Low-cost carriers (LCC) rose rapidly to become significant players in short-haul markets, quite often at the expense of legacy carriers’ short-haul services. Route opportunities still exist in many markets, but some services are being introduced with only one or two flights per week, as the traffic will not support daily schedules.

For LCCs willing to look beyond large single-aisle aircraft, crossover narrowbody jets are a viable option to enable not just daily, but multiple daily flights. Rodrigo Silva e Souza, vice president of marketing for Embraer Commercial Aviation, says there is a clear indication that some low-fare carriers can no longer sustain a robust market expansion. “Given the focus on larger narrowbody aircraft, the mismatch between market demand and aircraft capacity threatens their ability to expand the network in the lower-density markets,” he explains.

“In the last five years, the LCCs’ major driver of expansion has been additional frequencies on existing routes,” he observes. “Since a large narrowbody is the growth engine, the natural focus has been in the highest-density markets. Higher frequencies in previously served routes represented nearly 70% of the added capacity since 2012. Frequency in new markets was responsible for only 20% of the growth in the same period.

“Last year, some traditional LCCs canceled more markets than they actually opened,” Silva e Souza notes. “As opportunities to explore trunk routes are limited, low-density markets will become more relevant. Crossover narrowbody jets offer a new strategic mindset—a shift in focus to exploring low- and mid-density markets, where yields are up to 10% stronger than the average.”

According to Jorge Abando, Mitsubishi Aircraft Corp.’s vice president of sales and marketing, the challenge with low-cost airlines is that “they need to keep their unit costs below the low yields they are operating. That’s where the economic story of new technology aircraft comes in—shifting that cost curve to where a 90-seat aircraft’s unit cost can be similar to, or less than, that of the Boeing 737-800. That’s when it makes sense.

“Then the challenge is finding markets where the yields are a certain margin above those unit costs,” Abando continues. “What I contend—from our studies and analyses of mature markets such as Europe—is that there are plenty of those routes. It is just a matter of filtering them and finding the ones that work for that airline.”

Sukhoi Civil Aircraft Co. (SCAC) is convinced that its Superjet 100 (SSJ100) has a role to play when LCCs consider lower-density markets. “The SSJ100 is the ideal complement for narrowbody operators; it is a replacement for aircraft with larger capacity (such as the Airbus A320 and Boeing 737) operated with low passenger payload during seasonal downturn,” remarks the SCAC press office. “The SSJ100 can substitute for both those aircraft for a long period in a ‘low’ season and at particular times of day [in regular traffic periods].”

Few outright LCCs operate a second fleet type. One crossover narrowbody jet operator, though not an LCC, believes these types will be able to penetrate low-fare markets. “When a low-cost airline with a single fleet type [reaches its growth limit] in the established markets, a crossover jet might be the solution for further growth,” says Martin Gauss, CEO of AirBaltic, which has 13 Airbus A220-300s and plans to have up to 80 of the type by 2025.

“A good example is ‘Project Moxy’ in the U.S. [which has signed a memorandum of understanding for 60 A220-300s]. They will fly from secondary cities using the low-cost model,” Gauss adds. “The same concept would work if an established LCC would add that to their model. We might see the current European operators doing the same, perhaps by purchasing an airline which already operates these models.”

The geographical location of any airline is likely to affect its fleet decisions. As SCAC points out, “[An] airline’s geographical location may restrict a carrier in terms of temperature (climate), aerodrome level (altitude), complex terrain, short runways, a negative environment affecting the engines, and so on.”

In the near-term, there will be places where the prospects for crossover jets in an LCC are better than others. “The quick answer is that it is the mature markets—Europe and North America being the ones that come to mind—where, in a sense, the established players have already cherry-picked the good routes,” remarks Mitsubishi’s Abando. “If you go back in history, it’s well-known that airlines will enter and exit markets over certain time periods. But with an aircraft like the MRJ, [which can bring] a competitive edge, low-fare carriers will have the ability to expand in those smaller markets, maintaining their market share.

“In rapidly developing markets like Southeast Asia, it’s almost the quickest and easiest way to get to maturity, bypassing what established markets and airlines have done. We’ve seen evidence of that in India with its growth of low-fare carriers. There is a sizable market there,” Abando adds. “The same could be said for China, although the economies—in the ways they are developing—are rather different. You have the planned economy of China versus the market-driven growth of India. There is a similar end point but how they get there is a little bit different. That affects the potential for air travel.”

Declaring the one-size-fits-all approach to LCC fleets as “history,” Embraer’s Silva e Souza emphasizes that no matter where they are located, “LCCs [whose focus is] on increased profitability rather than bloody battles for market share will consider adding a new fleet that allows them to develop new markets.

“The LCC’s average aircraft size is 170 seats (190 seats in the Asia-Pacific),” he adds, taking in a geographical element. “Such aircraft sizes limit airlines’ ability to expand their network beyond high-density markets. As opportunities to explore trunk routes are limited, low-density markets will become more relevant in LCC networks.

“By deploying crossover narrowbody jets, LCCs can fulfill two roles,” says Silva e Souza. “They can offer high-frequency flights with connectivity for business travelers and serve thin routes that cannot be sustained by larger aircraft, roles that some LCCs are now chasing on their own or via a regional arm like Azul Brazilian, [Canada’s] WestJet, [India’s] IndiGo, and [Indonesia’s] Lion Air.”

Of the three E-Jets E2-family members, Silva e Souza suggests that the E195-E2 will provide “an attractive proposition to LCCs worldwide, with much lower trip and seat-mile costs comparable to larger narrowbodies”.