CNBC’s David Reid
Bill Franke, Managing Partner of Indigo Partners (L) and John Leahy, Airbus Chief Operating Officer Customers, Airbus Commercial Aircraft (R)
Veteran airline investor Bill Franke has claimed that U.S. travelers are spoiled and need to be better educated about no-frills travel.
Franke’s private equity firm, Indigo Partners, stunned observers at the Dubai Airshow Wednesday when it signed a draft agreement to buy 430 planes with a list price of nearly $50 billion. Indigo Partners holds stakes in four low-cost airlines who will take delivery of the planes.
Speaking to reporters after the official signing, Franke said in the United States, airline customers are yet to understand budget air travel.
“The consumer is essentially like your teenage spoiled brat. They had been flying with all the amenities for ever and ever and that’s what they think they ought to get,” Franke said.
“They don’t want to pay any more for the ticket, they just want all the amenities,” he added.
Franke said that in Europe about 40 percent of travellers fly the low-cost model while in the U.S. the figure was closer to about 6 or 7 percent.
According to the Statista website, the low-cost carrier model, in fact, holds almost 30 percent of the U.S. domestic market and includes airlines such as Delta, Southwest, and American Airlines.
It categorizes the likes of Spirit Airlines and Frontier as ultra-low cost carriers (ULLC’s).
Franke’s monster order with Airbus on Wednesday is a firm backing of the belief that extreme budget travel in the U.S. and elsewhere has scope to grow as travelers begin to accept the pared-down flying experience.
