These days the conversations we all have in the airport are often about what bags we need to check-in and where we’re being seated. Is it “the purser and the ticket agent?” Does it matter? And how about those snacks? While the ultimate desire for convenience and affordability may seem the least surprising question to any frequent flier, it’s becoming clearer what the future holds for flight-specific businesses.
Hedge fund manager Steven Birenberg spoke with me about his new investment and belief that so-called “superbusiness,” or long-haul, short-haul, ultra-long haul or ultra-low-cost airlines are on the brink of reshaping the sector by providing an industry standard of convenience, low cost and mega-efficiency.
“There was a time in aviation that every entrepreneur would start an airline, but now it seems that there’s just one: one of those mega-capacity airlines that compete in an oligopoly — in other words, a global economic powerhouse where there’s no threat and there’s no competition.” Birenberg said.
So what’s the rationale? Simply put, Birenberg says, the industry longs for some new competitors — anyone besides the big majors.
“Over the past few years, United has actually had more cancellations because of hurricanes than any carrier and other carriers,” he said. “But a lot of people aren’t aware that they’re canceling as many flights in the face of hurricanes as they are…because they don’t have that the competition is somewhere else, and that that extra seat, that extra small aircraft and airplane seat that’s like an AC Express costs them like $400 and it’s more when it’s fully loaded, for example, than what the economy seat would be going for.”
Airlines have cried foul about fare increases, pass through ticket tax and recent regulations and regulations that have hindered routes like international flying from Europe to the U.S. It seems to be an industry starved for competition. But it’s possible a new breed of airlines might come in the next few years.
Recently, for example, the company Wow Air introduced a successful super-low-cost route between Reykjavik, Iceland and Amsterdam — and Birenberg speculates that another of the big U.S. airlines may follow suit, battling it out with super-sized fare prices.