svitek 2 сарын өмнө
R.I.P. Wow Air... Flying between Canada and Europe for a hundred bucks... Was nice while it lasted :(
Chris Rebehn
Chris Rebehn 2 сарын өмнө
Loving this video, but you should have had a look at ownership and alliances, which appear to be a huge success factor besides network design. What sets TUI and Condor apart is that they are part of massive, fully integrated tourism companies. That means that when you go to a TUI travel agent, they will likely book you into a TUI-owned hotel and in a chartered seat on a TUI flight. Now, logically, the flights will go from where their customers are to where their hotels are while schedules and capacities are closely linked. I would assume that they fill most if not all of their seats throught this channel; I've literally never seen a TUI flight publicly sold online, you have to get a charter seat from your travel agent. Consider also that the highly profitable Condor had to be bailed out when their parent company (with its tour operators, hotels, and travel agencies) went out of business and the charter seats were lost. They also don't really have a hub model, they just depart from as close as they can to as many of their customers as possible. At the same time, Scoot, Jetstar, Azul and WestJet have codeshare and interline agreements with mainline carriers (the parent companies for the former two, and a whole lot of international airlines for the latter) which creates synergies between both business models and gifts the LCC with additional passengers who use them to connect to their final destination; the LCC owned by full service carriers are even strategically used to service low-frequency routes or leisure destinations to expand the mainline network. Lufthansa has used this logic to cut cost (and prices!) in the short-haul market when it transferred all routes outside their main hubs to Eurowings and had them open some to holiday destinations. Other LCCs partner with foreign airlines looking to expand their market access in certain regions without having to open new routes themselves - Air Berlin's fateful Etihad partnership was one of those. AirAsia X likely tried to emulate that model trusting in their own substantial route network in the region but failed to take into account that most of their feeder markets already have direct long haul flights (from BKK, SIN, CGK, HKT, DPS, etc.)
GoinManta 2 сарын өмнө
Got a question I havent seen answered yet.. In June ticket to Berlin is a one stop for $800 DC thru Frankfurt. Frankfurt Nonstop from DC is $1800. Guess what ?? Same flight to Frankfurt. Also when I try to get a one way ita cheaper to get a round trip... Can you Explain that..?
fighter5583 2 сарын өмнө
So from my understanding, when Norwegian tried doing Low cost long haul flights, they were setting themselves up to fail given the numerous carriers flying those same routes. Not to mention dealing with 3 huge airline groups.
Gregor Alexander
Gregor Alexander 2 сарын өмнө
Damn, watching this in 2029 remembering when covid was harmless compared to now. 2020- the good ol’ days
Serenity17 2 сарын өмнө
I'm so sad wow air went out of business. The cost to go to Amsterdam is now 2.5x what is used to be... I didn't know how good I had it back then.
LMLMD 4 өдрийн өмнө
Yep. It's like when Air Asia X pulled out of Europe. London to Perth via KL for under £300? Happy days...
Tekno77 9 өдрийн өмнө
Wait you're alive!! Bro I miss your r6 vids even though I don't play r6 anymore.
karebu2 2 сарын өмнө
So low cost long haul airlines are just messing with passengers by selling them food on a cart when it actually doesn’t cost them much
tim berry
tim berry 2 сарын өмнө
Tui Is not really an airline. The vast majority of tui passengers are on package holidays booked with TUI therefore generating passengers that generally wouldn't exist without the package holiday.
henanigans 2 сарын өмнө
3:15 why are all of these regressions linear? I would think you'd get a better r²-value for at least some of them if you tried different graphs (exponential for example)
Remco F. Gerritsen
Remco F. Gerritsen 2 сарын өмнө
So much math
Cássio Lins
Cássio Lins 2 сарын өмнө
The fun thing is that Azul is actually the most expensive (in average) airline for domestic flights in Brazil.
Double - You
Double - You 2 сарын өмнө
The sole reason West Jet is profitable is because Air Canada is just so damn bad, the could serve shit sandwiches for lunch and people would still fly West Jet.
