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Mar 18, 2017

British Airways owner Levels up with new long haul LCC

If new cheap long haul Level works, it will inevitably seek access to Asia-Pacific routes

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Who will get Levelled by this A330-200?

It may be time for observers of low cost airline wars to buy more popcorn and watch the arrival of new-entrant Level, into the hotly contested market for long haul budget carrier operations.

Level is owned by the IAG group, which also owns British Airways, Iberia, Aer Lingus and short haul Euro low cost carrier Vueling and revealed Level’s branding, and initial routes overnight.

However IAG itself is 20 percent owned by Middle East carrier Qatar Airways, whose CEO, Akbar Al Baker, recently predicted the destruction of such long range low cost carriers.

Although there is saturation coverage of the Level story in the European media, the most useful context is probably given by this report by Robert Wall in the Wall Street Journal, which has always been worth the price of admission for those who cannot make the link work.

Level will start operations this northern summer on trans Atlantic routes with an initial two Airbus A330-200s from Barcelona, to tie in with short haul Euro market LCC feeds from another IAG investment, Vueling.

These A332s are configured with standard eight across economy seating at a seat pitch of 30 inches or 76 cms, which, lucky us, is all full service brands like British Airways, Lufthansa and Air France KLM now declare necessary for full sized adults and adolescents on flights of up to five hours.  (Or 2.5 cms less on selected ‘agony’ routes.)

The comparative ‘generosity’ of the Level configuration results in a passenger capacity of 314 seats in its initial fleet of A330-200s but this includes 21 premium economy seats up front arranged seven across with an extra leg friendly 17.5 cms of seat pitch.

This seems to result in an economy cabin which will be just possibly more comfortable than the nine across economy seating found in 787s operated as a full service product by the likes of Etihad and Air NZ today, although until someone like the Runway Girl Network goes out armed with tape measures (and the unforgiving and amply proportioned reporter John Walton) we can’t be absolutely certain.

This is because airlines have their own ways of describing cabin metrics which sometimes differ from the empirical evidence, and may benefit positively or negatively from variations in aisle widths and actual seat frame designs.

IAG is taking Qatar Airways prisoner for this ride, since if Level fails it costs its investment in that enterprise money, and if it succeeds, it undermines its credibility.

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32 comments

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32 thoughts on “British Airways owner Levels up with new long haul LCC

  1. Deano DD

    Ben, what am I missing
    Jetstar, Qantas, Tiger all have 30″ in economy
    Virgin gives you 31″
    Apart from the baggage and food, what is the real difference, aside from a quicker turn around when getting on or off the plane, which LCCs have it all over legacy carriers
    Even Jetstar and Tiger running slightly wider A320s over Virgin and Qantas and their 737s

    Would it mot make more sense to roll Tiger into Virgin and Jetstar into Qantas
    Improve scheduling and frequencies
    Eliminate duplicated staff
    Run a 2 class domestic and 2-3 class international fleet and be done with it

    From an airlines perspective, they would do better flying, for example, a Jetstar configured 787 into Asia than, for example, Cebu Pacific (all economy) Or Scoot, Air Asia 2 rows business
    Or even 7-8 rows of business with upgrades available on the day for unfilled business seats

    I just don’t understand why, today, VA and QF feel the need to have a separate brand for a LCC product that is basically the same as their legacy product
    QF could even call their economy seats “Star Class”

  2. johnb78

    Interesting minor detail worth noting: Level doesn’t have an AOC or crew of its own at this point – it’s a sub-brand of Iberia, with flight deck and cabin crew employed by Iberia on standard long-haul contracts (I would have guessed it would have been run under Vuelling).

    1. johnb78

      Deano: (off-topic, Ben feel free to delete) seat pitch isn’t everything. Everything else about the QF economy experience is superior to the JQ experience, and everything else about the VA economy experience is superior to the TT experience. You get a better terminal with better facilities, shorter walks, and far less chance of ending up on a bus, you can arrive later and still get on the flight (much later if you have checked luggage or require manual checkin for other reasons), and you get far better looked after if things go wrong – especially as QF and VA retain the option to bump passengers onto sub-brand flights if lead carrier ones are cancelled.

