fbpx

Quick Overview of How The Low Cost Carriers Work

Call it what you will – low-cost carrier, low-cost airline, no-frills, discount, or budget carrier, even cheap flight. The low-cost carrier is an airline that offers lower fares and fewer amenities and services to its passengers.

The “parent” of low-cost carriers

It may seem that low-cost carriers have existed nearly as long as people have been flying airplanes. Southwest Airlines, the first airline dedicated to providing low-cost carrier service full time, began flying in 1971. Its mission was to offer cheap airfares to travelers. 

In the history of low-cost carriers, the American carrier, Southwest Airlines, is considered the “parent” and its business model has been copied by airlines around the world. 

European airlines such as EasyJet and Ryanair based their low-cost concepts on the Southwest model. A number of low-cost airlines have developed modified versions of the Southwest model of operation. Today, low-cost airlines operate in most major airline markets of the world.

 

The low-cost carrier business model

How do they do it? How do they manage to be so cheap? The principle behind the business model is centered on “cutting costs in order to be able to give the consumers a low price product with the bare essentials.”

If you have ever flown on a low-cost carrier, take a moment to remember what was not offered or available. These are services not typically offered by low-cost airlines:

  • Priority boarding
  • Reserved seating/seat choice
  • Meal/snack/beverage services
  • Limited or no in-flight entertainment services
  • Few, if any, ticket refund options

The business model for fare savings is built around some of these cost containment principles:

  • Standardized fleet of aircraft reduces training and maintenance costs
  • Non-essential features (reclining seats, frequent flyer plans) are removed
  • Secondary airports with lower landing fees and marketing support are used
  • Rapid flight turnaround (more flights per day/increased revenue, less ground time)
  • Online ticket sales and check-in
  • Baggage charges
  • Charges for all services (onboard services, extra baggage, reserved seating, etc.)

Who benefits? If all those services are eliminated, what does (and doesn’t) benefit the passengers? Let’s look at the pros and cons of budget airlines.

Pros

  • Low price – the most obvious benefit to travelers who can save between 50 – 80 percent on airfare, especially when booking early.
  • One-way tickets – some airlines charge extra for one-way tickets; a number of low-cost airlines sell air tickets a la carte, priced according to availability.
  • Price benefits for traveling during off-peak hours or red-eye flights.
  • Frequent big discount promotions.

Cons

  • Hidden fees – taxes, insurance costs, baggage, etc.
  • Extra charges for not using online ticket sales and check-in, reserved seating.
  • Less convenient schedules – travelers’ flight options may be limited to non-peak hours/days.
  • No refunds; rescheduling a flight can be costly.
  • Baggage restrictions like carry-on luggage only; large fees for excess baggage.
  • “Lesser” airports – some low-cost carriers fly out of secondary, less-used airports that may be a considerable distance from the destination.

Surprises in customer satisfaction

One might think that the biggest customer satisfaction of using a low-cost carrier is the ticket price. Pricing is important, but sometimes low-cost carrier tickets cost more than a legacy airline ticket!

Other services that may influence travelers to choose low-cost carriers are:

Fees – not all low-cost carriers are “fee-heavy.” JetBlue and Southwest don’t charge for a first checked bag.

Aircraft – some low-cost carriers fly new planes because they are cheaper to operate overall than second-hand craft.

Seating comfort JetBlue has the largest pitch and seat area of either low cost or legacy airlines.

Striking a balance

Some travelers spend endless hours chasing after the lowest fare and sometimes the win isn’t much of a win. 

The savvy travelers are not seduced by the promise of low airfares. They will more likely consider the restrictions, price, services and amenities available when deciding which carrier to use.

However, the low cost carriers can be the best choice, meeting the needs of a pleasant and comfy flying experience.

—–

Check out the Slideshare presentation:

Contact Info

BLOG SUBSCRIPTION

Receive our latest posts regarding the travel industry in your mailbox by subscribing to our newsletter here.