Jack McLane
Jack McLane 2 сарын өмнө
TUI is also a full scale vacation corporation with travel agencies, resorts and everything related to (upper) middle class vacationing. They can fill their planes also with their own customers. You can see that they primarily connect semi-exotic vacation destinations to europe. Other than vacationing, long haul flights are MOSTLY for business travellers... those that don't ultimately care about 50€ cheaper ticket prize, because it's not them that pay it. They prefer a juicy bonus program, lounge access and status miles. There are not that many people with intercontinental family ties.
Thomas Gibbons
Thomas Gibbons 2 сарын өмнө
Ryan air??? Low cost????????
Sailor 2 сарын өмнө
tl;dr, blue ocean strategy good.
Robert Andrews
Robert Andrews 2 сарын өмнө
What's the point of these subscription based learning programs? If passing a class doesn't help get a job, how can it benefit someone taking the classes? I'm guessing it's just if you want to learn something, if only the classes would help with credential.
Charlie 2 сарын өмнө
Jet star is owned by QANTAS, and does both long and short haul flights in Australia. It also helps that the biggest competitor to Qantas went under first with Ansett and then Virgin
Aviraj Singh Mehta
Aviraj Singh Mehta 2 сарын өмнө
The R square values are a joke All the variables are not at all useful
Kevin Lombardo
Kevin Lombardo 2 сарын өмнө
In the time since this has come out, norwegian has also gone under for long haul.
Tim Thompson
Tim Thompson 2 сарын өмнө
Low cost in words! A myth, but not in price!...All added extras/baggage/food/seating...etc...Adds up to high cost scheduled travel.. Reason for Banktruptcy!
Tegos 2 сарын өмнө
Azul Airlines operated long-haul flights at reduced costs until 2019, I believe. I remember their flight from São Paulo to Fort Lauderdale was a lot cheaper than other flights from Brazil to the US. But from what I've seen in 2019 and 2020, they raised their prices to match other airlines in Brazil. I'm pretty sure the lower prices was a wonderful PR move for them, though. They've been regarded as the best airline in Brazil for a while now. PS: good job on your pronunciation of "Recife".
Khalid Abdulghani
Khalid Abdulghani 3 сарын өмнө
Ironic how after this video was released Norwegian has permanently suspended long haul operations with their Dreamliner. 😢 hopefully not more to come though 🤞
Shian 3 сарын өмнө
3:15 Label your damn axes 🤦‍♀️
hitempguy 3 сарын өмнө
While the r2 of a linear regression can vary in the result, anything as low as 15% is for all intents and purposes useless. Not that I'd expect anything less from this channel. Pushing pseudo-knowledge of topics is not the same as being an expert, always hilarious when you run off the cliff of not knowing shit from shinola
Lee247 3 сарын өмнө
I see a Tui 787-9 every month at kingston BA competes with them with the 777 200ERs i would rather fly tui to where it goes in UK rather than BA
Sergei Garbar
Sergei Garbar 3 сарын өмнө
Only Sami Puro knows the answer. )))
ChrisYeoh 3 сарын өмнө
Norwegian Long Haul is now kaput! The next one would be AirAsia X.
LP Pokefan
LP Pokefan 3 сарын өмнө
Who is here after Norwegian decided to cancel it's long-haul business?
tuban body slammer
tuban body slammer 3 сарын өмнө
R^2 of .36, .16 or .15 is not correlated at all, also the .36 you should remove the high leverage point at the top right. this video is rediculus
Guilherme Moritz
Guilherme Moritz 3 сарын өмнө
By Brazilian standards AZUL is not a low-cost carrier, it is actually the expensive one, even in the long haul market. Brazilian's low-cost carrier is GOL.
