Strategies of Low Cost Airlines

by CraigF; Updated September 26, 2017
...

Low cost airlines came into the public consciousness at the turn of the 21st century as consumers were, for the first time, offered the chance to fly with no frills attached at a reduced cost. There have been companies that have failed but some have profited enormously from this new business strategy.

Simple Product Idea

Their concept is a simple one. Low cost airlines cut out the segregation of passengers and use very narrow seating which, in turn, creates more capacity. They do this with large planes so every flight has plenty of seats. Usually, the passengers pay for the seat and anything else is extra. Ryanair has even started charging customers to use the toilets on short flights. These companies target leisure customers, not business passengers.

Flights are sold on a first come, first serve basis and therefore the cost of each flight rises depending on the demand for seats. The routes are never too long, which takes away the need to stop and refuel at other airports while increasing the frequency of the flights.

Marketing

The lost cost airlines that have survived and profited have done so through heavy use of advertising and public relations. Ryanair once advertised that its flights cost as little as one penny, before taxes, which was covered heavily by the media. Many low-cost carriers have also embraced and exploited, for their benefit, some of their legal battles.

Cost Cutting

Costs are cut all over the board. Flights are booked over the phone or online which eliminates commissions and cuts down on staff. Passengers are encouraged to check in online or face a possible charge. Reductions in downtime and delays are made possible by targeting small airports. Companies also cut back on wages by employing less senior staff members, and reduce overtime by eliminating overnight stays in foreign countries. Catering costs and handling costs are also reduced.

Photo Credits

  • Just One Film/Stockbyte/Getty Images