      1. Deano DD

        Johnb78
        I travel regularly MCY-SYD
        QF verses JQ
        Same terminal at MCY feels the same at Sydney
        Walk is about the same at SYD and there are travelators 🙂
        Never had to bus it except once into MCY due weather from Brisbane on VA
        Being late depends on the ticket you buy on all airlines
        Never been bumped from QF to JQ but have been bumped from JQ to QF Mel-Syd
        Aside from no av in the seat, the experience on the plane is fairly same same to me
        Both JQ and QF have professional and courteous staff, yes you pay for a smack on JQ
        I believe that getting going once the boarding call is made is quicker on JQ, plus you get off quicker (time is money)

        On this routes served by both JQ and QF scheduling could be better with a combined brand
        SYD-MCY is poorly served mid afternoon on weekdays, yet QF and JQ have flights arriving at 6.15pm (I guess for business) but there is nothing else from mid day

        Simply by adding 12-16 true business class seats in a JQ A320 and going head to head with QF on say, SYD-MEL, JQ would slaughter QF and be more a profitable flight for JQ than all economy
        Or, QF could just sell economy seats at JQ prices (which they often do now anyways)

        1. Deano DD

          Oops typo
          You pay for a snack on JQ, not a smack lol

      2. Cantbeeffed

        Not to mention that JQ’s ruthless yield management means that your flight may be cancelled at the last minute. We have effectively cut JQ from our business travel as actually getting to meetings is paramount.

        1. Deano DD

          Last year QF 88% JQ 78%
          If you are a businessman Cantbeeffed, you would understand the golden rule of turning up to meetings, “better to be an hour early than 5 minutes late”
          If you were to rely on ANY airline to get you to a meeting in a small window, you would be foolish
          Mechanical faults, weather, yes cancellations, road traffic at departure point and destination
          I would bank on planning to be at a meeting 3 hours prior to be safe on a busy route like SYD-MEL. On a thin route, I would always have a plan B ie. when is the next flight…
          Yes QF have a better on time performance, but 12% still arrive late and if you are on one of those 12% of flights, you too will be late for your meeting

  3. Ben Sandilands

    Gentlemen, pray continue. It’s a good discussion.

  4. Jacob HSR

    Can they do something innovative? eg, develop squat toilets for aircraft? Or Japanese washlets for aircraft?

    “Chinese man hospitalised after airport toilet collapsed when he stood and squatted on it”

    “A Chicago-bound Air India flight took off from Delhi Airport on Saturday with only eight out of twelve toilets functioning. These eight toilets were also out of order shortly” – “paper cups and bottles used to fill water are dumped into the commode”

    Not everyone wants to use a Western loo, how about making half the toilets Eastern style.

    1. Deano DD

      How about learning to use the toilets the NORMAL way
      Seriously, NOT all “eastern” people squat on toilets, but they want allowances for them
      What about 130kg easterners, I bet you they can’t squat… so they sit down
      Or those with back injuries
      FFS if you easterners are afraid of catching an illness from a toilet seat, just wipe it with a sanitizer first and stop bitching
      Plus, if you are sitting on the toilet the correct way (which is sooooo much easier than squatting) and you encounter turbulence, at least you won’t fall off or into the toilet

      1. Rais

        Why is sitting on a toilet the “normal” way? It’s a relatively recent development and more than half the world’s population squats to relieve itself. The medical profession admits that squatting is healthier. I learnt to do it in Indonesia and only took to sitting again when arthritis took its toll. If aircraft toilets were better designed they could be used both ways. These days even sitting on one is difficult in such a cramped space.

        1. Deano DD

          Rais
          As the human race evolves we start doing things better and smarter
          First world countries populations sit on toilets, where as backward third world countries tend to squat
          Rais you said it best when you stated that you could no longer squat because of your arthritis
          Those that would prefer to squat when they go to the toilet will always need a plan B which will end up being sitting, so just conform to modern standards and START SITTING ON TOILETS the way god intended us to

        2. Jacob HSR

          Rais, where do you have arthritis?

          If in the knees, I think microfracture surgery coupled with stem cell injections can fix your knees.

          Dr. Khay Yong Saw is your best bet.

  5. Zipper

    Deano D.. dude there’s a huge difference between flying LCCs vs Legacy carriers, I know because I do it a lot, Jetstars so called business class which has no right to call it that, is light years away from the Qantas product, also I’ve done both Qantas and Jetstarr to HNL down the back and Qantas massacred jetstar in every area, I wish all LCCs died a slow death, I find them all terrible, only use them if I’m totally desperate, oh also behind the scenes in operational areas LCCs are scary, they cut every corner they can find, I work in the industry and I see it, just stick with the legacy carriers, they’ve been around the block a few times so they know what there doing..