Pétrou Velteau
Pétrou Velteau 3 сарын өмнө
9:58 what the hell is that woman doing
WithTheWorks 3 сарын өмнө
Recognizing that 'data' is plural and using the appropriate grammar is my kink
Lars Gravdal
Lars Gravdal 3 сарын өмнө
Here after Norwegian quitting long-haul to even stay afloat. Take a look at its share price to see how much they're struggling, efficiently bankrupt.
Roberth Sjonøy
Roberth Sjonøy 3 сарын өмнө
Norwegian has just announced that they getting out of the long -haul business.
Violan Miro
Violan Miro 3 сарын өмнө
Your method in using statics is fundamentally flawed. A R2 of 0.36 is not conclusive. Linear regression with only one variable is not the standard procedure. If you absolutely want to make a regression, you should do one with multiple variables and try different models. But you shouldn't even try using regression methods first, because you can't be sure that your variables are independent. Onr method that would be the more adequate if you think that your meaningful variables are linear dependent would be PCA. And even that would not be conclusive, bexause the size of the sample is so small. I am not an expert in statistics (geometric toplogy which is far off), but I am quite sure that what you did is a mathematical nonsense. You should read undergrad level statistics and you woukd understand what are the issues and with postgraduate books I am sure that you can find a method more effective.
Shinbaal99 3 сарын өмнө
I really miss long haul travel corona be damned!
Alex Zetsu
Alex Zetsu 3 сарын өмнө
P-values not R squared should be used. An extreme case is if you only had 2 airlines to study, everything would be perfectly correlated. Likewise, as you get more data (or... maybe not since that would mean more low-cost airlines opening up and that would distort data by adding competition and making existing airlines less profitable rather than complementing existing data) other factors you dismissed as unimportant like GDP per capita of origin, aircraft utilization, aircraft capacity, might actually turn out to be important. Or maybe you'll find they still aren't imporant.
Jake Day Williams
Jake Day Williams 3 сарын өмнө
All in on charters.
Douglas 3 сарын өмнө
Latam is a merge between TAM and LAN Airlines. TAM was always about quality, so you could consider it a full service. LAN I don't know since its from Chile. But one thing I can say for sure: LATAM is none of them: neither quality or cost, that is why Azul is growing a lot. Azul is cost AND quality. With a horrible competitor like that you definitely gets a fair share of the market.
Douglas 3 сарын өмнө
To summarize: flying still very expensive for a lot of people and they are already talking about tourism to Mars.
Jordan 3 сарын өмнө
Where did you find the dataset? Is it publicly available anywhere?
Nihonium Mapping
Nihonium Mapping 3 сарын өмнө
It's pronounced Cebu Pacific, not Ceebu Pacific. Sorry, I can't stand it when the city I'm in is pronounced wrong.
Nerte 3 сарын өмнө
The auto-generated subtitles are completely messed up and unusable. Please, add actual subtitles to your videos - you probably read your script from the written form anyway.
Zhi Han Lee
Zhi Han Lee 3 сарын өмнө
Scoot does short-haul low-cost flying too, after TigerAir in Singapore was merged into it in 2017 (it's Australian & Taiwanese subsidiaries were sold to VA & China Airlines respectively IIRC, who continue to retain it's original branding). Also Scoot might be relatively more financially secure as it's under SIA, with it's financial backing, & their low-cost & full-service flights respectively are also more co-ordinated, reducing canibilisation of each other's markets for flight routes e.g. Scoot flies from SIN to numerous smaller cities not (or formerly) served by SIA e.g. Nanjing
Fernando Campos
Fernando Campos 3 сарын өмнө
Simply nailing the pronunciation of "Recife", I'm impressed! Hahaha
DELICIOUSCHEESE999 3 сарын өмнө
R^2 values are extraordinarily low to draw strong conclusions here my dudes
Allie Gottuso
Allie Gottuso 3 сарын өмнө
The distinct tomato minimally squeak because jute proximately chop alongside a delicate whorl. bawdy, slippery bail
pipiligrama 3 сарын өмнө
Can’t even imagine how would it be to fly NY to Sidney with a fucking mask on...
Max M.
