Network low-cost carriers - whatever next?

Over the past few years the phrase "network carrier" has become almost a byword for inefficient, old-fashioned flag carriers, the type low-fare upstarts have loved to bait and hate.

So, hold on, Richard Branson, Tony Fernandes and Stelios, of Virgin Atlantic, AirAsia and easyJet fame respectively are plotting a "global" budget carrier - come off it. But yes, according to a report in Malaysia, since apparently confirmed by Virgin, the three entreprenuers are chatting about some form of international tie-up. What, a network carrier?

The idea of linking low-cost carrier networks has tempted many, but there are few connections today. The problem has been the distribution systems of low-cost carriers tend not to be compatible, while the lack of interlining and baggage transfer, and the cost of providing this "network" service has been prohibitive. Network carriers do this in their sleep of course, but it is not cheap, and there are ramifications for the type of fast turnaround, go-when-we-are-ready, networks that low-cost carriers operate.

It is no doubt a natural evolution of the low-cost carrier model that as the most prosperous and ambitious mature that they look at opportunities beyond their pure point-to-point operation. Look at what Jetstar and Qantas are doing in Australia, and at the advances their rival Virgin Blue is making.

The limitations of taking costs out of the long-haul model are well documented. These limitations mean pure origin and destination low-cost long-haul carriers will have a tough time gaining a significant edge over their network competitors. But there surely must be a way of connecting the slick domestic or intra-regional low-cost networks with long-haul operators. The ones that crack that one will be the winners.