Low cost model pressured by late discounts

The low-cost business model is under pressure from deep late discounting, according to a former senior executive at easyJet.

Monarch Flights and Holidays managing director Liz Savage told the Barclays Travel Forum: “Everybody is discounting. The danger for the low-cost carriers is that consumers get used to it. Then what happens next year?

“On peak travel dates – the bank holidays and school half term – there are not the [usual] racy prices [this year]. A lot of airlines are giving away seats and relying on ancillary revenue.”

Low-cost carriers typically start fares low and raise prices closer to departure, while charter carriers traditionally do the opposite. But now there are late discounts across the market, said Savage, who was at easyJet for a decade.

She predicted little growth in the low-cost sector this winter, but warned: “As soon as we see green shoots of recovery in the sector, capacity will turn about again. The sector is built on growth and stimulating growth.”

Savage told Travel Weekly: “There are players making big losses that will fall. But I do not see a breaking point for the low-cost model.”