M. Maunu von Lueders (CEO of FlyNordic)

Air Scoop: Could you please present FlyNordic to our readers? What are your specificities compared to other European LCCs? What do you do better than your competitors?

Maunu von Lueders: We do not call ourselves a low-cost carrier anymore. We are a 3rd generation airline which combines the best from the low-cost and the traditional airlines in such a way that our model will satisfy the Scandinavian market in the best possible way. In order to do this we must be better than or at least as good as the dominating traditional airline in the most important service elements but at a lower cost to our customers. We do not want to humiliate our customers by depriving them from service or ignoring their expectations just because our fares are low. We also do not want to rob our customers by charging a lot for features that are indeed traps created by a monopoly situation.  We simply try to satisfy the most important customer needs at a reasonable cost. 

You already cover most of the Scandinavian market; are there sufficient population catchment areas to open new routes in Scandinavia? If not, towards which market do you tend to?

The frequency of travel is very high in Scandinavia. Distances can be great and travel times with other means of transportation very long which should create a favorable situation for airlines. But even though exceptionally many people travel by air within Scandinavia and business should be good, there are too many players in the field which results in destructive overcapacity. The market is quite saturated and all viable routes have already been exploited. FlyNordic has been successful on routes between Stockholm and Northern Sweden and also between Stockholm and the other Scandinavian capital cities. We can be even better in these markets as we are developing a concept of exceptional value.         

Is there many low cost carriers serving the Scandinavian market? Who are your most dangerous competitors: local LCCs or “Islanders” (Ryanair, easyJet)?

The low-cost segment is growing fast in Scandinavia. There are quite a few low-cost carriers and more will come. We do not consider the other low-cost carriers as our most obvious competitors. We target other markets as we are predominantly offering suitable services for business travelers within Scandinavia from primary airports with a morning – evening concept. We are in direct competition with the likes of SAS rather than other low-cost carriers.  

The European Low cost carriers market has reached a certain maturity which leads to its consolidation.  During this transition, what are, for you, the greatest threats to the European Low cost carriers? Fuel rising? Overcapacity? ...

You mentioned indeed in your question two serious threats. As costs are rising and the price elasticity remains high it will be more difficult for the low-cost carriers to stimulate profitable growth. Consolidation is an inevitable development as there will be many troubled carriers without a chance to manage the equations between rising costs and diminishing revenues.  I do not see consolidation as a threat but a natural way of making the industry more effective. The weakness of consolidation is the common misfit between different corporate cultures which often results in long term corporate turbulence and ineffectiveness. Some real threats to the low-cost segment are the prevailing protectionism in favor of the “flag carriers”, predatory pricing and other hostile actions by the large incumbents and a tendency to re-regulate through various taxes and other restrictive measures.     

You have adapted your flights according to your passengers: Morning and evening flights for business routes, daytime for leisure travelers and week-ends with charters. How do you manage such an adjustable model?

It is quite easy logistically.  The segmentation of customers is only a factor regarding schedules and destinations. The rest is pretty much the same regardless if it is a business flight, leisure flight or a charter. The distribution mechanism and the fare concept serve all scheduled traffic whereas charters are sold by tour operators.  Catering and some other service features may vary on charter flights based on what the customer requires but that too is easy to handle. The main thing is to have the aircrafts and crews in the air serving all our different customer categories as well as they can. 

Do you believe that consolidation of the market will lead to 2-3 main LCCs in Europe, or do you think there will always be many LCCs on niche markets?

I do not think that consolidation will result in only 2 or 3 large low-cost airlines. There are more variations among the low-cost carriers than among the traditional airlines. This variation has developed out of a need for different concepts in different markets.  There will always be a need for various niches. A niche carrier can however never expect to grow large because then it no longer serves a niche.

Are you worried about the shortage of pilots and crew hitting LCC market?

I am not worried but one must all the time keep an eye on the situation. The market for pilots is very much a local matter. Pilots are people with homes and family and not members of a highly mobile workforce.  A well-run airline should be an attractive employer.  If you stick to one aircraft type and offer a good and rewarding working environment you should have a better chance to recruit and maintain a good pilot workforce.  

What are the options for FlyNordic to transform its business model in order to make more costs savings?

We are pretty close to have explored most of the cost saving areas.  There are naturally some savings to be gained regarding service providers. Our own organization is as small and effective as it can ever be. If we can maintain our cost structure but increase our earning potential through customer oriented and innovative product features, we should be doing OK.