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Low-cost carrier

From Wikipedia, the free encyclopedia

A low-cost carrier or low-cost airline (occasionally referred to as no-frills, budget or discount carrier, and abbreviated as LCC) is an airline that is operated with an especially high emphasis on minimizing operating costs and without some of the traditional services and amenities provided in the fare, resulting in lower fares and fewer comforts. To make up for revenue lost in decreased ticket prices, the airline may charge extra fees – such as for carry-on baggage. As of July 2014, the world's largest low-cost carrier is Southwest Airlines, which operates in the United States and some surrounding areas.

Airbus A319 of Germanwings and an Airbus A320 of Air Berlin at Zurich Airport in 2013. Both carriers were among the largest budget airlines in Germany at the time the picture was taken.
Airbus A319 of Germanwings and an Airbus A320 of Air Berlin at Zurich Airport in 2013. Both carriers were among the largest budget airlines in Germany at the time the picture was taken.

The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors. While the term is often applied to any carrier with low ticket prices and limited services, regardless of their operating models, low-cost carriers should not be confused with regional airlines that operate short flights without service, or with full-service airlines offering some reduced fares.

Some airlines actively advertise themselves as low-cost, budget, or discount airlines while maintaining products usually associated with traditional mainline carrier's services—which can increase operational complexity. These products include preferred or assigned seating, catering other items rather than basic beverages, differentiated premium cabins, satellite or ground-based Wi-Fi internet, and in-flight audio and video entertainment. More recently, the term "ultra low-cost carrier" differentiates some low-cost carriers, particularly in North America where traditional airlines increasingly offer a similar service model to low-cost carriers.

