Barcelona -- Chinese low-cost carrier Spring Airlines hit the headlines earlier this year when it put forward a proposal for standing-only seats on aircraft, a concept crazy enough to feature on Ryanair’s website as a publicity stunt along with its much derided plans to charge passengers to use the aircraft lavatories.

Officials from Spring, the first low-cost carrier in China, were in Barcelona for the World Low Cost Airlines Congress and continued to insist the idea is feasible and are calling for the low-cost carrier industry to come together to look further into its development.

Spring Spokesperson Zhang Wuan told delegates the idea was aimed at tapping into the roughly 70% of the Chinese population – what he calls the 'grass roots people' - who will never be able to afford to fly.

He talked of an aircraft concept using a half-standing concept, described as the X322 - which could take capacity from 180 on its fleet of 12 Airbus A320s to 258 seats under the new aircraft concept.

Showing examples of the global media coverage the idea provoked Wuan to say: "This caused tremendous debate after our proposal. A number of people have shown their support for half-standing. Some have said ‘as long as it is cheap enough, I will buy half-standing tickets, even if I have to sit on my luggage.’”

He insisted safety and meeting regulatory requirements is key to the project, and acknowledged the challenges to the concept. But it believes it is feasible. Even so, he admitted that the difficulty lies in industrialization. "A few orders from one airline obviously is not able to attract aircraft manufacturers to design a new aircraft type,” he said. “But if all low-cost airlines made an alliance and placed a large order, the new aircraft type is no longer just a dream on paper.”

Spring Airlines may have grabbed the headlines with its half-standing concept but that is only part of the story. As the first private, low-cost carrier trying to carve a niche in the Chinese market, it started operations on July 18, 2005 on flights between Shanghai and Yantai.

Chief Executive Zhang Xiuzhi said the airline, a subsidiary of the Shanghai Spring International Travel Service, keeps operating costs low by selling tickets exclusively from its website and offers no on-board meal service except water.

She attributed developing their own distribution system as being key to their success. "It was the first time an airline in China had used its own distribution system," she said. “In early 2007, the airline announced a 2006 net profit of CNY20 million ($2.6 million) on revenue exceeding CNY500 million.

Earlier this summer, Spring's plan to establish overseas routes was granted by the General Administration of Civil Aviation. The airline plans to link mainland Chinese cities to Hong Kong and Macau, as well as cities in Japan, South Korea and Russia.

LAN Peru General Manager Jorge Vilches, said the secret lies in "giving the passenger what he expects."
Vilches explained the low cost airlines in Latin America mostly operate domestic flights. LAN Peru is part of the Chilean LAN Group.

"South America is very different in terms of costs from Europe or North America," he said, adding the business model depends on whether it is operating short or long haul. The low-cost model is used for short haul and the Legacy model for long haul.

"The secret is to give each passenger what he wants in terms of what sector he is flying,” said Vilches. “If it is a three hour flight, they do not want a lie flat bed. But we do need the GDSs as we want people from England, Spain and New York to get onto our domestic operation. So our network is key.”

The Latin America region is developing quickly for the low cost sector but infrastructure difficulties are hampering growth. “Gol (Brazil) is the largest carrier in the region and they embarked on rapid growth into neighboring countries but they were forced to retreat after their reliability caused problems,” he said. “What the passengers want is an on time arrival.”

Walter Prenzler, chief executive officer of Nas Air, the first Saudi Arabian low-cost carrier said legacy carriers had to move "more strongly into the markets of the low cost carriers. They are under immense pressure from some customers. They are losing their traditional business clientele as these passengers become more price sensitive. But it all depends in the end on the passenger and the culture”

Prenzler added the airline, which operates six Airbus A320 and four Embraer 190 aircraft, considered it an excellent time for low-cost carriers to take advantage of market opportunities. “Our passengers are used to receiving certain levels of service and our lower costs will enable us to meet this expectation more easily in difficult times,” he said.

The Middle East region, he said, is seeing rapid growth in the low-fare sector with several new airlines being established to operate low-fare flights.

“Many of the legacy carriers are more suited to the long-haul, connecting traffic market,” he said. “Focusing on the regional market using aircraft suited for the purpose is the logical step.”

He commented that Air Arabia and Jazeera Airlines will be joined soon in the skies by Emirates-subsidiary flyDubai. Qatar Airways Chief Executive Akbar Al Baker has said he will start a low-cost, low-fare carrier.

But he said more needs to be done to deregulate the market. “A key route would be to Cairo but the authorities have a policy that does not allow low cost airlines into the Egyptian capital,” he said. “We have to change that policy or find a way round it.”