Sabre's watcher of airline trends, Mr Gordon Locke, shares his vision of the airline industry with P@SSPORT in a wide-ranging interview that covers the move from price to choice, and the evolution of pure low cost to hybrid.

Mr Gordon Locke sees a future where there will be less stratification of airline models and consumers will find it easier to choose which airline they want to fly with - in much the same way they now shop at retail stores.

The Senior Vice President, Airline Strategy, Sabre Airline Solutions/Sabre Travel Network said there were now, broadly speaking, five types of airlines - global network carrier, traditional flag carrier, domestic/regional, low cost airlines and start-ups.

And then there's the sixth - the hybrid model "which represents the convergence of a few of these models", he said.

"In the future, you will see airlines falling into three distinct categories - high end, value and low cost, no frills. There will be less differentiation in the actual business model but more differentiation in the way airlines style their services and brand their experiences.

"It will be just like in the retail market."

Citing US examples (Neiman Marcus - high end, Target - value and Walmart - low cost, no frills), he said: "They are very different business models but all three carry similar products."

Keep it simple, please

Mr Locke, who was in Singapore for a brief visit, said that consumers, who were getting smarter, were pushing for the industry to simplify "so that the consumer knows what he is buying".

In the meantime, however, consumers will have to contend with an increasingly confused and crowded market in which the hybrid model, the focus of a recently-released study by Sabre Airline Solutions, is adding complexity to the price structure.

The hybrid model, said Locke, is an attempt by airlines to seek out new revenue streams in a "perfect storm" scenario.

"Costs are rising. Recession is setting in. Inflation has arrived. Airlines have to manage costs far more vigorously and, at the same time, look for opportunities to grow revenues in an increasingly competitive marketplace."

From price to choice

Airlines are trying to move away from price to choice, he said. "Charging for ancillary services is working as a revenue opportunity and it also works to add choice for the consumer. All things being equal, choice can tip the balance for the consumer."

Ryanair and Easyjet charge more for priority boarding passes. American Airlines is now charging US$25 for a second checked bag for domestic customers and will charge US$15 for first checked bag from June. JetBlue is selling extra legroom for a fee. Singapore-based Tiger Airways is charging for checked-in baggage.

"The problem is when an airline starts adding too many choices - it can get a little overwhelming for consumers. But you will see more airlines experimenting with this space," said Locke.

All this is making it harder for consumers to compare price which presumably is what the airlines are aiming for. The Internet stripped airlines of their emperor's clothing and laid bare their fares for all to see.

Now, Mr Locke said, consumers will have to buy based on "the perception of value".

"That's why the brand experience is so important and must be consistent across all channels," he said.

Mr Locke sees the hybrid model taking off faster in Europe than in Asia because the pure low cost model on the continent is being squeezed by rising costs as well as competition from other forms of transportation while network carriers "try to outsmart each other" with their search for new revenue streams.

"In the next five years, we will see airlines - both low cost and network - move to the middle ground in Europe."

And he believes the pure low cost model will have a greater survival rate in Asia, due to the geography of the region and the diversity of its market.