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Transcription

now ladies and gentlemen I would like to ask for everybody's attention please low-cost airlines have revolutionized the way we fly easyJet now carries more passengers than British Airways and the giant of the low-cost carriers is Ryanair see the wizard commercial visitor bombs Michael O'Leary is its boss the pheasant he may not look like a tycoon but he's built a multi-billion pound business that's all-time in Amsterdam Georgia budget airlines are private by making their planes and their staff work harder for passengers to air travel sometimes feels like hard work I think people don't like being treated like cattle even the cattle in their lorries get free water and and they don't have to cope with these things well good evening music this is Talia speaking how can I help the Battle of the low-cost airlines has been a clash of big personalities this inside story our Greek and an Irishman for to turn the airline industry on its head now have a chance to experience more of the world than they used but air travel has the middle of its glamour we do thank you very much indeed to your attention ladies and gentlemen and we hope you have a pleasant flight this afternoon easyJet has 200 planes each makes up to four round trips every day their crews meet up around 6:00 a.m. morning how are we all alright Fitzroy yes outstanding um three colleagues for the day and puts them through their daily tasks of safety Kevin you noticed a milky white buildup on the wind what might we think that this buildup is I would think that it's a rime ice absolutely it's bought at the table next to them their pilot and co-pilot check their flight plans and the weather is fine announced fam windy into Gatwick and wind into Edinburgh Gatwick is just one of 22 airports where easyJet faces its planes right so Gavin online yet morning so the issues this morning clearly well the first flights get underway at company headquarters at the Luton Airport senior management meet to review yesterday's operations ok so we have a challenging weekend so Saturday we've had eleven hundred and twenty sectors flown we also have some snow closures in the evening so the daily ops meeting is the one place where the right people get together who can take decisions about the day-to-day operation of the airline we've got about five or six engineering issues during the course of the day everyone knows what they're doing why they're doing in how they're doing in so it's an operation I think that is wrong in a militaristic fashion stelios a Jaguar noon started easyJet with five million pounds from his dad a Greek Cypriot shipping tycoon stelios no longer runs easyJet but he still its biggest shareholder now all told has been a great investment for me I made about a billion pounds in the process so it's a significant investment I keep an eye on today Stelios also keeps an eye on other businesses he owns and charities he bonds between them stelios a Greek Cypriot and Michael O'Leary from rural Ireland have transformed the way the British fly it probably does take you maybe their Greek mentality and an Irish mentality to kind of come at it from a slightly different angle I think you know I think it was logical that somebody growing a low fare airline business would emerge out of Ireland I think it's to be fair to Stelios it's much more impressive that the son of a Greek shipping billionaire who could if he wanted to been spawning around the world in executive jets has made another fortune by offering reasonably priced air travel it's just not as reasonably priced as Ryan here the low-cost rivals are fighting for traffic all over Europe Katowice in Poland is getting a lightning visit from O'Leary he's taking in three Polish airports today getting Ryanair's name in the media I think what I like most today about Poland is your rubbish football team that are even more rubbish than the Irish football team and that's setting the bar pretty low in terms of rubbish O'Leary has business in his blood he's the son of an Irish entrepreneur who'd had both successes and failures were you ambitious to make money yes I think one of the great things you learn if your father has made money and lost money a couple of times the great lesson you learn is the not having money and you don't remember the good times you'll remember the times when there wasn't money there and you generally it breeds the determination not to repeat that in your old life Ryanair was founded by tony ryan in the 1980s ryan was a successful businessman who hired O'Leary this is personal assistant in the early days the airline was small and very traditional it was good old-fashioned customer service if there was flight delays we give them food and drink and all the rest work and you get passengers coming up to you who are not delayed had no delay at all and they're queuing up for their food and everything like that just thanking us it's Ryanair it's feeding time at the zoo Ryanair was losing money but tony ryan hoped that deregulation which had helped American aviation would soon come to Europe he sent O'Leary to meet one of the industry's pioneers he said we're gonna have one last goal where I go to the states meet Southwest Airlines he arranged to meet he would Herb Kelleher and it was the kind of road to Damascus Morman herb Keller has Southwest did everything Airlines thought they shouldn't do that they wanted to make money ambassadors take any seat on the plane just like on a bus or a train it didn't serve full meals just drinks and snacks it made its planes and its crews work more flights per day it just seemed to be blatantly obvious that this was the way forward and that's what started the revolution in low fare air travel in Europe please go immediately to gate 112 gate 1 1 2 back at Gatwick at 7 a.m. easyJet's first wave of flights since elites and gentlemen a very good morning to you all and a warm welcome on board this easyJet flight to Amsterdam do you have a special voice yes I do my friends and family always ask me to do my work voice and show them what I say on board and they'll find it highly amusing the easyJet story began almost 20 years ago travellers between Scotland and London will now be able to make the trip for as little as 29 pounds on a new airline called appropriately enough easyJet but the airline's young founder business wasn't privileged upbringing I was suffering from the rich Sun syndrome so whatever I was doing people said it really is really a father's doing I'm eternally grateful that at the age of 28 he actually gave me the opportunity to do this amazing thing yes son go and prove yourself and of course it wasn't a guaranteed success maybe wouldn't have worked it would have been very embarrassing to go back and say in a dad of lost it all psycho leering Stelios made the pilgrimage to Texas to find out how to run I had a big advantage because I've never worked in an airline before so I literally travelled a bit on Southwest read a couple of books and the Harvard Business School case study on it and then said okay you know let's let's see how we're gonna make this work Richard Gooding was the manager of a small unprofitable Airport north of London at Luton when he got a visit from a keen young man who said he wanted to start an airline we had seen many people who wanted to start Airlines and they had a sort of common ingredient that they'd been to the bank who'd laughed a lot and then come to us to say but would we lend them the money to get started and he was less interested in planes than in selling tickets he had a theory of something called the ignition price and his his view of the ignition prices if you can get your price down to the what that is the market will explode this was very interesting innovative thinking for us in aviation I know it had happened in other retail industries but in aviation we hadn't thought like that stelios hired a couple of flames and Lewton what would make easyJet different was its branding stelios felt he wanted to own a color he wanted a color that nobody else was using and orange was his idea and we sat behind a computer screen until we arrived at the most shocking vivid shade of of orange we could find which was Pantone zero to one see I think which is using jet orange orange was telling us his idea for selling tickets easyJet's call center will take bookings direct from its customers no longer would travel agents get a hefty slice of every airfare it was suddenly possible to cut out the Commission of the travel agent cut out all the accounting of tickets and and save you know the best part of 20 percent I didn't know what I was doing remember it could have been possible that I could open the airline say we only take bookings over the telephone and the planes could have been empty but I was the right place at the right time good evening is it judge this is tell your speaking how can I help you the low fares Revolution had begun twenty years ago it would have been unheard of for a group of lads to pop off to Eastern Europe for a stag party today it's nothing special going to Riga in Latvia it's makes like do and cheaper than Prague is so traps down so there should be should be a good craic don't forget lower fares have changed attitudes to travel passengers there are in many cases indifferent to where they go so long as it's sunshine destination or a historic destination depending on what their personal preferences so if it's Krakow or Prague it really doesn't matter or if it's Alicante or Malaga it doesn't matter it's the place that determines that to man when you can travel to somewhere like you know flowers we're on a plane different country different culture for the same price it's at you to get up to somewhere like Manchester or Liverpool then yeah it's a bit of a no-brainer really the arrival of low-cost airlines has created work in Riga not least the police soon as we had Ryanair for example we had more and more Brits coming here it's very easy to find here some cheap entertainment that they concern to go some striptease maybe even prostitution and that it was easy available that brought here a lot of youngsters Riga responded to the influx by setting up a special police department just to deal with the new tourists they were all taught English which they would meet on their nightly patrols the tourist police have learnt how Brits like to enjoy themselves and the night there are many Brits having these tech parties there was one British guy dressed as a spider-man it was like fat spider-man it's how they enjoy their time here Richard and his friends are already impressed with Regas nightlife not going on lots of different ways you can see it's really texture specifially favorite box has been really good many locals see the new tourists as a gift from low-cost airlines local sales have been doing really good thing because they are bringing money here a bunch of the tourists come just for the weekends here and they are leaving spending a enormous money only when dawn breaks will the casualties be revealed yes it usually happens some British guys wake up somewhere they don't remember where they've been where are their friends where are they staying so it takes takes and hours to find the place where his thing low-cost airlines are certainly a boost to Regas economy but perhaps not the kind that locals would have chosen all these stag parties going to Eastern European cities do you feel you owe any apologies there I think you're look wait we're in low fares airline we carry 80 million passengers a year the overwhelming majority of the passengers we carry each year are families going on holidays businesspeople I think yet the apocryphal stag or hen party is a tiny proportion of the business and I think you'll