IAG levels up

Courtesy Level

International Airlines Group (IAG) which also owns British Airways, Iberia and Aer Lingus is expanding the scope of its new low-cost carrier Level. Originally intended to be a long-haul budget operator, it will now also offer short-haul services from Austria.

The Europeans may not be aware of how Scoot, set up as a budget carrier by Singapore Airlines (SIA) for the long-haul, soon took on the short-haul as well and ended up assimilating its short-haul budget sibling Tigerair. (See After the merger of Scoot and Tigerair, will it be Singaproe Airlines and SilkAir next? Aug 29, 2017)

While IAG’s move is motivated by the competition with rivals such as Ryanair and EasdyJet, we note that IAG already owns a short-haul bydget carrier namely Vueling which operates out of Barcelona, which is also the springboard for Level’s long-haul. Will this lead to intra-competition? But, of course, there is only so much one may suggest of the comparison between IAG and SIA since Europe is a much bigger arena than Singapore.

In the bigger picture, IAG’s new focus on budget travel yet again testifies to the thriving low-end market and the competition that it poses to legacy airlines. (See Ryanair affirms market for budget travel, May 22, 2018) Level, which commenced operations last year, was intended to check the aggression of other low-cost long-haul operators such as Norwegian Air Shuttle and WowAir. Interestingly, IAG tried but failed to acquire Norwegian, and expanding Level may be a strategy to boost its viability in a wider market, foster brand familiarity and promote intra-connectivity.

IAG chief executive Willie Walsh said: “We are launching this new short-haul subsidiary to provide Austrian consumers with more flight choices across Europe. These flights will be branded as Level to build upon the huge success of our new long-haul low-cost operation.”

Read between the lines.