Luxair credits a swapping out of Embraer ERJ-145s for Bombardier Q400s, plus boosting of frequencies, for helping it fend off low-cost carriers’ encroachment onto its home turf.
The carrier has faced low-cost competition on its doorstep since 2012. EasyJet flies from Luxembourg to London and Milan Malpensa, while Vueling serves Barcelona from Luxair’s home city.
Nonetheless, Luxair achieved passenger growth of 14.4% last year and boosted revenue some 10%, says airline executive vice-president Martin Isler.
Of the arrival of low-costs rivals, Isler notes: “We knew that this was a danger and we have built up our fleet.”
On 1 April, Luxair took delivery of its seventh Q400 turboprop, with which it is replacing ERJ-145 jets “one by one”. Isler say the Q400 has “helped us to grow and to be more competitive”.
Frequencies to Milan were boosted before EasyJet started to operate the route, he recalls. “We knew Milan is a relatively high-yield business market and we knew that will attract low-costs,” he says. ”It happened to us on Geneva, which we fought successfully.” On its London City route, meanwhile, Luxair is increasing frequency to six per day. Additional flights are seen by Luxair as a means by which the airline can protect its business traffic, as such passengers value schedule flexibility.
“The top-growing routes last year were the routes where we had low-fare competition,” says Isler. “Low-cost carriers also bring market. We benefited from that. Our prices are not low-cost prices but in a certain frame of time, for booking, we are competitive.”
Isler indicates that the expanded market takes in passengers who might have travelled to other airports – such as Frankfurt Hahn, Brussels Charleroi or Cologne – plus “completely new customers”.
However, Luxair must adapt to maintain its competitiveness, in Isler’s view. “Our cost base is too high,” he says. “Luxembourg is an expensive place for everything but we also pay very high salaries… We need to stop this constant increase of personnel cost.”