find that in most Eastern European cities are in Dublin or in the cities where we bring that stag party or hen party business they're very grateful for the business the stag parties have to go somewhere inspirational visit to Southwest Airlines just over a year later Tony Ryan offered him the top job as chief executive of Ryanair I really didn't want to do it I didn't want the the profile of it and eventually you know I was persuaded to do it O'Leary got to work turning Ryanair into a low-cost airline it was a very simple choice close the airline or cut the costs it was brutal in terms of changing model but it changed dramatically and quickly and Michael was the driver behind that to be low-cost you really have to eat sleep drink and believe in low cost no more stuff for free and when you took away the free stuff guess what lots of people started buying a couple of litres and 200 bags even better than cutting costs was turning a cost into a profit it worked beautifully with the orange juice Finch's orange juice were trying to break into the UK market so it was very valuable for them even as a marketing tool for people going from Ireland to the UK to be drinking Finch's orange juice so at the start we were buying that product from them but we had to have a conversation with them then we'll say we can't afford to do this and they said ok well we still want to be on board so we give it to you for free and then we discovered that this probably was a marketing opportunity for them so they should pay for the privilege and if they didn't want to do it we get somebody else so they said ok with papers and then we said you can why don't you give us the glasses as well Ryanair was soon offering more flights and lower prices of Ireland the fare Lingus and British Airways high prices have kept families apart so now even God was back Ryanair Ryanair was really surprised that they found a powerful marketing agent in the Catholic Church because the priest started preaching from the pulpit reminding their congregations that you know that now they suddenly was cheap flights to Ireland so if they did want to go home and visit their families they could afford to do it and that they should check out Ryanair today easyJet and Ryanair still follow most of the original Southwest formula for how to run a low-cost airline thanks very much thank you thank you Thank You Carly by day thank you very much very welcome thank you about the fight they both rely on quick return its history in a 25-minute stop there's no time for cleaning staff to come on board so that's up to the crew it's amazing what gets left behind even easyJet's copilot helps out more engine this team has landed in Amsterdam but it doesn't make much things to them that's all time in Amsterdam ten minutes and the passengers if you turn around already it's my time to go whatever passengers might achievement no prospects and mostly blind younger players than the rest of the industry each airline flies only one time easyJet only flies Airbus planes and Ryanair only flies Boeing's it's another part of the original low-cost model the older our pilots can fly all the planes we are any one Bangka spares for all those planes the cabin crew when they get onboard know that all the galleys and everything will be in exactly the same spot so it's simply replicating our simple formula and making it simpler and simpler the more simple we can make it the more lower-cost and efficient it will be there's a final key part of the Southwest formula that easyJet never adopted but Ryanair has embraced it's the use of smaller out-of-the-way apples you're going to Frankfurt they'll bring you to Frankfurt Han which is about an hour and 20 minutes away you can go to Paris but you go to Beauvais with Ryanair which is a good Arab from Paris so their model has been to develop secondary airports they're mainly disused old air bases that they got scattered around Europe so this is what you put your cheap flight with Ryanair will get you Connor McCarthy helped set up Ryan as European Network we just lined up these small airports maybe 10 at a time and then did a bake-off try to pick the top three and basically competitive tension did the rest hrus most of those airports had never seen anything like it in the past but the prospects of them getting a daily flight to London was just far too mouth-watering for them to ignore so how do airlines make money from low fares at Ryan Air it's a strategy of pilot high and sell it cheap Howard Miller is one of the company's deputy chief executives and its chief accountant our objective is to keep our planes full as much at a time as we possibly can so to that end we are always aggressively targeting the maximum number of bones on seats and every flight we're less worried about what the average passenger pays on the basis that we have a very low break-even load factor and the fact that every passenger spends about 13 euros on other things such as hotels car houses etcetera Ryanair's average fare is 40 pounds but that additional revenue including in flight sales it brings the total per passenger up to 52 pounds excluding and passenger taxes on the cost side fuel comes 220 pounds and here's where being a low-cost airline really counts everything else including the staff the planes Airport charges and financing comes 226 pounds which means there's a profit per passenger of six pounds keeping costs low enough to make a profit on low fares is hard work the staff in Ryanair's old cramped offices it means a battle for everything that costs money there is a head of stationery and you you go upstairs and you request what whatever item you want and you usually cross-examined as to whether you actually need them and if it's a pen you're encouraged to go to the local hotel and get them and if it's a if it's staples they're given out by line rather than box so I do banners buying by rolls for the staff in Ryanair and I'm happy to supply hotel pens whenever I can I need a pen from the the silver silver' Hotel in Katowice O'Leary keeps tabs on the bigger items from his desk at the end of the office every Monday at 8:30 senior management is summoned you had a list of items to complete you had a date beside them when the items were given to you if you haven't achieved what's what's on the list then you're in big trouble O'Leary adopted the practice from his mentor Tony Ryan along with some of Ryan's personal style razor-sharp mind easy razor-sharp mouth and you need the ability to decimate somebody fairly quickly if if they weren't thinking in the right direction it was always going to be somebody's turn and if the hate beam came in your direction it wasn't a very pleasant experience the word is that you're pretty aggressive at those meetings I think isn't that there's some of that is sort of firm but he call it water font talk you know I think we tried to have a very open culture in Ryanair I would be critical of people who don't accomplish what they're supposed to accomplish but people are equally critical of me you know and we I think tried to foster a culture in Ryanair where I think the person who gets criticized most at the London morning meetings is me I don't think so maybe he saw that way but no I think it was a pretty one-way traffic yeah initially I suppose I've been in that meeting for 10 years now so I didn't like the kind of loudness of some elements of the meeting but yes I've long long I can't remember the last time I cried in the meeting we've had a few shouts and stalling out but yeah they're very interesting I don't think she's unique I think there be quite a few people grown-man include us I mean nobody added to my knowledge has ever cried at her Monday morning manager meeting including myself but you know we don't we don't hang around it's we don't have this you know it's all we don't hold hands and sing the company song despite being on the receiving end of O'Leary's anger many of his managers have continued working with him for years you could have had the worst gouging of your life at half-past 9:00 in the morning and perhaps 211 he'd be sitting in or in your office having a cup of coffee he's not out there to upset people but it's certainly a life experience and I've developed 2g as a manager because of Michael by 1998 just wait the rest Larry had done well personally too after negotiation with Tony Ryan for almost a quarter of the company's shares do you feel like you've made enough money now I made enough money a long time ago I don't know what is enough after the elation of easyJet's inaugural flight there was a drastic fall in to get sales Stella started getting worried you know we were two months in it wasn't looking good and at that point Stella's pulled out his checkbook and said spend spend spend in fact I think he said spend a million pounds this week or you're fired Andersen splurged a couple of million in six weeks producing a blitz of orange advertising in the press and on television we had to fill the planes we had to fill the plane he was very very basic at that stage we have no reputation we had to advertise the telephone number so people would call and get on there and the flight to fill the plane when you spend those sorts of sums of money you expect an effect and we got nothing the public responded the public got the message people could see that we have substance with easyJet making a splash and Ryanair already established the big elements started getting interested in these new rivals it was the first time that we got some acknowledgement of the business model until that moment the discussion was well these things they don't really work they might not be safe how can they do it for such a low price are they maintaining the aircraft so we went from rubbishing the constant basically to saying it is a valid business model and one who copied British Airways appointed one of its star executives Barbara Cassone to create B A's own budget airline she began by studying the competition we felt that Ryanair was I mean I call it a flying pub it was just all kind of chaotic and a little bit dehumanizing to customers and easyJet was too orange to my taste I thought you know how much orange can one person take British Airways budget airline go study of us took British Airways to court claiming go back Amish easy gentlemen I was trying to put his airline out of business take nothing away from me so Jeff but I didn't copy them and in fact what we did was we we looked at all of the low-cost airlines on Southwest in the US as well as Ryanair and easyJet etcetera and we created her own a third one goes inaugural flight it was Stelios who had the last laugh I was wandering around the call center as the folks were taking bookings and one of them came over to me and said you won't believe who I've just taken a booking for Studios had booked 10 seats for himself somebody called the police the police just laughed we got on the flight and Stelios walked up and down the aisle talking to the passengers we decided to give away free easy jet flights to the passengers we'll go and I think that took the edge out of it because you're giving people something for free people take it enjoy after a couple of years Kassar knees go started making money but it never got a chance to prove itself da sold it to venture capitalists who in turn couldn't resist the offer made to them by none other than Stelios all the stars aligned for easyJet and they very shrewdly took out their most effective competitor by allowing go and easyJet to be merged ba really created a huge competitor for itself which was most unfortunate and and I think the British flying public lost a great product have reversed traditional pricing of air ticket in the past if you waited till the last minute you might get a standby ticket at a bargain