Max M. 3 сарын өмнө
Great Video
Shivang Yadav
Shivang Yadav 3 сарын өмнө
This person sounds like half n intersting channel person but with not humour
Agon G
Agon G 3 сарын өмнө
I wouldn't call westjet "low cost" given for all their routes I've flown they are exactly the same cost as air canada or even more expensive sometimes.
Isip 3 сарын өмнө
Cebu Pacific: does everything that they should not do Also Cebu Pacific: profit
Maximiliano Leon
Maximiliano Leon 3 сарын өмнө
So its more profitable to find your niche than to compete with the big boys
Artur Castro
Artur Castro 3 сарын өмнө
Calling R squares of 0.16 and 0.36 very significant is a bad analysis at best
AleParmi 3 сарын өмнө
I'm not entirely sure that creating demand is the only key factor for success in this case. Condor and TUI have a very strong connection to tourist platforms and agencies. People buy holiday packages with the flight included. This is proven by the fact that buying a flight tickets only, with TUI and Condor, is much more expensive than purchasing it within a package.
Max 3 сарын өмнө
woah you sound just like half as interesting, like literally the same wtf
Lars Vos
Lars Vos 3 сарын өмнө
Tui has another thing that works in their "favour" the flights they operate are (mostly) part of a package deal they offer, since they also own a lot of the resorts/hotels at their destination. So they are just feeding their own destinations. Yes they also sell seperate tickets but most people fly them because they booked a package deal with them. They kinda create their own demand, and since they oparate all over europe its easy for them to switch/send aircraft to where demand is more needed. (All pre-covid offcourse) during covid they were offering a lot of flights to places where it was still allowed/safe to travel like the Canary islands, Aruba, Bonaire and Curaçao where they would be feeding their own destination. And they could easily adjust demand depening on the status of their destination (green,yellow or red)
Steindele 3 сарын өмнө
Thanks for your awesome videos!!
Šimon Vávra
Šimon Vávra 3 сарын өмнө
9:48 omg that beautiful Prague!!
Andrey Kelip
Andrey Kelip 3 сарын өмнө
in 2020 ALL airlines go bankrupt.... ((((
Justice Warrior
Justice Warrior 3 сарын өмнө
You did better RND than high paid CEOs in these companies!!!
Harsh Deep
Harsh Deep 3 сарын өмнө
Stat people in the comments: ???? all these correlations are hella weak.
Chris Skuse
Chris Skuse 3 сарын өмнө
West jet is not low cost or at least they’re trying to leave that market/reputation
little boy man
little boy man 3 сарын өмнө
and ill KEEP flying westjet because one time a westjet flight attendant complimented my totoro necklace
Stairway to Motivation
Stairway to Motivation 3 сарын өмнө
I appreciate your efforts put into the research and analysis. It's really great to see the aviation-related topic in the form of substantive video material that others can share and easily understand. However, your work is missing some crucial factors that answer why some airlines are successful, and some are not. Condor and TUI are in fact leisure and charter airlines, most of their seats were sold to tour operators, with TUI Airways (and subsidiaries) being a part of TUI Group, a tourist tycoon. Condor was owned by Thomas Cook, before its bankruptcy, then a new owner was sought, which was not found, the airline also had an affair with LOT Polish Airlines (in conjunction with the Polska Grupa Lotnicza), and 30% of the passengers were delivered by the Lufthansa Group, which was a feeder to Condor. It is not entirely appropriate to compare them with the other low-costs. It is a different business model. Eurowings was looking for its recipe for success, and the Germans did not really know what to do with it. The airline was successful on short-haul routes but unsuccessful on long-hauls. Before the COVID-19, Lufthansa Group was planning to launch new long-haul leisure, charter carrier, to replace Eurowings. Jetstar is a part of Qantas Group, while Scoot of Singapore Airlines Group, they are utilizing budget niche on their markets. Cebu and Azul are successful examples of low-cost airlines, but this is due to the markets they serve. Norwegian and Air Asia X sought success unsuccessfully, with the Norwegians effectively burning money on long-haul routes. WestJet was transitioning to a full-service carrier and launched its ULCC subsidiary - Swoop, flying only short and mid-haul. WOW Air failed, as Iceland market was not enough for two carriers, and they were not able to duplicate Icelandair's hybrid business model and strategy. So that is how it should be described, but you were right in the end. The clue is that the only scalable way for low-costs to succeed on long-hauls was to serve the tourist traffic, with charters and leisure routes, in cooperation with large tourist partners.
