Life in the old dogs yet

By CHRIS DANIELS aviation writer

Glory days of double-digit growth for budget airlines may soon be coming to an end, says a senior executive of Sabre, one of the world's biggest airline software companies.

Brad Jensen, senior vice-president of airline product development, who was in New Zealand this week, said the world aviation market had been changed forever by the so-called "low-cost carriers".

But he does not buy in to the belief of some industry observers that "dinosaur" full-service airlines are about to become extinct - driven into bankruptcy by the superior business model of the budget carrier.

There would always be a market for full-service carriers, said Jensen. The question yet to be answered was how big that market would be.

"Twenty years ago you could have said the dinosaurs are going to die - Pan Am and TWA and a few dinosaurs have died - but some of the guys that you might accuse of being dinosaurs are still doing their network business and there will always be some place for it."

Low-cost carriers could dominate in dense markets, where travellers wanted only to travel from point-to-point, non-stop.

During a Commerce Commission conference in Wellington earlier this year, former Air NZ executive and current chief executive of budget airline easyJet Ray Webster said the days of full-service airlines were numbered.

Air NZ should try to work out an "exit strategy" for its domestic and Tasman air services, with its only hope for survival possibly lying in long-haul, point-to-point routes.

Jensen sees room in the skies for both types of airline.

"There will be a point of balance reached when the low-cost carriers have penetrated all of those very large bits. Then we'll see a new balance, then we'll have the point-to-point market and the full network marketplace established, they'll be in balance," he said.

This balance time would be coming within the next few years.

It was wrong to think low-cost carriers did not need as much IT firepower as the bigger network airlines, with flight dispatch and crew scheduling requirements often just as complex.