price Ryanair aims to sell at least 80% of its seats you see we launched route in January and the first flights were in June we will monitor the bookings each month as we go along and in order to have any 80% of the seats sold by the time the first flight us is flown we will know four to five months out the experience of similar routes that we've had for a number of years that we need to have 5% so by the end of January 15 percent by the end of February and so on we will know whether we're over and are below that target and if we're above it we can increase the fares because we need to slow down the rate of booking or offer below it we need to reduce the fares we track the prices of three flights from London to Berlin as the flight date approaches fares rise but when a flight isn't selling well enough prices are cut to increase sales in the last few days before these flights the British Airways fare rose dramatically leaving Ryanair the cheapest with easyJet in the middle lovely countryside lovely people lovely food Brenda is one of many British expats in the region there's areas that are almost like a little England with lots of activities lots of enjoyable things and I'm sure that community wouldn't have been as large if we weren't near an airport and the low-cost airlines weren't available nearby Limoge airport 80 percent of the traffic is to and from the UK passenger numbers have trebled in the past 10 years and the French talk about a revitalization of the area thanks to the British exit I even boasts its own English cafe if the low cost airlines weren't around my business would definitely suffer for example there are there are lots of Brits who have second homes here so they'll often pop out for the weekend we wouldn't see them I don't think if they had to drive each time just for a few days Sheila Pickering moved to France more than 20 years ago before you could fly cheaply between England and limos it really changed family life because they can just pop over that the family can pop over if we're having an anniversary over the weekend this would never have happened before you know gun ahve the days when I trust you to go down to the cellar fell 500 pounds the stands have gone with the moving on and we're moving on very very fast I think the greatest contribution of the concept of the low-cost airline in Europe at its most idealistic if you like is that it creates an environment where people can cross cross borders easily and frequently however balding may sound it promotes peace if the low-cost revolution has led to peace it's only been achieved through conflict Ryanair and easyJet have argued over which is the cheapest and Ryanair has always admitted it chases controversy as an alternative to paid publicity core of our marketing strategy is always to spend as little money as possible advertising we don't have an advertising agency we don't use any advertising agencies we designed them all ourselves with a group of young kids who get together once or twice so we can come up with ideas for new ads and the more controversial the funnier the more humorous they are the better a classic Ryanair ad featured the Pope whispering to another the 4th Secret of fátima Ryanair paid for it to appear in just one newspaper that ad went all over the world kind of annoyed a lot of people offended some Catholics and it was seen as a you know a really cheeky and I'm kind of pushing the bullshit boat out but you know for the publicity it garnered it was probably the best ad Ryanair has ever placed in in its history tonight on watchdog the boss of Ryanair who says he wishes he could charge extra for fat people and she used the loo budget airlines get plenty of publicity they don't have to pay anything for the BBC's consumers show us send it more than one complaint a day easyJet and the same for Ryanair hello and good evening and welcome to watchdog tonight so many people get caught out and it's very common for the complaints we get to end with you know I will never fly with them again and I want to warn anybody else not to make the same mistake we did Michael O'Leary the rider boss has been listening to all that as long as you're talking about Hasan I know we're doing a good job okay you've done away with check-in desks what's next in many ways Michael Leary is a journalist and a broadcasters dream because he just comes out with fantastic quotes but I think all of us have to be a word that he is very media savvy and he will use us for his own ends if you like height fares don't book Ryanair if you want the guaranteed lowest fares in Europe fly Ryanair it's a very good commercial now welcome to our very special Ryanair right I'm sorry it's a bit O'Leary makes journalist its jobs easy by coming up with stories that write themselves whether or not they're true we are as you know working hard on a plan to charge for the toilets so that we can take myself microreel under them we arrived in to Gatwick and Michael needed to use the bathroom of course we've no money no change so we had to go and buy a can of coke in order to get the money in a course then somebody asked about hidden charges well actually tell you about hidden charges I go to charge to go to the bathroom and of course love Michael says something like that that media coverage is absolutely enormous so it's not it's not what actually the message is is the fact that you're in the media generating lots of free publicity that we're using ultimately to convert into substantial profits Caroline greed must deal to the fallen from O'Leary's remarks he might make a comment in the press whether it's putting porn on the aircraft or toilet you know paying for the toilets or some other he's standing up on aircraft people think they're ridiculous but they do believe it to a certain extent but we all know that that's what my clears and you know I would prefer that the some of the comments weren't made but that's that that's publicity we are still married to clear up once and for all some of the myths you want to charge people to use the point thoughts you want to have people standing up at the back of the plane is that still it's never been a plan would you like to know is there a rule against Orion air staff charging their personal mobiles in the office yes it's one of the great PR initiatives does anybody a paid ban no they all charge at their mobile phones but makes for great PR if man we're so focused on not wasting money that we don't even allow people to charge up their mobile phones today easyJet is launching a new route to Moscow while they've always been seen as rivals easyJet and Ryanair mostly slide at different hours only a small proportion Brits now they're diverging even more easyJet wants to appeal to business travelers Russia's outside the deregulated EU so this route needed government approval what was really good it was that we were awarded this and I think it showed that we have the credibility to fly the route and it is predominantly a business route so I thought it said quite a lot about east jet today the goal is making the most of us last year easyJet started offering the science seats instead of the usual low-cost practice for finding a seat when you board the called annuities make an easyJet more like a traditional airline and moving away from the low-cost we are completely a low-cost airline in our operating model completely we are also a low fares airline to the passenger so what I think a passenger doesn't say is I'm going to fly a low-cost airline today they just don't use that terminology they think yeah low fares good value great service I'm off I'll try you jet in Moscow easyJet's party of journalists and business people are entertained at a local restaurant the highlight is a performance by a couple of easy church cabin do not the things appear to be going well for easy jerk its despite the long running battle over different visions of its future surprisingly its easyJet's founder who's skeptical about how much more can be achieved he's worried that rising fares caused by rising fuel prices and higher charges by airports are eroding the company's profitability you know the the available opportunity to grow this business must have gone down because the costs have gone up as easy Jets biggest shareholder he wants to stop the company buying new planes every airline at the end of the day goes back because it buys one aircraft too many that flies on one unprofitable route and multiply that by a hundred and fifty and you end up like Pan American TWA and other great names of the sky stelios his fears are at odds with easyJet's management the airline not buy any more planes we would be in decline and we believe that we can continue to grow as I said to grow profitably and deliver returns to shareholders welcome easy and for their first flight and more opportunities for more Russians come and see more president much more scope is that the load was all days to grow well average rim now makes more than three or four flights a year in France it's less than two and in Poland it's less than one flight every two years in place if the rest of Europe starts flying as much as the British low-cost airlines should continue to do well but Stelios has his doubts I mean some of these countries that display very low propensity to trouble is because they live in a very beautiful country in the first place remember you live in the UK and you're sort of conditioned over the last three four decades that holiday means getting on an aeroplane and going to the Sun mostly away from your country because your country doesn't have Sun but this doesn't happen in the South of France and in Spain and in Portugal they live in the Sun already McCall insists easyJet can keep growing and beat its biggest low-cost competitor in the all-important opinion of customers the difference between these generally is that we have really good service on board and on the ground and we care about our passengers there's a big difference there you don't think Ryanair cares about a passenger I'll leave you to judge that I think I think we're the airline that people love to hate here there's the sensationalism that comes out of Michael's interactions with the press but underneath the covers were an incredibly efficient airline we're today announcing and celebrating four new routes here at candidature both easyJet and British Airways the strategy remains what it's been since they Larry took over we cannot offer a little fair without having a really little car space so that means if we have to get up in the morning and have a fight with everybody we will we're absolutely determined to do that any of the carriers that we have seen that have failed have all lost one thing they lost control of their car space and you do that in this industry at your peril this is a very very competitive industry very very capital-intensive and if you're not in control your car space you've got lots of problems coming your way Ryanair has demonstrated its confidence in the future with an order for a hundred and seventy-five new planes from Boeing I still have this vision that in time the flights would be free but we'll get paid for all the other optional services around now we're not quite at that level yet but you can really begin to say to people around the UK and Europe your flight will cost twenty quid in five years time but it costs ten quid and then in ten years time it might cost five quid then we'll be carrying five hundred million passengers and why not a realistic ambition and one of the most successful executives in the business or just another piece of O'Leary's spin you decide how many more cities today then two more cities today we do next is Wroclaw and then back home Dublin should be back in the office by about four o'clock these work has to start

