Travel – the great social equalizer – has over recent decades increased at significantly faster rates than GNP growth. There is no doubt as well that LCCs have changed the model for the airline market further accelerating the growth of travel amongt all the world’s populations. But this growth has been confined until now to regional or short haul sector pairs.

In February 2005 First Choice – the UK’s 4th largest VTO Travel business and 6th largest UK airline with a fleet of 32 aircraft announced – to a surprised market – its first purchase of 787s. In December it converted 2 options to purchases and again this month converted 4 more to confirmed orders becoming only the second first airline to increase its order twice for the new twin jet before it even takes to the skies. "Having taken the decision to increase our commitment to long-haul destinations, we wanted to ensure we could do this in the most cost-effective and environmentally sound way, while offering our customers new destinations and even more comfortable travel," said Dermot Blastland, managing director of First Choice Mainstream Holidays.

Well, for those of you who think the long haul LCC is a fantasy – think again. It’s here. This is the first "non-legacy airline" to build its business growth engine around the 787 but it will not be the last. It is important to understand that First Choice is not really an LCC – it positions itself as a premium charter and tour company, as a VTO – Vertically Integrated Tour Operator it has little in common with any legacy airline. But it has a lot in common with an LCC because it is not a networked airline.

With the ability to connect virtually any secondary city in the world to the UK, First Choice will be able to move into markets up now the exclusively the playthings of British Airways and Virgin Atlantic. Indeed this creates an interesting scenario and pressure on BA, BMI and Virgin as the UK’s legacy “Flag Carriers”. At the top their protected status at London’s Heathrow is likely to be blown by the new Transatlantic EU-US “just a little bit more open skies” agreement, and at the other end by voracious appetite LCC airlines. Clearly an opportunity for the stock pickers to mark down legacy airlines.

Many industry pundits have commented on the 787 being a "game changer" – this 787 order needs to make many in the aviation world pay attention to what is surely the next frontier to be invaded by LCCs. First Choice’s broad base of airports in UK means that they will be able to fly just about anywhere with its 787s that British holiday makers want to go. No more stops in Goa on the way to Phuket. With a range of over 15,000Km potentially makes First Choice’s 787 a London to Sydney nonstop possibility.

For airlines that want to accept and realize that air travel is a commodity, the 787 class aircraft is the way to go. For now at least, until the A350XWB is available. If Airbus ever gets the A350XWB out the hanger door then you would have a 787-type plane in 777-size that will also connect secondary cities the world over.

The good news for UK residents is that they will be able to avoid the bottlenecks of the 4 London airports as First Choice bases its planes at secondary UK airports. It should be noted that LCCs in a long haul market will be primarily dependent on leisure traffic. But this is bound to change. Just as the proportion of business travelers using LCCs is growing so too will that phenomenon apply to the long haul model.

But it is more than First Choice. Other LCCs (real ones) are getting into the act.

• Ryanair is being helped by the Moroccan government to start service. 4 plus hours on seats that don’t recline!

• FlyAsianExpress plans to operate flights to destinations in Asia and Europe as AirAsia X, a new long-haul, low-cost carrier launched by AirAsia,
• Australia's Virgin Blue reported expansion plans including considering an order for eight 777-300ERs to be deployed on planned long-haul operations.
• LionAir is taking delivery of 60 Boeing 737-900ERs a 6000 Km range aircraft.
• Oasis Hong Kong is growing its service from Hong to London by adding US service this year to Oakland and possibly Chicago and Vancouver

New opportunities beckon for LCCs. They have created brand following beyond their traditional domestic markets. For example Aer Lingus and JetBlue are going to sell each other’s seats on their websites. Maxjet clearly is leveraging its traffic and publishes connections at JFK and STN. Imagine this happening outside an airline alliance? When Oasis starts its Oakland service, you can bet JetBlue will be doing the same thing with them. That could even mean round-the-world tickets are coming soon- on LCCs with no alliance and no legacy costs.

Our conclusion – LCCs are driving innovation and pushing the envelope for airlines now in a long haul version.