    1. Deano DD

      Zipper
      I did say a true Jetstar business class, rather that the what they offer up now which is more like premium economy and I will grant you on the international wide bodies QF gives you 31″ over JQ 30″
      JQ business is is about the same price as QF economy if that helps you
      And yes I am aware that some of the JQ fleet is serviced offshore, which is another issue that airlines or government needs to put a stop to by providing tax incentives to have the work done in house in Australia and to the highest standards, be it legacy carriers or LCCs
      I am a strong believer in work for Australians
      They could start by
      Dropping income tax on engineering wages
      No duties, taxes or G.S.T. on parts
      Rent free, government owned hangers

      Why not make Australia great again……

      1. Giant Bird

        Deano D,
        You do not have to go that far. Just implement the Trump tax plan. No tax deduction for any imported goods of services. People forget it is “Income Tax” not “Profit Tax”(You pay tax on your income less what deductions the government allows). Companies who outsource manufacturing and services off shore can continue to do so but you do not get a tax deduction for the cost. The tax evasion of the Googles, Apple and Ikea etc simply does not work as they pay income tax on their sales less amounts paid as wages in Australia and for goods and services to domestic Australian suppliers. Export sales are excluded from the income for tax but you still get the deduction for your total costs paid in Australia for goods and services. It gives exporters a leg up and companies who only import pay their fair share and suffer a disadvantage against companies who employ and buy in Australia. With this approach the income tax rate can be lowered from 30% to 15% and manufacturing industries would return to Australia. You may see Toyota restarting it plant in Australia.

        1. Deano DD

          Giant Bird
          “No tax deduction for any imported goods of services” I like this for bringing manufacturing and call center jobs, but…
          For servicing of aircraft fleets, this may not work as it is not a matter of “do it here or be penalized” more so “reduce the cost of doing it here” because your suggestion simply pushes up costs and may end up see QF or VA become uncompetitive with international rivals
          Ditching income tax to workers is a start
          Say an engineer earns $100k per year and is taxed at 30% for $70k
          You just pay $70k direct to the worker saving the boss $30k
          Roll this in with your idea and its a win win

          1. Dan Dair

            DeanoDD,
            There is an essential difference between your (the Toddler-in-Chiefs) idea & Giant Bird’s.
            Giant Bird is advocating what is effectively a government subsidy for businesses which are actively boosting the nations economy through exporting.
            You are just asking for an across-the-board subsidy.

            There is no ‘added-value’ in what you propose.
            I completely agree with you that such actions would reduce costs (in the case highlighted) for Qantas & potentially make them more competitive on an international basis.
            However, the same would be true of Qantas domestic, Virgin domestic, Rex & all the other smaller players in the ‘home-grown’ domestic market. Where would you draw the necessary arbitrary-line & what added-value do domestic carriers bring to the Australian international-trading economy.?
            Also, in a time (as ever) when there is insufficient money to properly fund (for example) AirServices, big businesses paying no, or considerably less income tax to the government is not going to improve the state of air safety at home & in the medium-term might make it a lot worse.

            Let me be clear, I don’t like to pay income tax,
            but I like still less the idea of transferring general taxation to purchase taxes.
            I already can’t afford the swishest hotels or the swankiest restaurants, but I accept that because there are reasonable hotels & restaurants that I can enjoy & afford.
            I don’t wan’t to be paying $20 for a beer or $5 for a carton of milk for example, because the government have to recover the $15-20,000 dollars they’ve lost on my income tax.?
            If I’m earning genuinely big money, $20 is nothing to me; I’ll give that & more as a tip when I’ve paid for my dinner in a restaurant.
            A regular Joe with a regular job, would be a lot worse-off under a ‘no income tax’ regime. The taxes have to come from somewhere.?

            Off my soapbox & back to the topic;
            I’m all for tax-breaks (government subsidies) for businesses which are improving the economy for the nation.
            These companies employ people & generate wealth, most especially through exports. This is the added-value I’m talking about.
            Domestic airlines service & facilitate the domestic economy, they don’t generate the wealth of it.!

  6. Creeper

    Very strange branding. Name, Livery, uniforms. All very sterile.

    1. Jacob HSR

      Where can I see the uniforms? Just post the URL without the .com otherwise your post will not show up for some time (if at all).

  7. Dan Dair

    You would imagine that the a big organisation such as IAG will be able to find an alternative use for a couple of A330’s, should this Level venture not work-out.
    So it won’t be a total waste of time & money if it doesn’t succeed.?

    And the fact that they’re starting with East coast Americas to Barcelona makes me think that they must have done some serious research to either identify where their best market is,
    or to ensure it’s not going to be fighting an unwinnable-battle where the market is already saturated.?