Contents

Business model

Low-cost carrier business model practices vary widely. Some practices are more common in certain regions, while others are generally universal. The common theme among all low-cost carriers is the reduction of cost and reduced overall fares compared to legacy carriers.

Traditional airlines have also reduced their cost using several of these practices.

Common practices

Aircraft

Most low-cost carriers operate aircraft configured with a single passenger class, and most operate just a single aircraft type, so cabin and ground crew will only have to be trained to work on one type of aircraft. This is also beneficial from a maintenance standpoint as spare parts and mechanics will only be dedicated to one type of aircraft.[1] These airlines tend to operate short-haul flights that suit the range of narrow-body (single aisle) planes. As of lately however there is also a rise in demand for long range low-cost flights and the availability of next generation planes that make long haul routes more feasible for LCCs.[2]

In the past, low-cost carriers tended to operate older aircraft purchased second-hand, such as the McDonnell Douglas DC-9 and older models of the Boeing 737. Since 2000, fleets generally consist of the newest aircraft, commonly the Airbus A320 family and Boeing 737. Although buying new aircraft is usually more expensive than second-hand, new planes are cheaper to operate in the long run since they are extremely efficient in terms of fuel, training, maintenance, and crew costs per passenger.[citation needed]

In 2013, ch-aviation published a study about the fleet strategy of low-cost carriers. They summarized that major LCCs that order aircraft in large numbers get large discounts for doing so, and due to this they can sell their aircraft just a few years after delivery at a price high enough to keep their operating costs relatively low.[3][clarification needed] Of course, the strategies of negotiating discounts for large orders and reselling planes are also available to higher-cost carriers as well.

Aircraft often operate with a minimum set of optional equipment, further reducing costs of acquisition and maintenance, as well as keeping the weight of the aircraft lower and thus saving fuel. Ryanair seats do not recline and do not have rear pockets, to reduce cleaning and maintenance costs. Others have no window shades. Pilot conveniences, such as ACARS, may be excluded. Often, no in-flight entertainment systems are made available, though many US low-cost carriers do offer satellite television or radio in-flight. It is also becoming a popular approach to install LCD monitors onto the aircraft and broadcast advertisements on them, coupled with the traditional route–altitude–speed information. Most do not offer reserved seating, hoping to encourage passengers to board early and quickly, thus decreasing turnaround times. Some allow priority boarding for an extra fee instead of reserved seating, and some allow reserving a seat in an emergency exit row (for longer leg room) at an extra cost.

Bases

Like the major carriers, many low-cost carriers develop one or more bases to maximize destination coverage and defend their market.[4] Many do not operate traditional hubs, but rather focus cities. LCCs formed alliance themselves usually, for example:U-FLY Alliance

Simplicity

Passengers boarding a Spring Airlines aircraft via passenger boarding stairs at Shanghai Pudong International Airport
Passengers boarding a Spring Airlines aircraft via passenger boarding stairs at Shanghai Pudong International Airport

Airlines often offer a simpler fare scheme, such as charging one-way tickets half that of round-trips. Typically fares increase as the plane fills up, which rewards early reservations. In Europe (and early in Southwest's history) luggage is not transferred from one flight to another, even if both flights are with the same airline. This saves costs and is thought to encourage passengers to take direct flights. Tickets are not sold with transfers, so the airline can avoid responsibility for passengers' connections in the event of a delay. Low-cost carriers often have a sparse schedule with one flight per day and route, so it would be hard to find an alternative for a missed connection. Modern US-based low-cost carriers generally transfer baggage for continuing flights, as well as transferring baggage to other airlines. Many airlines opt to have passengers board via stairs, since jetways generally cost more to lease.

Often, low-cost carriers fly to smaller, less congested secondary airports and/or fly to airports during off-peak hours to avoid air traffic delays and take advantage of lower landing fees. This is why Ryanair flies to Gatwick Airport, Luton Airport, and Stansted Airport in the London area and how easyJet is able to fly to Paris-Charles de Gaulle, and Amsterdam. In London's case however, low-cost carriers would not be able to use Heathrow anyway as the airport is running at near capacity, so there is no room to build a base. The airlines tend to offload, service and re-load the aircraft (turnaround) in shorter time periods and don't wait for late passengers, allowing maximum utilization of aircraft.

Non-flight revenue

Low-cost carriers generate ancillary revenue from a variety of activities, such as à la carte features and commission-based products. Some airlines may charge a fee for a pillow or blanket or for carry-on baggage.[5] In Europe, it is common for each and every convenience and service to have an additional charge. AirAsia, for example, generates revenue by courier services and hotels as well as flights.

Allegiant Air is a large United States low-cost airline.
Allegiant Air is a large United States low-cost airline.

Limit personnel costs

Ryanair and easyJet airplanes at John Lennon Airport, Liverpool, two competing low-cost carriers in the European market
Ryanair and easyJet airplanes at John Lennon Airport, Liverpool, two competing low-cost carriers in the European market
Airbus A320-200 of AirAsia and a Boeing 737-900ER of Lion Air at Ngurah Rai Airport. Both carriers are among the largest budget airlines in Southeast Asia.
Airbus A320-200 of AirAsia and a Boeing 737-900ER of Lion Air at Ngurah Rai Airport. Both carriers are among the largest budget airlines in Southeast Asia.

Low-cost carriers intend to be low-cost, so in many cases employees work multiple roles. At some airlines flight attendants also work as gate agents or assume other roles, thereby limiting personnel costs. Southwest Airlines is well known for using fuel hedging programs to reduce its overall fuel costs. Check-in at the gate of luggage requires fees, as it requires addition to the weight calculation and last-minute baggage handling.

Online check-in is becoming common, again in the interest of avoiding personnel costs.

