History lesson: What IndiGo and SpiceJet learnt from Iceland and hippies
Low-cost airlines enabled millions of middle-class Indians to fly. Decades earlier, another set of unlikely fliers felt butterflies in their stomachs as they lifted off the tarmac for the first time.
On August 25, 2003, an Air Deccan plane made the short flight from Bangalore to Mangalore. It was the christening of India’s first low-cost airline.
Until then, travelling by air was a privilege enjoyed by the elite. But Air Deccan opened up the skies to a new set of travellers – India’s burgeoning middle class.
Among other operational tweaks, its "no-frills" service helped the airline price tickets more than 25 percent cheaper than the competition and only a tad more than the most expensive train ticket. As a result, even the aam aadmi could think about spreading his wings and an entire generation of Indians experienced flying for the first time.
Air Deccan eventually crashed and burned, but 14 years on, the concept of low-cost air travel is still flourishing in India. Budget carrier SpiceJet is currently the world’s best aviation stock, while rival IndiGo earlier this week posted the highest-ever quarterly profit by an Indian airline.
While these airlines have certainly charted their own routes to success, they learnt many of the tricks of the trade from an unlikely source: Iceland.
And decades before middle-class Indian families took flight for the first time, another set of unlikely fliers felt butterflies in their stomachs as they lifted off the tarmac.Pioneering idea
The hippies of America were predominantly middle-class youth who lived off little money in shabby apartments. They had no savings or steady jobs, but still managed to travel east to Europe, the Middle East and even to India, where they made bell-bottoms fashionable and inspired Bollywood to produce songs such as Dum Maaro Dum.
But how did these flower children from America manage to cross the Atlantic?
In the 1960s, high operational costs and regulations made flying – especially across the Atlantic Ocean – an expensive affair. In 1965, eight out of ten Americans had never sat on a plane. But despite their relatively empty pockets, the hippies found an airline to ferry them across to Europe and beyond.
Enter Loftleioir (pronounced Loftlader).
A tiny airline from tiny Iceland with just four aircraft, Loftleioir was only flying 5,000 passengers a year in 1953. But then genius struck.
Airfares were heavily regulated by the International Air Transport Association. Most airlines in the world were members of this body, but Loftleioir was not. It took advantage of this position and offered flights to Europe at fares that were 35 percent less than the competition, making it the world’s first low-cost airline in 1955.
Apart from cheaper fares, the airline also creatively cut costs. Their rivals flew jets while Loftleioir used older turbo-prop engines. Their rivals divided their passengers between business and economy while Loftleioir put passengers into a single class, which meant they could fit more seats (just like Air Deccan). The luggage racks were used as beds for children (unlike Air Deccan).
But service was one area where Loftleioir, unlike their modern counterparts, did not compromise. Passengers received full-course meals, along with wine, coffee and cognac. Even after running into rough weather on the financial front, the airline continued to pride itself on its service.
The airline dodged regulations by essentially operating one route from the US to Europe: New York – Reykjavík – Luxembourg (the heart of Europe). The transatlantic service started with a sole aircraft. But soon, Loftleioir was flying that route three times a week and eventually three times a day.
A perfect matchThe airline was known as the “grandmother of low fares”. The nickname was not only because they were the first airline to offer cheap transatlantic fares, but also because their flights were considerably slower and rarely punctual, taking 10-12 hours to reach Europe. And the company embraced that fact, according to Hans Indridason, the airline’s head of marketing in the 1960s. “We’re slow but we’re low,” was the airline’s advertised slogan.
Business grew steadily and the airline carried 40,000 passengers – mostly middle-class families - in 1960 alone. And then came the boom.
As it turned out, Loftleioir’s cheap fares and chosen route was the perfect match for the bohemian generation of the decade that was eager to explore the world on a budget. Over time, Loftleioir became known as the “Hippie Express”.
The airline not only flew hippies but also appropriated their culture. While smoking was allowed on planes in those days, the staff recall the whiff of marijuana interspersed with the smell of tobacco. Some of the passengers even took out their guitars, triggering an impromptu concert in the sky.At its peak in the early 1970s, Loftleioir was flying nearly 72,000 passengers a year. An energy crisis forced Iceland’s government to merge it with another airline, eventually renaming it Icelandair. But Loftleioir had made its mark. It spawned several other low-cost carriers across the world such as Laker Airways, Southwest and Ryanair, making low-cost travel mainstream. And then at the start of the new millennium, Captain Gopinath got India to join the club.