    1. johnb78

      Yup indeed – the cost consists of a couple of vinyls and whatever they paid the marketing agency for the brand. Barca is somewhere with strong demand, a decent IAG presence but a weak Iberia intercontinental one, and no other EU scheduled carriers on the route. It would have been a good strategy for the secondary UK cities that BA no longer flies intercontinental from under BA’s AOC, but I think they might all now have been Norwegianed.

  8. Deano DD

    Dan Dair
    I understand your point
    However
    If work (jobs) is currently being done offshore, then there is no loss of revenue, even if there is no income tax, quite the contrary
    The government saves money as the jobs created need to be filled by some one and those that fill the positions would either come from the pool of unemployed or be promoted workers from the existing operations creating positions for new employees at the lower end, again from the pool of unemployed
    Create 1000 jobs and the government no longer pays around $13 million in dole payments

    Plus, the new workers have more money, which will be circulated into the economy
    Moving from $250 or so on the doll to $1000 or so in full time work, sees $750 per week extra spend by that person
    1000 workers = $750,000 per week ($75,000 GST) plus new jobs created in the region in supermarkets, hair salons, take away shops etc. These new jobs generates again take people off the dole and into employment and paying tax and GST etc
    It is the snowball effect that carries on and on
    More cost effective engineering in Australia makes airlines more competitive and perhaps QF and VA may compete better against Asian airlines and add more flights (this could even be mandated as part of the deal for engineering subsidies) creating more top end jobs for pilots, flight crew, ground staff etc. Again putting more Aussies into jobs and paying tax

    Something like this SHOULD have been done for the auto industry as well

    The best fix for any countries economy is more jobs, not more welfare
    I don’t care what happens to Asian workers in their countries, I care about Australia…

    1. Dan Dair

      I’m not arguing with your sentiment,
      neither am I going to argue with the figures or positive outcomes you suggest.
      The glaring problem I see, is the thing I mentioned before, which is where do you draw the vital but arbitrary line between jobs which will attract income tax & those which won’t.?

      I honestly can’t see a way around this particular problem. Once you start making tax-exemptions anywhere, someone is going to shout foul, and once one exemption is made, it’ll be hard not to make more & more.
      Eventually, there’ll be a high employment third-world nation right at home. No income taxes, so no services & no infrastructure. Maybe even no law & order.?

      IMO the problem would be better-served at a business-level.
      Government working with businesses to help them generate the work & importantly exports that the country needs to stay solvent as a nation.
      The problem is so often, as with Toyota & GM/Holden, that the government simply didn’t believe the cases that these two companies put forward for subsidy.

      If the government were going to actually go down that road, it would probably make a lot of sense to start to have civil-servants embedded within large businesses. Helping to ensure that the requests for government funding, concessions or handouts were based on some semblance of honesty & reality.? (as opposed to big corporations or ministers (or civil servants.?) seeking to line their own pockets at the expense of the lowly masses)

      1. Dan Dair

        With a little time to reflect,
        it occurred to me to back-up my point about embedding civil-servants on the boards of big businesses;
        Toyota wasn’t believed, got nothing & buggered-off.
        Qantas wasn’t believed, got nothing & then posted it’s first profitable results for about ten years.!!

        How otherwise is the government supposed to tell the difference in integrity of these two supposedly reputable international organisations.?

        1. Deano DD

          The government needs to look outside income tax for 40% of their revenue
          We are competing, unfortunately, in a global economy against countries with exchange rates that make goods and services from said countries much cheaper than we can do here

          A good start would be to drop income tax all together as only low to middle income earners pay it, the top end have the ways and means of minimizing income tax
          Replace it with a 20% GST a tax that gets everyone, especially the top end
          How about a stamp duty (not a tariff) on imports
          And a big increase on land rates on private dwellings over $2 million
          Finally a 0.5% transaction tax this would be a massive earner and catch share traders etc.
          Absolutely subsidize those industries that are good for the nation like manufacturing

          1. Dan Dair

            Deano DD,
            “a 20% GST a tax that gets everyone”
            Sure, high-earners can’t avoid it, but low earners are paying $20 for a beer or $5 for a carton of milk, etc, etc. Where’s the social-justice in that.?

            Genuinely, I’m not against reform of the taxation-system to free-up, empower or release home-grown businesses & business-ideas to compete with the world & generate employment & exports.

            Unfortunately, President Trump isn’t the man to look to for inspiration.
            He’s the kind of businessman that would willingly reduce wages & living-standards for the ‘little-people’ in his employ, so that his business could thrive & he could continue to remain wealthy.
            That is his prerogative.

