Why are low-cost airline tickets so cheap?
Low-cost airlines in the US generally have 10 to 20% cheaper ticket prices than traditional airlines, in Europe this difference is even greater, from 50 to 70%. It is not uncommon to buy return tickets for less than 10 euros from one end of Europe to the other. How is this possible and how do low-cost airlines operate at all?
The topic is quite broad and could be analyzed in detail, but we will show you here a few obvious differences between low-cost and traditional airlines. In any case, low-budget companies cut operating costs wherever they can, without caring about passenger comfort. Here are a few reasons why low-cost airline ticket prices are so affordable and how they do business in general.
Aircraft
Buying an aircraft is extremely expensive for any airline. In the crisis that occurred in the aviation industry after the terrorist attack on New York, Ryanair took the opportunity and placed an order for 150 B737-800 aircraft. In addition to the fact that their price was already lower than usual at the time of the crisis, companies receive significant discounts on larger orders. It may sound illogical for low-budget airlines which are cutting operating costs to buy brand new aircraft, but that is actually the smartest thing possible and extremely important for business. The newer aircraft is significantly more efficient than the older ones (lower fuel consumption, another thing that greatly affects business). This is also the reason why low-budget companies are having a significantly younger fleet compared to traditional carriers.
Low-budget companies generally have one type of aircraft in their fleet. Ryanair operates only B737-800 aircraft, while EasyJet uses only aircraft from the A320 family. Having only one type of aircraft in the fleet, expensive trainings of flight and cabin crew and mechanics, as well as ground staff are avoided. In addition, low-cost airlines generally do not have "additional equipment", by this we mean that their seats do not lean back, given that such seats are more expensive to purchase, and passengers do not have the usual seat pocket in front of them which means less waste to clean up after each flight, more about that later.
Low-cost airlines fly all day, non-stop. For example, Ryanair will operate a flight Brussels - Copenhagen - Brussels, Brussels - Zadar - Brussels, Brussels - Prague - Brussels, Brussels - London - Brussels in one day. The time spent on the ground between two flights is reduced to a minimum and ranges from 30 to 40 minutes, enough for deboarding, quick cabin cleaning, loading fuel and boarding new passengers. It also means that the aircraft is very short on the ground, and it is known that only an aircraft in the air brings money to the company.
Cabin crew
Cabin crew is mostly young, at the beginning of their careers and companies pay them significantly less than traditional airlines. The staff is also less educated, of course, they have all the necessary safety and security trainings, but therefore there is generally no additional investment in training related to the customer service. The cabin crew cleans the aircraft while it is on the ground and prepares it for the next flight, which automatically reduces the cost to the airline as it will not use the airport service. Food and drink on low-cost flights are almost never free and companies make huge amount of money on it. The cabin crew offers in-flight duty free and Ryanair even sells its famous lottery. Many companies offer you bus or train tickets from the airport where you will land to the city center.
Airports
Ryanair, Wizz Air and EasyJet do not fly to London’s Heathrow given that landing costs and all other taxes at such large airports are high. On the contrary, Ryanair, for example, flies to Stockholm, to Skavsta Airport, which is 106 kilometers away from the city center. It is the same with Frankfurt where it flies at Hahn Airport, 125 kilometers away from Frankfurt. Operating to these smaller airports, the low-budget company is generally the only one or one of the few that brings traffic to the airport, which gives them a certain bargaining power. When they start to operate and bring passengers to regional, smaller airports that have not had a significant number of passengers until then, they will start asking for lower prices (acceptance and handling of aircraft, landing fees, etc.) and if the airport does not agree with that, the LCC will simply cancel all routes and transfer flights to another airport where they will apply the same business strategy. If they can't find a suitable smaller airport, low-cost airlines will also operate to larger ones, but certainly in the less attractive time of the day where their costs will be lower, as well as the possibility of delays.
P2P instead of Hub system
Traditional airlines have their hubs through which they offer transfers for passengers to continue their journey to the final destination. Low-cost airlines do not do that, instead of hub, they fly point to point. Many LCC's do not even allow transfers because in that case they have to pay the airport service provider to transfer your luggage to the next flight, with the risk if your first flight is late and you would miss the second one, the airline will need to reroute you at their expense.
Minimum costs for aircraft handling at the airport
In addition to the cleaning which is done by cabin crew, other airport services have also been kept to a minimum. When checking in for a flight, the company will direct you to print your boarding pass at home or have it on your mobile phone, and if you don’t do that, they will charge you at the airport, probably more than you paid for your flight. This saves companies additional money by not using airport staff who would otherwise have to work at the check-in counter. The check-in agents will still be there for most companies, just in case, but once again, if you want to check-in at the airport, you will need to pay for it with many low-budget companies. Likewise, Wizz Air, Ryanair or EasyJet aircraft will almost never be seen parked in a position with bridges at the airport. Yes, airports charge extra for airlines for this service as well. Most airports also charge for the stairs, so Ryanair has built its own stairs into the aircraft and almost always use them to board or disembark passengers at the front door of the aircraft.
Demand
While traditional airlines track market movements and generally run routes between certain destinations where demand already exists, low-cost airlines will actually create demand by themselves by launching a new route. The route operated by LCC which is extremely affordable will very quickly become popular. Then, of course, the airline will raise the price of airline tickets which will still be significantly lower compared to traditional airlines.
In conclusion, for us as passengers any competition is good since there is more choices to travel, mostly by affordable price.