Where permissible, some airlines have a disinclination to handle Special Service passengers, for instance by placing a higher age limit on unaccompanied minors[6] than full-service carriers. Often these airlines don't offer connecting tickets, since the airline will have to pay for ground crew to transfer luggage. A customer may create a connection manually by purchasing two separate tickets, but these are considered separate contracts, and the passenger bears the risk if a delayed inbound flight causes a missed connection.[7]

When most countries had national monopolies, crews could negotiate pay raises and good pension benefits (something that costs money for the airlines only in the long term). Most passengers were business travelers who paid high fares that covered these costs. After deregulation led to lower fares, many airlines remained bound to these salary agreements and pensions, whereas new low-cost carriers employed new staff with lower salaries, especially for cabin crew, keeping personnel costs low and allowing for competitive fares. In some cases airlines have gone bankrupt (e.g., Alitalia, Sabena, and Swissair), and new airlines replaced them.

Traditional carriers followed the low-cost carriers by enabling web check-in and encouraging machine check-in at the airport, and generally reducing ground personnel cost. Many airlines are limited to whatever their hub airports decides. Ryanair is special by more or less having its own airports, when it can demand large cost reductions and good deals with the airport owners.

The number of crew members follow international conventions that require one flight attendant per 50 passenger seats and two pilots. No carrier can save money by reducing flight crew, but they can reduce ground crew.

Carriers like Ryanair hire pilots through third-party agencies, without benefits for sick pay, pensions or health insurance.[8]

Principles of operation

At IATA, a LCC operation is defined as including the following characteristics, at least to some degree:[9]

  • Primarily point-to-point operations
  • Short-haul routes, often between regional or secondary airports
  • Strong focus on price-sensitive traffic, mostly leisure passengers
  • Typically a single service class, with no (or limited) customer loyalty programmes
  • Limited passenger services, with additional charges for some services (e.g., on-board catering)
  • Low average fares, with a strong focus on price competition
  • Different fares offered, related to aircraft load factors and length of time before departure
  • A very high proportion of bookings made through the Internet
  • High aircraft utilisation rates, with short turnaround between operations
  • A fleet of just one or two aircraft types
  • Private-sector companies
  • A simple management and overhead structure with a lean strategic decision-making process

While low-cost airlines differ in service offerings, by definition they feature most of the following:

  • Standardized fleet (lower training, maintenance costs; purchasing aircraft in bulk)
  • Absent non-essential features (reclining seats, frequent flyer schemes)
  • Use of secondary airports for lower landing fees and marketing support
  • Avoidance of airports with high costs
  • Rapid turnaround (less time on the ground, more flights per day)
  • Online ticket sales to avoid the cost of call centres or agents
  • Online check-in (fewer check-in desks), charge for desk check-in
  • Baggage charges for checked bags to offset baggage handling and loading costs
  • Passenger loading via stairs rather than jetways
  • Use staff for multiple jobs (cabin crew also check tickets at the gate, clean aircraft)
  • Hedge fuel costs (buying fuel in advance when cheaper)
  • Charge for all services (including on-board services, reserved seating, and extra baggage)
  • Do not use reserved seating (which slows down boarding), or charge extra for reserved seating or early boarding.
  • Fly point-to-point (passenger transfers to other flights are not accommodated, no compensation for missed connections)
  • Carry little extra fuel (reducing aircraft weight )
  • Outfit plane with cost-cutting modifications, such as winglets[10][11][12]
  • Route planning before aircraft arrives at airport (saving time on the ground)
  • Market destination services such as hotels and rental cars for commissions

Innovative practices

Ryanair saves money by attaching the safety card to the backrest
Ryanair saves money by attaching the safety card to the backrest

Some airlines resort to very innovative practices. Many airlines these days work with aircraft manufacturers, but airlines such as AirAsia goes a step further, working with airports to develop specially designed low-cost terminals that require far less overhead. Lower costs are passed on to the airline, and in turn to the customer. Other practices that reduce expenses are the use of UAVs for aircraft checkups, tablet PCs instead of logs on paper (reduces airplane weight), and smartglasses for the pilot.[13]

Differentiation

Ryanair and WizzAir airplanes at Glasgow Prestwick Airport, two competing low-cost carriers in the European market
Ryanair and WizzAir airplanes at Glasgow Prestwick Airport, two competing low-cost carriers in the European market

Not every low-cost carrier implements all of the above points. For example, some try to differentiate themselves with allocated seating, while others operate more than one aircraft type, still others have relatively high operating costs but lower fares. JetBlue, for instance, has in-flight entertainment in every passenger seat. Other airlines are limited on what points they can implement based on local laws. For example, Ryanair cannot remove window blinds from its aircraft, as they are required by the Irish Aviation Authority. As supply increases, this sort of differentiation by brand is an important criteria for the future success of low-cost carriers, since many experts believe price competition alone is not enough, given the number of carriers.[14]

As the number of low-cost carriers has grown, these airlines have begun to compete with one another in addition to the traditional carriers. In the US, airlines have responded by introducing variations to the model. JetBlue Airways advertises satellite television. Advertiser-supported Skybus Airlines launched from Columbus in 2007, but ceased operations in April 2008. In Europe, the emphasis has remained on reducing costs and no-frills service. In 2004, Ryanair announced proposals to eliminate reclining seats, window blinds, seat headrest covers, and seat pockets from its aircraft.[15]

India's Air India Express offers a complimentary meal with beverages on most of its flights.[16]

Ultra low-cost carrier

A secondary term "ultra low-cost carrier" (ULCC) has been used to differentiate some low-cost airlines whose model deviates further from that of a standard low-cost carrier, with ultra low-cost carriers having minimal inclusions in the fare and a greater number of add-on fees.[17] Spirit Airlines and Allegiant Air have been most commonly referred to as Ultra Low-Cost,[18] with Frontier Airlines in 2015 announcing a new strategy to reposition themselves as ultra low-cost.[19] Following the appointment of former Allegiant Air COO Jude Bricker as their new CEO, Sun Country Airlines began transitioning to an ultra low-cost carrier model in 2017.[20][21]

Canada Jetlines specifically refers to itself as seeking to apply "Ultra-Low Cost Carrier operating principles".[22]

Pricing policy

The pricing policy of the low-cost carriers is usually very dynamic, with discounts and tickets in promotion. Like other carriers, even if the advertised price may be very low, it often does not include charges and taxes. With some airlines, some flights are advertised as free (plus applicable taxes, fees and charges). Depending on the airline, perhaps as many (or as few) as ten percent of the seats on any flight are offered at the lowest price and are the first to sell. The prices steadily rise thereafter to a point where they can be comparable or more expensive than a flight on a full-service carrier.

Most airlines charge additional taxes and fees on their tickets. Some low-cost airlines have been known to charge fees for the seemingly ridiculous, such as levying a credit card charge if credit card is the only payment method accepted. Many consumers and legislative bodies[who?] consider this to be fraudulent, but some still allow it and similar practices.[citation needed]

Traditional perceptions of the "low-cost carrier" as a stripped-down, no-frills airline have been changing as new entrants to the market offer passengers more options, as well as premium amenities. JetBlue offers all passengers generous legroom, complementary snacks, and live in-flight television. JetBlue also offers a first class cabin with lie-flat seats on some flights. Southwest allows passengers to check two bags for free. Other amenities found on low-cost airlines include premium cabins, in-flight Wifi, and rewards programs.