            I do not believe however, that reducing wages & standards of living for lots Australians is what you want. It’s certainly not what I want.

            IF
            Toyota had been believed by the government, perhaps a compromise subsidy-package could have been found.
            IF
            that had happened, Toyota would still be in Australia, making cars for Australia, thus creating viable employment, reducing imports & generating exports.
            It’s not the governments fault that it didn’t happen. It’s the understandable culture of secrecy in businesses.

            Regarding “a 0.5% transaction tax”,
            It might work, but everyone on the receiving-end of it will jump-up on their back legs & rant (justifiably or not) about anti-competitiveness.
            I’ve no doubt that share traders will talk about & possibly even act upon, the idea of moving their businesses offshore to avoid the transaction tax liability, which might make doing business with them uncompetitive in comparison with other Australasian trading-houses.?

          2. Dan Dair

            Deano DD,
            Let me add that whilst I believe I can see what to me are obvious flaws or shortcomings in the points you make,
            I’m freely admitting that I’m not coming up with better suggestions or solutions to the underlying problem.!

            Global business & the governments role in providing support for it’s own businesses,
            as well as the governments need to decide upon the best thing for the people of it’s nation is a bloody big & complicated problem.

            There probably isn’t one simple answer, because if there was the people that do this stuff for a living would have probably figured it out for themselves by now.?
            So what you end up with is a mish-mash of lots of little plans and ideas, some of which conflict with eachother, but in the end generally work-out OK,
            sort of….
            more or less.?

            Just as a suggestion, let’s say you abolish all income tax.
            So you get paid £1000 a week & you keep all of it.
            But you pay for every single thing you do, other than breathing.
            Step out onto the pavement, the local council want paying for it’s use. Go to the shop, & pay inflated purchase taxes to make-up for no income taxes. Get in your car, pay tolls on every road. Pay inflated purchase taxes on fuel, etc, etc.
            Stuff that you take for granted as just being there, is only there because taxes, federal, state or local are paying for it.
            If you remove the governments prime source of income, they’ll have to find a (or a number of) replacement(s). Either that or those things will just cease to exist.
            What do you do if you can’t pay your water bill & you can’t go to the state for assistance because any social-funds have gone.?
            Die of thirst, in ‘water-poverty’ in a city in Australia.
            Scary.!

  9. Deano DD

    Dan Dair
    Mate it’s about taxing spending rather than earning
    This country needs to say F___you to globalism which is sending Australia broke and putting locals out of work
    The BEST way for a country to prosper is to have it’s population working in good quality well paying jobs
    Every person that
    works
    +$200 income tax
    +$70 GST
    +$50 other
    verses being on welfare
    -$250 dole
    +$25 GST
    +$10 other
    is a net gain to the government of $435 per week $20,000 per year x 500,000 jobs = $10 billion
    Employed people spend more than unemployed and this extra spend creates more jobs and revenue
    Simply by removing taxes on employing people has the effect of creating jobs and this can not be argued
    replaced with a higher GST claws back a large amount of the cost and makes it more attractive to be working rather than being unemployed
    A 0.5% transaction tax affects few regular people to much degree
    Share traders (if they want to buy and sell Aussie shares) simply can’t go offshore as the tax is collected by the ASX
    Share traders in my opinion are leaches anyway, nothing more than gambling on short term gains by bumping stock prices up and down by a few percent a week on stocks
    True long term investment in the stock market would be unaffected but the daily highs and lows would be stifled

    1. Dan Dair

      I completely agree with you,
      right up to the line: ‘spend creates more jobs and revenue’.
      Beyond that, I guess we’ll have to agree to disagree.

      Just for the record, spending money at home does create jobs, but those jobs are not ‘productive’ jobs, they’re only servicing the economy.
      Also & the bit you seem to be missing or ignoring is the regressive-nature of purchase/sales taxes.
      By transferring taxation-priorities away from incomes & onto purchases the wealthiest earners in society will pay less to the state, whilst the poorest earners will end up paying a much higher portion of their salary than high-earners on everyday purchases & the necessities of life.
      The current system may be a long way from perfect, but changing to a no income tax system will make things very much worse for a huge section of society.

      1. johnb78

        All I have to say on this one: shift tax incidence to the unimproved value of land!

        1. Dan Dair

          Johnb78,
          This has got somewhat off-topic, but I’d be grateful if you’d give me a precis of what “shift tax incidence to the unimproved value of land” means in laymans terms.?

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