Cruz says Vueling had a watch list of airlines that might pull out of the market and reaction plans in place in case that occurred. “We cannot afford not to respond fast,” he says. As a consequence, the airline has seen traffic expand by more than 20% in recent months. Cruz says Vueling has lower unit costs than EasyJet and he sees “more room to cut.”
Vueling expects more growth potential as it develops its Barcelona base. Cruz also is keen to build connecting traffic there, the share of which was about 10% before the summer and is rapidly increasing. He argues that it is fine to offer connections for low-cost carriers as long as the schedule is built on point-to-point traffic and the airline takes advantage of natural connections only. But he will not tolerate new routes that are based on connecting-traffic revenues.
As Vueling opens up more bases in European countries outside of Spain, Cruz sees it becoming more pan-European. “We have to start connecting the dots,” he says. As part of its expansion plans, Vueling is seriously considering an order for the CS300, the larger version of the Bombardier CSeries. “The CSeries will be the new narrowbody in town for a long time,” Cruz believes. “It is a very attractive aircraft.”
Vueling is in the process of placing an order for at least 60 aircraft; it will decide in the next few months if it will order the Airbus A320NEO, Boeing 737 MAX or Bombardier CSeries.
Bombardier is offering a 160-seat version of the CS300, which is designed for 149 seats in a legacy airline layout. The manufacturer might have to add a second overwing exit on each side of the aircraft to accommodate rapid disembarkation regulations in emergencies. Cruz believes the CS300 will still be a comfortable aircraft with 160 seats, though. Vueling, which has given the three manufacturers clear specifications for cabin and seat configuration, has been very pleased by the response.
The Vueling CEO also points out that the Canadian government is eager to help with the financing of Bombardier’s aircraft.
Vueling operates a fleet of Airbus A320s and when it began the order campaign last year, Cruz thought it would choose between the A320NEO and the 737 MAX. Bombardier’s offer came to the table later.
Another European LCC about to reveal a major aircraft order is Turkey’s Pegasus. “We are already there, but I would like to announce it in my own country,” CEO Sabanci says. The carrier is deciding between the A320NEO and the 737 MAX, he says, and it will buy more than 40 aircraft, the size of its current fleet.
Pegasus, originally a charter airline, turned to scheduled flying in 2005. It has averaged 41% annual growth in the past five years. Sabanci thinks the airline has much potential for further development in the Turkish domestic market, as the middle class and disposable income are growing. It can triple capacity on domestic routes in the next few years and still not offer too many seats, he says.
Internationally, Pegasus is focusing on Russia and the Commonwealth of Independent States (CIS). “We need to send the low-cost virus to these countries,” Sabanci says. But he complains about government protection, of which incumbents, such as Turkish Airlines and Aeroflot, are taking advantage. “We would like to fly to Moscow and St. Petersburg, but they are a no-no for us. The regulators still have a romantic relationship with the national carriers,” Sabanci says.