Criticism

Some elements of the low-cost model have been subject to criticism by governments and regulators, and in the UK in particular the issue of "unbundling" of ancillary charges by both low-cost carriers and other airlines (showing airport fees or taxes as separate charges rather than as part of the advertised fare) to make the "headline fare" appear lower has resulted in enforcement action.[23] Believing that this amounts to a misleading approach to pricing, the United Kingdom's Office of Fair Trading (OFT) in February 2007 gave all carriers and travel companies three months to include all fixed non-optional costs in their basic advertised prices. Although the full-service carriers had complied within the specified timescales, the low-cost carriers have been less successful in this respect, leading to the prospect of legal action by the OFT.[24]

Some destination cities lie relatively far from the airports that low-cost airlines use to save costs. Examples of this are Hahn, Weeze and Girona airports—which low-cost airlines advertise as the destinations for Frankfurt, Düsseldorf, and Barcelona, respectively—even though these airports are 50 to 90 kilometres away. This has drawn criticism, mostly from competing airlines that fly closer to the destinations.[25]

IAG CEO Willie Walsh found established airlines arrogant facing the LCC model: Aer Lingus turned down the opportunity to buy Ryanair for 29 million Irish pounds (€36.8 million), and would not have developed it but would have shut it down.[26]

History

While tour and package operators have offered lower-priced, lower-frilled traveling for a large part of modern airline history, not until during the post–Vietnam War era did this business model escalate. Through various ticket consolidators, charter airlines, and innovators in lower-frills flying, such as Channel Airways and Court Line, the traveling public had been conditioned to want to travel to new and increasingly further away and exotic locations on vacation, rather than short-haul trips to nearby beach resorts.[citation needed]

The world's first low-cost airline was Pacific Southwest Airlines, which started intrastate flights connecting Southern and Northern California on 6 May 1949. PSA's light-hearted atmosphere and efficient operations were a runaway success early on, and inspired a number of low-cost start-ups across the United States, beginning in the mid-60s. Herb Kelleher studied the success of PSA, and copied their culture closely when he established Southwest Airlines in 1971.

The first airline to offer cheaper transatlantic fares was Icelandic airline Loftleiðir in 1964, often referred to as "the Hippie Airline". Many young Americans travelled to Europe after graduation, to experience the "old-world culture", and they were more concerned with getting there cheaply than comfortably or even exactly on time. Loftleiðir were not famous for speed or punctuality, but flying with the company became a sort of rite of passage for those young "hippies", one of whom was Bill Clinton, later US President.[27]

Advert for Loftleiðir Icelandic Airlines on Fifth Avenue, New York in 1973
Advert for Loftleiðir Icelandic Airlines on Fifth Avenue, New York in 1973

The first airline offering no-frills transatlantic service was Freddie Laker's Laker Airways, which operated its famous "Skytrain" service between London and New York City during the late 1970s. The service was suspended after Laker's competitors, British Airways and Pan Am, were able to price Skytrain out of the market.[citation needed]

In the United States, airline carriers such as Midway Airlines and America West Airlines, which commenced operations after 1978, soon realized a cost of available seat mile (CASM) advantage in relation to the traditional and established, legacy airlines such as Trans World Airlines and American Airlines. Often this CASM advantage has been attributed solely to the lower labor costs of the newly hired and lower pay grade workers of new start-up carriers, such as ValuJet, Midway Airlines, and their like. However, these lower costs can also be attributed to the less complex aircraft fleets and route networks with which these new carriers began operations, in addition to their reduced labor costs.

To combat the new round of low-cost and start-up entrants into the very competitive and deregulated United States airline industry, the mainline major carriers and network legacy carriers strategically developed no-frills divisions within the main airlines brand and corporate structures. Among these were Continental Lite, Delta Express, MetroJet, Shuttle by United, Song, and Ted. However, most of these "airlines within an airline" were short-lived and quickly disposed off when economic rationalization or competitive pressures subsided.[citation needed]

Taking a page[clarification needed] from the mainline, major, or legacy carriers' desire to reduce costs in all ways possible in regards regional route networks by outsourcing regional operations to the lowest expense airline bidder capable of operating regional aircraft, a new generation of low-cost airlines (in name only) soon evolved in the US with varying levels of success. Among these varieties of low-cost and discount operators were noteworthy starts-ups that managed to get off the ground by using the larger aircraft services of established charter airlines. Among this group were the virtual airlines; Direct Air, PeoplExpress, Western, and those that never began service such as JetAmerica. Though harkened as something new, this business model of hiring other mainline airlines and marketing it as a whole other airline business was actually pioneered by the ubiquitous Pan Am with its Pan Am Express operations operated by Air Atlanta and Emerald Air  among others during the early years following airline deregulation, as established airlines fought to survive.[citation needed]

In Japan, low-cost airlines made major inroads into the market in 2012 when Peach, Jetstar Japan and AirAsia Japan began operations, each with financial sponsorship by a domestic legacy airline and one or more foreign investors. By mid-2013, these new LCCs were operating at a unit cost of around 8 yen per seat-kilometer, compared to 10–11 yen per seat-kilometer for domestic legacy airlines. However, their unit cost was still much higher than the 3 yen per seat-kilometer for AirAsia in Malaysia, due to the higher cost of landing fees and personnel in Japan.[28]

Market share

By 2017, low-cost carriers had achieved market share of 57.2% in the South Asia and 52.6% in Southeast Asia. Market share remained somewhat lower in Europe at 37.9% and North America at 32.7%.[29]

For the European Commission, the LCCs market share (44.8%) exceeded legacy carriers (42.4%) in 2012: between 2002 and 2017, LCC share of international seat capacity rose from 23% to 57% in UK, from 10% to 55% in Italy and from 9% to 56% in Spain but have still room for growth in domestic seat-capacity In France with 19% and in Germany with 25% in 2017, compared with 66% in the UK, 48% in Spain and 47% in Italy.[30]

By early 2019, there were more than 100 LCCs operating 6,000 aircraft, doubled from 2,900 aircraft at the end of 2009, while seat capacity reached nearly 1.7 billion in 2018. LCCs accounted for 33% of intra-regional seat capacity in 2018 with 1.564 billion, up from 25% in 2008 with 753 million, and 13% of seat capacity between regions with 101 million, up from 6% in 2009 with 26 million. In 2018, penetration rate was 41% of seats within Europe, 36% within Latin America, 32% within North America, 29% within Asia Pacific, 17% within the Middle East and 12% within Africa.[31]

Long-haul low-cost

Laker Airways Skytrain DC-10 in London, 1973
Laker Airways Skytrain DC-10 in London, 1973

A long-haul low-cost operation would be harder to differentiate from a conventional airline as there are few cost savings possibilities, while the seat costs would have to be lower than the competition. Long-haul aircraft scheduling is often determined by timezone constraints, like leaving the US East Coast in the evening and arriving in Europe the following morning, and the longer flight times mean there is less scope to increase aircraft utilization as in short-haul. The business model is financially risky, and many companies have entered bankruptcy, like Laker Airways.