Bernard von Schulmann
Bernard von Schulmann 3 сарын өмнө
I think having WestJet on this list is not really correct. WestJet flys almost all its flights within Canada, which by nature makes their flights long but they are the only serious competition within Canada to Air Canada. WestJet uses the low-cost airline model but in this case in a very restricted market. WestJet will add and drop routes within Canada depending on demand, and they do this rather quickly. They will try a route for six months and then drop it, or make it only seasonal. WestJets international flights are almost in the winter months from Canada to warn holiday destinations. This has always been a very large charter market within Canada with low-cost flights. Because of the size of Canada and the linear nature of where the population lives, even with a population of only 37,000,000, the country has a lot of air travel across the nation. The restrictions against non Canadian airlines means the market here is well suited to an airline duoploy
Max T.
Max T. 3 сарын өмнө
norwegian is blessed honestly
MadsPlayz 3 сарын өмнө
RyanAir: Are you sure about that???
Liviu Dnistran
Liviu Dnistran 3 сарын өмнө
Great content. One small mention about TUI and Condor. The majority of their passengers buy those seats with a holiday package attached. TUI and Condor fly mostly as part of a holiday package and that's why they are the only company flying MUC-CUN(one exampe) direct in the middle of european winter. Even though they sell tickets to the mass market, most of the plane is full of holidaymakers going to a warm place in winter.
Starchy 3 сарын өмнө
*mentions Cebu Pacific* Filipinos: Thou have summoned us!
Reza Pratama
Reza Pratama 3 сарын өмнө
English subtitle please, i dunno why the automated translate is only vietnamese
brickson98moto 4 сарын өмнө
Just for reference, I’m watching this while taking a shit on a southwest flight. And I just heard the seatbelt light come on. Time for some shitty turbulence! Lol
Sahil Singh
Sahil Singh 4 сарын өмнө
More Give me more videos this isn't enough for me
John von Shepard
John von Shepard 4 сарын өмнө
Taishou hi
YQR Aviation
YQR Aviation 4 сарын өмнө
WestJet isn't low-cost anymore. They've got a full business class and economy premium layout on their new Boeing 787-9's and launched Swoop as a low-cost alternative. I'm surprised you didn't include Air Transat though
ricardo gurgel
ricardo gurgel 4 сарын өмнө
Azul (from Brazil) aren't a LOW COST, NO WAY
Marcus Bates
Marcus Bates 4 сарын өмнө
Who is here after the Reddit post in Bad Economics? 😂
Qatar airways Airbus a350
Qatar airways Airbus a350 4 сарын өмнө
Thats why AirAsia X is not that cheap
Qatar airways Airbus a350
Qatar airways Airbus a350 3 сарын өмнө
@madscientist 666 nice
Jose Luis
Jose Luis 4 сарын өмнө
Nice video!
Josh Thiele
Josh Thiele 4 сарын өмнө
Jetstar isn't just a long-haul airline though, they pretty much are the EasyJet of Australia, and most people tend to fly with Jetstar if they want the cheap flights domestically.
Craig Martin
Craig Martin 4 сарын өмнө
Westjet certainly started out by doing all the right things, cherry-picking high-profit, low-competition routes in under-served markets. Now they still do a lot of that but more recently just compete directly with Air Canada and are no longer low-cost.
Papi 4 сарын өмнө
Emirates is essentially a long haul low cost airline and it's spectacularly successful
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