Why Long-Haul Low-Cost Airlines Always Go Bankrupt

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Writing by Sam Denby
Research by Sam Denby and Tristan Purdy
Editing by Alexander Williard
Animation by Josh Sherrington
Sound by Graham Haerther
Thumbnail by Simon Buckmaster
Select footage courtesy the AP Archive

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  • WestJet wasn’t a low cost airline in my opinion. They’re the second largest airline in Canada

    MaximusMaximus5 օր առաջ
  • 4 ads during one video... Wendover what are you doing??

    jeturner99jeturner995 օր առաջ
  • I like Half as Interesting more for the humor content

    ArvindArvind7 օր առաջ
  • Suspiciously low prices make me nervous, especially when flying.

    YourPalALYourPalAL8 օր առաջ
  • Because fuel costs money

    Robert MichaelsRobert Michaels8 օր առաջ
  • Always huh?

    YouDontKnowMeYouDontKnowMe19 օր առաջ
  • "stimulate demand on routes with low demand* Low cost, long haul airlines: opens Pyongyang to Washington DC route

    Mudhaffar AdhwaMudhaffar AdhwaԱմիս առաջ
  • The captions think he’s speaking Vietnamese

    QuarioQuario54321QuarioQuario54321Ամիս առաջ
  • 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

    AlestraAlestraԱմիս առաջ
  • 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

    DOM solankeDOM solankeԱմիս առաջ
  • Aircraft Utilization also has a high R2 at 0.1439. Is there a reason this isn't considered in this analysis?

    NekoRocketNekoRocketԱմիս առաջ
  • 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.

    Dukie BladeDukie BladeԱմիս առաջ
  • More ✈️ Plane ✈️ Videos!!! ✈️

    NoahNoahԱմիս առաջ
  • "statistics" on a dozen of observations

    SergSerg2 ամիս առաջ
  • Please do a collab with TIK on the logistics of the WWII Eastern Front.

    Arya PourtabatabaieArya Pourtabatabaie2 ամիս առաջ
  • 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.

    aswleraswler2 ամիս առաջ
  • 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.

    jasonsureshjasonsuresh2 ամիս առաջ
  • R.I.P. Wow Air... Flying between Canada and Europe for a hundred bucks... Was nice while it lasted :(

    Milan SvitekMilan Svitek2 ամիս առաջ
  • 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.)

    Chris RebehnChris Rebehn2 ամիս առաջ
  • 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..?

    GoinMantaGoinManta2 ամիս առաջ
  • 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.

    fighter5583fighter55832 ամիս առաջ
  • Damn, watching this in 2029 remembering when covid was harmless compared to now. 2020- the good ol’ days

    Gregor AlexanderGregor Alexander2 ամիս առաջ
  • 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.

    Serenity17Serenity172 ամիս առաջ
    • Yep. It's like when Air Asia X pulled out of Europe. London to Perth via KL for under £300? Happy days...

      LMLMDLMLMD17 ժամ առաջ
    • Wait you're alive!! Bro I miss your r6 vids even though I don't play r6 anymore.

      Tekno77Tekno776 օր առաջ
  • 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

    karebu2karebu22 ամիս առաջ
  • 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.

    tim berrytim berry2 ամիս առաջ
  • 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)

    henaniganshenanigans2 ամիս առաջ
  • So much math

    Remco F. GerritsenRemco F. Gerritsen2 ամիս առաջ
  • The fun thing is that Azul is actually the most expensive (in average) airline for domestic flights in Brazil.

    Cássio LinsCássio Lins2 ամիս առաջ
  • 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.

    Double - YouDouble - You2 ամիս առաջ
  • 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.

    Jack McLaneJack McLane2 ամիս առաջ
  • Ryan air??? Low cost????????

    Thomas GibbonsThomas Gibbons2 ամիս առաջ
  • tl;dr, blue ocean strategy good.

    SailorSailor2 ամիս առաջ
  • 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.

    Robert AndrewsRobert Andrews2 ամիս առաջ
  • 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

    CharlieCharlie2 ամիս առաջ
  • The R square values are a joke All the variables are not at all useful

    Aviraj Singh MehtaAviraj Singh Mehta2 ամիս առաջ
  • In the time since this has come out, norwegian has also gone under for long haul.

    Kevin LombardoKevin Lombardo2 ամիս առաջ
  • 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!

    Tim ThompsonTim Thompson2 ամիս առաջ
  • 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".

    TegosTegos2 ամիս առաջ
  • Ironic how after this video was released Norwegian has permanently suspended long haul operations with their Dreamliner. 😢 hopefully not more to come though 🤞

    Khalid AbdulghaniKhalid Abdulghani2 ամիս առաջ
  • 3:15 Label your damn axes 🤦‍♀️

    ShianShian2 ամիս առաջ
  • 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

    hitempguyhitempguy2 ամիս առաջ
  • 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

    Lee247Lee2472 ամիս առաջ
  • Only Sami Puro knows the answer. )))

    Sergei GarbarSergei Garbar2 ամիս առաջ
  • Norwegian Long Haul is now kaput! The next one would be AirAsia X.

    ChrisYeohChrisYeoh3 ամիս առաջ
  • Who is here after Norwegian decided to cancel it's long-haul business?

    LP PokefanLP Pokefan3 ամիս առաջ
  • 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

    tuban body slammertuban body slammer3 ամիս առաջ
  • 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.

    Guilherme MoritzGuilherme Moritz3 ամիս առաջ
  • 9:58 what the hell is that woman doing

    Pétrou VelteauPétrou Velteau3 ամիս առաջ
  • Recognizing that 'data' is plural and using the appropriate grammar is my kink

    WithTheWorksWithTheWorks3 ամիս առաջ
  • 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.

