Time and time again, bright strategists flush with cash have tried to prove that low-cost, long-haul flying works. And time and time again, they’ve been proven wrong. The coronavirus pandemic has hurt every airline, but it’s also highlighted some of the shortcomings of these low-cost, long-haul carriers even more. And now, they are suffering mightily with IAG’s entrant, LEVEL, shrinking nearly into nothingness.
We’ve already seen Norwegian get taken to the brink of insolvency before finding yet another way to pull a rabbit out of a hat. But with a team focused on profitability for the first time in its history, Norwegian doesn’t expect to even take a swing at long-haul flying again until later this year at the very earliest. But this story isn’t about Norwegian. It’s about LEVEL.
IAG — parent of British Airways, Iberia, and others — decided to get into the low-cost, long-haul game back in 2017. At the time, Air France was busy putting together the now-defunct absurdity called Joon. Lufthansa was still wrongly thinking Eurowings would be a big player internationally, something it for some unknown reason continues to try to figure out. And IAG had LEVEL.
When I interviewed IAG CEO Willie Walsh in March of that year, he sounded far too bullish about the new airline’s prospects.
We’re convinced that the model works. We’re convinced that having looked at what Norwegian has done in terms of successfully unbundling the product, there is consumer appetite for that in a way that you know, 5 years ago we wouldn’t have believed possible. And we’re convinced that this is something we can do and be profitable doing it. We wouldn’t be launching it if we weren’t absolutely convinced that we could return, sort of financial targets, measures, equivalent to the targets we’ve set for the rest of the group. We think we’ve got a combination of factors that work for us.
LEVEL had plans to grow to more than a dozen aircraft and operate long-haul from cities throughout the European continent across the North and South Atlantic and potentially to Asia. In reality, it looked like it was being designed to simply kill Norwegian off, but whether IAG actually thought it would work or no, it never took off. Instead, it became a dumping ground for bad ideas.
When the airline launched in June 2017, it flew from Barcelona to Buenos Aires, Los Angeles, Oakland, and Punta Cana. Punta Cana failed quickly and was gone by the next spring. LAX and Oakland made it until October 2018 when LEVEL walked away. Norwegian was still in both those markets, but the bloodbath was apparently unbearable. LEVEL did move the Oakland flight to San Francisco, but it operated very infrequently until the pandemic stopped everything temporarily.
Over the last couple years, LEVEL strayed from its original plan in strange ways. The airline started flying short-haul out of Vienna after the failure of airberlin and its subsidary Niki. IAG was spurned in its takeover attempt for the remains of Niki, so it put LEVEL into the market to fight. This should have been Vueling, but since it was never going to be a successful, sustainable operation, Vueling probably didn’t want it. Last month LEVEL Europe’s short-haul operation was dissolved.
When IAG didn’t know what to do with its OpenSkies subsidiary, it turned to LEVEL as well. OpenSkies was originally a 757 operator that flew from the East Coast of the US to continental Europe. The idea when it was launched was in its name. British Airways wanted to take advantage of the open skies agreement between the US and Europe by flying its own airplanes in an all-business class configuration. That hung on far longer than most expected. But instead of killing it, IAG turned it into LEVEL France.
LEVEL France had three A330-200s and started up in November 2018 with a leisure focus from Paris/Orly to Fort-de-France (Martinique), Newark, and Pointe-a-Pitre (Guadeloupe). It added Montreal last May and briefly tried Las Vegas last winter. Now it too is being shut down for good.
When the pandemic hit, these long-haul LEVEL operations were exposed to even greater economic forces than usual. Low-cost, long-haul operators pay the same price for fuel as everyone else, and fuel is a much bigger piece of the pie on long-haul than for short-haul carriers. The playing field is more, ahem, level. At the same time, the big airlines had a lot of empty seats to fill. Why fly LEVEL with its nickel-and-diming strategy when you could fly another traditional airline for the same price and earn your miles? This was already an issue in off-peak times before the pandemic. Now every time is an off-peak time.
IAG hasn’t given up entirely. LEVEL Spain is still flying from its Barcelona home, but best I can tell, that is only one aircraft operated by Iberia. LEVEL is merely a brand these days that — at pre-pandemic levels — flies four aircraft from Barcelona to Boston, Buenos Aires, New York/JFK, Santiago, and San Francisco. There isn’t much reason for the airline to still exist with demand in the tank, Norwegian on ice, and nobody else trying to get into the game.
The recovery post-pandemic has so far focused more on the leisure traveler. You would think LEVEL would be in a position to take advantage of that fact, but clearly that’s not the case. When every airline flying over the Atlantic is a low-fare carrier, the ones that actually position themselves as low-fare seem to lose out first.
In Barcelona, this problem exists, though with less competitive pressure than in a business-friendly market like Paris it may limp along for longer. But why? LEVEL appears to be on borrowed time, like so many other efforts at low-cost, long-haul before.