Addison Schonland and Timothy O’Neil-Dunne of T2Impact are the authors of the new report: LCCs and the Travel Trade to be published by OmniTourism Research March 2007. For more information on the report contact research@omnitourism.com

Travel – the great social equalizer – has over recent decades increased at significantly faster rates than GNP growth. There is no doubt as well that LCCs have changed the model for the airline market further accelerating the growth of travel amongt all the world’s populations. But this growth has been confined until now to regional or short haul sector pairs.

In February 2005 First Choice – the UK’s 4th largest VTO Travel business and 6th largest UK airline with a fleet of 32 aircraft announced – to a surprised market – its first purchase of 787s. In December it converted 2 options to purchases and again this month converted 4 more to confirmed orders becoming only the second first airline to increase its order twice for the new twin jet before it even takes to the skies. "Having taken the decision to increase our commitment to long-haul destinations, we wanted to ensure we could do this in the most cost-effective and environmentally sound way, while offering our customers new destinations and even more comfortable travel," said Dermot Blastland, managing director of First Choice Mainstream Holidays.

Well, for those of you who think the long haul LCC is a fantasy – think again. It’s here. This is the first "non-legacy airline" to build its business growth engine around the 787 but it will not be the last. It is important to understand that First Choice is not really an LCC – it positions itself as a premium charter and tour company, as a VTO – Vertically Integrated Tour Operator it has little in common with any legacy airline. But it has a lot in common with an LCC because it is not a networked airline.

With the ability to connect virtually any secondary city in the world to the UK, First Choice will be able to move into markets up now the exclusively the playthings of British Airways and Virgin Atlantic. Indeed this creates an interesting scenario and pressure on BA, BMI and Virgin as the UK’s legacy “Flag Carriers”. At the top their protected status at London’s Heathrow is likely to be blown by the new Transatlantic EU-US “just a little bit more open skies” agreement, and at the other end by voracious appetite LCC airlines. Clearly an opportunity for the stock pickers to mark down legacy airlines.

Many industry pundits have commented on the 787 being a "game changer" – this 787 order needs to make many in the aviation world pay attention to what is surely the next frontier to be invaded by LCCs. First Choice’s broad base of airports in UK means that they will be able to fly just about anywhere with its 787s that British holiday makers want to go. No more stops in Goa on the way to Phuket. With a range of over 15,000Km potentially makes First Choice’s 787 a London to Sydney nonstop possibility.

For airlines that want to accept and realize that air travel is a commodity, the 787 class aircraft is the way to go. For now at least, until the A350XWB is available. If Airbus ever gets the A350XWB out the hanger door then you would have a 787-type plane in 777-size that will also connect secondary cities the world over.

The good news for UK residents is that they will be able to avoid the bottlenecks of the 4 London airports as First Choice bases its planes at secondary UK airports. It should be noted that LCCs in a long haul market will be primarily dependent on leisure traffic. But this is bound to change. Just as the proportion of business travelers using LCCs is growing so too will that phenomenon apply to the long haul model.

But it is more than First Choice. Other LCCs (real ones) are getting into the act.

• Ryanair is being helped by the Moroccan government to start service. 4 plus hours on seats that don’t recline!

• FlyAsianExpress plans to operate flights to destinations in Asia and Europe as AirAsia X, a new long-haul, low-cost carrier launched by AirAsia,
• Australia's Virgin Blue reported expansion plans including considering an order for eight 777-300ERs to be deployed on planned long-haul operations.
• LionAir is taking delivery of 60 Boeing 737-900ERs a 6000 Km range aircraft.
• Oasis Hong Kong is growing its service from Hong to London by adding US service this year to Oakland and possibly Chicago and Vancouver

New opportunities beckon for LCCs. They have created brand following beyond their traditional domestic markets. For example Aer Lingus and JetBlue are going to sell each other’s seats on their websites. Maxjet clearly is leveraging its traffic and publishes connections at JFK and STN. Imagine this happening outside an airline alliance? When Oasis starts its Oakland service, you can bet JetBlue will be doing the same thing with them. That could even mean round-the-world tickets are coming soon- on LCCs with no alliance and no legacy costs.

Our conclusion – LCCs are driving innovation and pushing the envelope for airlines now in a long haul version.

Addison Schonland and Timothy O’Neil-Dunne of T2Impact are the authors of the new report: LCCs and the Travel Trade to be published by OmniTourism Research March 2007. For more information on the report contact research@omnitourism.com