Will long-haul low-cost take off?

The UK's Bank of Scotland clearly does not subscribe to the belief that the term "long-haul low-cost" is an oxymoron. It has paid C$12 million ($10.7 million) for a 7.5% stake in Canada's Zoom, a transatlantic carrier with big plans that so far has copied the low-cost model in many respects.

Launched in 2002, all bookings with the carrier are online or through call centres, distribution costs are low and Zoom flies only point-to-point without interlining. There the low-cost model gets a little blurry, however. With sector lengths of nine or 10 hours on flights between Canada and the UK travellers need some creature comforts. Despite its low-cost tag, Zoom provides a full service meal, complimentary drinks, a reasonable seat pitch and has a two-class configuration.
The injection of the Bank of Scotland cash will enable Zoom to create a UK-based subsidiary. This is likely to be based at London's Gatwick Airport and operate services from London to non-Canadian destinations. The likely start-up date for operations is May 2007 and, according to Zoom chairman Hugh Boyle, while routes are still under discussion, India and the USA are probable target markets.
As Zoom UK plans to take to the skies, however, three other carriers are also set to take the long-haul low-cost challenge - Australia's Qantas Airways and Virgin Blue and Hong Kong start-up Oasis Hong Kong Airlines. Oasis has now acquired some aircraft and has announced a launch date of September, although this date has already been delayed several times. It intends to fly between Hong Kong and London Gatwick. Qantas will be next when its wholly owned Jetstar launches longer-haul flights in November. Jetstar International will fly sectors up to 10 hours long from Sydney, Melbourne and Brisbane to six destinations in South-East Asia, Japan and Hawaii.
Virgin Blue's long-haul low-cost plans are due to take off by February 2008 and compete with Qantas on lucrative transpacific US routes. It will also have the opportunity to connect traffic with its potential US ally, Virgin America, when that carrier finally gets off the ground.