    Lars GravdalLars Gravdal3 ամիս առաջ
  • Norwegian has just announced that they getting out of the long -haul business.

    Roberth SjonøyRoberth Sjonøy3 ամիս առաջ
  • 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.

    Violan MiroViolan Miro3 ամիս առաջ
  • I really miss long haul travel corona be damned!

    Shinbaal99Shinbaal993 ամիս առաջ
  • 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.

    Alex ZetsuAlex Zetsu3 ամիս առաջ
  • All in on charters.

    Jake Day WilliamsJake Day Williams3 ամիս առաջ
  • 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.

    DouglasDouglas3 ամիս առաջ
  • To summarize: flying still very expensive for a lot of people and they are already talking about tourism to Mars.

    DouglasDouglas3 ամիս առաջ
  • Where did you find the dataset? Is it publicly available anywhere?

    JordanJordan3 ամիս առաջ
  • It's pronounced Cebu Pacific, not Ceebu Pacific. Sorry, I can't stand it when the city I'm in is pronounced wrong.

    Nihonium MappingNihonium Mapping3 ամիս առաջ
  • 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.

    NerteNerte3 ամիս առաջ
  • 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

    Zhi Han LeeZhi Han Lee3 ամիս առաջ
  • Simply nailing the pronunciation of "Recife", I'm impressed! Hahaha

    Fernando CamposFernando Campos3 ամիս առաջ
  • R^2 values are extraordinarily low to draw strong conclusions here my dudes

    DELICIOUSCHEESE999DELICIOUSCHEESE9993 ամիս առաջ
  • The distinct tomato minimally squeak because jute proximately chop alongside a delicate whorl. bawdy, slippery bail

    Allie GottusoAllie Gottuso3 ամիս առաջ
  • Can’t even imagine how would it be to fly NY to Sidney with a fucking mask on...

    pipiligramapipiligrama3 ամիս առաջ
  • Great Video

    Max M.Max M.3 ամիս առաջ
  • This person sounds like half n intersting channel person but with not humour

    Shivang YadavShivang Yadav3 ամիս առաջ
  • 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.

    Agon GAgon G3 ամիս առաջ
  • Cebu Pacific: does everything that they should not do Also Cebu Pacific: profit

    IsipIsip3 ամիս առաջ
  • So its more profitable to find your niche than to compete with the big boys

    Maximiliano LeonMaximiliano Leon3 ամիս առաջ
  • Calling R squares of 0.16 and 0.36 very significant is a bad analysis at best

    Artur CastroArtur Castro3 ամիս առաջ
  • 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.

    AleParmiAleParmi3 ամիս առաջ
  • woah you sound just like half as interesting, like literally the same wtf

    MaxMax3 ամիս առաջ
  • 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)

    Lars VosLars Vos3 ամիս առաջ
  • Thanks for your awesome videos!!

    SteindeleSteindele3 ամիս առաջ
  • 9:48 omg that beautiful Prague!!

    Šimon VávraŠimon Vávra3 ամիս առաջ
  • in 2020 ALL airlines go bankrupt.... ((((

    Andrey KelipAndrey Kelip3 ամիս առաջ
  • You did better RND than high paid CEOs in these companies!!!

    Justice WarriorJustice Warrior3 ամիս առաջ
  • Stat people in the comments: ???? all these correlations are hella weak.

    Harsh DeepHarsh Deep3 ամիս առաջ
  • West jet is not low cost or at least they’re trying to leave that market/reputation

    Chris SkuseChris Skuse3 ամիս առաջ
  • and ill KEEP flying westjet because one time a westjet flight attendant complimented my totoro necklace

    little boy manlittle boy man3 ամիս առաջ
  • 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.

    Stairway to MotivationStairway to Motivation3 ամիս առաջ
  • 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

    Bernard von SchulmannBernard von Schulmann3 ամիս առաջ
  • norwegian is blessed honestly

    Max T.Max T.3 ամիս առաջ
  • RyanAir: Are you sure about that???

    MadsPlayzMadsPlayz3 ամիս առաջ
  • 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.

    Liviu DnistranLiviu Dnistran3 ամիս առաջ
  • *mentions Cebu Pacific* Filipinos: Thou have summoned us!

    StarchyStarchy3 ամիս առաջ
  • English subtitle please, i dunno why the automated translate is only vietnamese

    Reza PratamaReza Pratama3 ամիս առաջ
  • 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

    brickson98motobrickson98moto3 ամիս առաջ
  • More Give me more videos this isn't enough for me

    Sahil SinghSahil Singh3 ամիս առաջ
  • Taishou hi

    John von ShepardJohn von Shepard3 ամիս առաջ
  • 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

    YQR AviationYQR Aviation3 ամիս առաջ
  • Azul (from Brazil) aren't a LOW COST, NO WAY

    ricardo gurgelricardo gurgel3 ամիս առաջ
  • Who is here after the Reddit post in Bad Economics? 😂

    Marcus BatesMarcus Bates3 ամիս առաջ
  • Thats why AirAsia X is not that cheap

    Qatar airways Airbus a350Qatar airways Airbus a3503 ամիս առաջ
    • @madscientist 666 nice

      Qatar airways Airbus a350Qatar airways Airbus a3503 ամիս առաջ
  • Nice video!

    Jose LuisJose Luis3 ամիս առաջ
  • 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.

    Josh ThieleJosh Thiele3 ամիս առաջ
  • 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.

    Craig MartinCraig Martin3 ամիս առաջ
  • Emirates is essentially a long haul low cost airline and it's spectacularly successful

    PapiPapi3 ամիս առաջ
  • Joon wasn't a LCC, it was an AF subsidiary whose business model never really made sense and so it was pulled during a restructure

    Daye BajelaDaye Bajela4 ամիս առաջ
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