History

In 2004, Irish Aer Lingus maintains a full service on transatlantic flights while it lowered its prices to compete with Ryanair on short haul.[32][not in citation given] Late in 2004, Oasis Hong Kong Airlines offered London to Hong Kong flights from £199, and Canadian Zoom Airlines started selling transatlantic flights between the UK and Canada for £89. In August 2006, Zoom announced a UK subsidiary to offer low-cost long-haul flights to the United States and India, but suspended its operations from 28 August 2008 due to high fuel prices inducing financial problems.

In 2005, Emirates' Tim Clark viewed long-haul low-cost as inevitable, flights could be operated on 760 seats all-economy Airbus A380s, or 870 for an hypothetical A380 stretch.[33] Since 2005, Australia's Jetstar Airways operates international flights, starting with Christchurch, New Zealand. In late 2006, others followed from Sydney, Melbourne and Brisbane, to popular tourist destinations within 10 hours like Honolulu, Japan, Vietnam, Thailand and Malaysia. With new aircraft deliveries, it hopes to fly to the continental US and Europe.

In April 2006, the industry magazine Airline Business analysed the potential for low-cost long-haul service and concluded that a number of Asian carriers, including AirAsia, were closest to making such a model work.[34] On 26 October 2006, Oasis Hong Kong Airlines started flying from Hong Kong to London-Gatwick. The lowest prices for flights between Hong Kong to London could be as low at £75 (approximately US$150) per leg (not including taxes and other charges) for economy class and £470 (approximately US$940) per leg for business class for the same route. From 28 June 2007, a second long-haul route to Vancouver, British Columbia was started. The company ceased operations on 9 April 2008, after over a billion Hong Kong dollars in losses.

On 2 November 2007, AirAsia X, a subsidiary of AirAsia and Virgin Group flew its inaugural flight from Kuala Lumpur, Malaysia, to Gold Coast, Australia. AirAsia X claims that it is the first true low-cost long-haul carrier since the end of Skytrain.[35][not in citation given] In late 2007, Cebu Pacific, the Philippines' largest low-cost carrier, announced non-stop flights from the Philippines to the United States West Coast and other US cities from mid-2009.[36] The airline also intends to launch low-cost service to Middle East, where around a million Filipinos are based, and in Europe. As of October 2017, it operates flights to Dubai daily and Guam three times a week.[37]

On 11 March 2009, AirAsia X started its first low-cost long-haul service into Europe, to London Stansted. The daily flights are operated by two leased Airbus A340-300s. A one-way economy-class ticket often costs £150, and the premium-class one-way often costs £350. On 12 January 2012, AirAsia announced that it would be suspending services to London on 1 April 2012.

A Boeing 787-8 from Norwegian Long Haul at Gatwick Airport, used for flights from Europe to Asia and the USA
A Boeing 787-8 from Norwegian Long Haul at Gatwick Airport, used for flights from Europe to Asia and the USA

The third-largest European low-cost airline, Norwegian Air Shuttle, started long-haul low-cost operations in May 2013 under their Norwegian Long Haul arm. Norwegian initially operated flights to Bangkok and New York from Scandinavia using leased Airbus A340 aircraft, switching to new Boeing 787s in the second half of 2013 after Boeing resumed deliveries following extensive problems and delays.[38] It currently has direct routes from the United States (Los Angeles, Fort Lauderdale, New York City, Oakland-San Francisco, Boston and Orlando) into Scandinavia (Oslo, Stockholm, Copenhagen).

In March 2017, International Airlines Group established Level, a long-haul low-cost virtual airline based in Barcelona Airport and serving destinations in North and South America.[39] Long-haul low-cost carriers are emerging on the transatlantic flights market with 545,000 seats offered over 60 city pairs in September 2017 (a 66% growth over one year), compared to 652,000 seats over 96 pairs for Leisure airlines and 8,798,000 seats over 357 pairs for mainline carriers.[40]

Ex American Airlines CEO Bob Crandall thinks the legacy carriers will force Long-haul LCCS to lose too much money and will continue to dominate.[41] While Asian carriers like AirAsia X, Scoot, Cebu Pacific and Jetstar Airways are successful, the October 2018 demise of Primera Air and its $99 transatlantic flights illustrates the difficulties of the model, as the US World Airways will be relaunched in 2019.[42]

Low-cost business-only carriers

A trend from the mid-2000s was the formation of new low-cost carriers exclusively targeting the long-haul business market. Aircraft are generally configured for a single class of service, initially on transatlantic routings.

Similarly, Midwest Express (later Midwest Airlines) which operated from 1984 until it was absorbed into Frontier Airlines in 2010, and Legend Airlines which ceased operations in late 2000 were also founded on this operating model.

Probably best described as "fewer frills" rather than "no frills", the initial entrants in this market utilized second-hand, mid-sized, twin jets, such as Boeing 757 and Boeing 767, in an attempt to service the lucrative London-US Eastern Seaboard market:

See also

References

  1. ^ "The secrets of Southwest's continued success". The Economist.
  2. ^ "Long haul low cost becomes mainstream as full service airlines gradually embrace new business models".
  3. ^ ch-aviation: Low-cost carriers eliminate rivals with unique fleet strategy,[dead link] July 20, 2013.
  4. ^ Bamber, G.J., Gittell, J.H., Kochan, T.A. & von Nordenflytch, A. (2009). "Chapter 5: Up in the Air: How Airlines Can Improve Performance by Engaging their Employees". Cornell University Press, Ithaca.CS1 maint: Multiple names: authors list (link)
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  6. ^ "Definition of unaccompanied minors". Uk-air.net. 2012-01-27. Retrieved 2012-04-09.
  7. ^ See e.g. connecting flight policy of easyJet and Wizz Air
  8. ^ Humphries, Conor; Bryan, Victoria (22 Sep 2017). "Ryanair crisis exposes low-cost scramble for senior pilots". Reuters. Retrieved 22 September 2017.
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  28. ^ 明暗分けた「日本流サービス」 ピーチ、満足度「大手並み」. The Nikkei (in Japanese). 24 July 2013. Retrieved 24 July 2013.
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External links

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