Why are budget airlines so successful?

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  • Anonymous
    Guest

    Cedric_Statherby
    Participant

    I would like to start a new thread, though it is not unconnected to existing ones on eg the future of mainstream airlines, BA’s strike etc.

    The question is, why is the budget airline model so successful? The answer appears to be that the travelling public has made Price the single most important determinant of deciding on their choice of airline. It seems that the average airline customer would rather fly cheaply than in comfort if it saves a few pounds.

    At first sight this seems understandable. But it is actually very odd. If other industries were so dominated by the question of price (note, NOT value, but price) we would all eat in Macdonalds at the expense of anywhere trying to serve better food, and stay in hostels rather than at more comfortable or convenient hotels. We would all wear rags rather than fashionable and quality clothes, and so on. You get the point.

    Other industries and service sectors are able to preserve a full range of quality offerings. Why is the airline industry being so uniquely driven by a race to the bottom?

    And what can those of us who do like a bit of comfort and are prepared to pay (with our own money) for it, do about it?


    Snickers
    Participant

    I have a the different theory. I don’t think the budget airlines originally targeted the typical airline passengers.

    I believe they were after a different makret: the people who used to take haly day or day long bus and train rides. And for the archiplagoes like Indonesia, Malaysia and the Philippines, to attract those taking the days-long boat rides. When these passngers realized the precious time wasted on the journey, plus the cost of the meals during a long trip, the cost of air travel suddenly became more feasible.

    Today, it is the old-time air travellers who are downgrading themselves and flying on the budget airlines. And with that comes the comparisons between the frills and no-frills. But for those who used to travel on land or sea for hours and even days, the budget airline is pure luxury.

    So the people used to the bigger airlines shoud stoip complaining and comparing. Instead, they should just lower their expectations – and enjoy the flight!


    TominScotland
    Participant

    Interesting thread, Cedric. I think that there are a wide variety of factors behind the sucess of SOME budget airlines (remember that many have failed – Oasis, Buzz, Go, Globespan etc.) to do with price, convenience etc.

    With the exception of Oasis, Air AsiaX and Jetstar, all budget airlines operate shorthaul with, typically, flights of less than 2 hours. I know that the trend is towards longer routes but that remains the dominant principle. The comparison is, therefore, with bus and train travel where a level of discomfort and low/ zero service is often expected. So, the argument is that if I put up with it on the bus from Manchester to Leeds, I can sit in an aircraft that long with a similar lack of pampering. Provided that the price is right.

    There is also a general casualisation of travel. Going away is no longer the “big thing” that it might have been for many people in the past, planned and dreamed about well in advance. We travel on the spur of the moment and are driven in our choices by availability and price. So on a Thursday evening you may decide that you want to go away for the weekend – you go to the FR/EZY website and see what is good value from your local airport. Its not “Lets go to Paris, Darling” but “Haugesund is really cheap (£4.99 including taxes) tomorrow, why don’t we try it this time?”.

    There is also a matter of options and choice. For a short break, FR offer me over 30 destinations direct from Prestwick. BA offer me Heathrow, Gatwick and City; bmi offer Heathrow and Copenhagen etc. For a short flight (business or pleasure), what makes more sense, comfort and a two hour wait at Heathrow while changing or a direct cattle truck to my destination, where an on-time arrival is much more likely than the indirect route? If I lived in London, maybe things would be different.

    Finally, for many people, travel is discretionary expenditure and is built around a finite budget. I am looking to take the family to Oslo in August. KLM/BA/bmi all come out at about £250 a pot. FR offer me a direct flight from EDI at less than £100 a head. That is a saving of about £500 which can go to a better hotel, a couple of drinks at Norwegian prices etc etc.

    I know the situation with budget airlines is somewhat different in Asia but also bear in mind that in the US, Southwest (the original post-deregulation budget airline) regualrly wins service awards…..

    It will be interesting to see what others have to add. I am off down to Wembley for the biggest cup final of the season this weekend (come on the Saints!!) and am on an early EZY flight tomorrow. Any other option would have been a crazy price or strikebound…….


    NTarrant
    Participant

    Definately an interesting thread Cedric. I think you have to go back many years to the late Sir Freddie Laker days to see why low cost has been successful. He made the mistakes that paved the way for the likes of Easyjet and Ryanair.

    The market now is the same as then, he was trying to open up air travel to “the masses”, those that would not travel with the major airlines because of price. The US model was seen as the way forward in the late 70’s and early 80’s. In those times if you travelled to Spain you went BA or IB, but sometimes it was possible to go on a charter with the likes of Thomson, Intasun or even BA’s Enterprise and throw away the accomodation which had to be offered.

    The regulatory system changed the way air travel was offered. The Europeans we dead against opening the skies to protect their national airlines. Perhaps Laker would still be a brand name if he had operated to Europe rather than the US.

    When you look at air travel in the retail sense, there is a market for both styles, low cost and full service. In much the same way as one would shop in Waitrose or M&S for quality as opposed to say Lidl or Asda for cheap and cheerful.


    Gin&Tonic
    Participant

    I honestly believe the majority of passengers on low cost airlines (including myself) just see the journey as a means of getting to the destination, safely and as near to on time as you could hope.
    If you don’t set out with any expectation you won’t be disappointed.

    If by using low cost airlines especially on Europe it means I can afford an extra holiday or visit then I will. Business travel should never be confused with the two. When I travel business the time I travel and the potential state I am in when I arrive are important.

    However if my destination is a sun lounger in the Mediterranean recovery from any journey is a pleasure.


    Cedric_Statherby
    Participant

    Thanks for all the interesting comments. I put this question to a friend in the travel trade and her observation was this:

    “The time spent actually in the air is now quite a small proportion of the time sent on air travel. This is especially true of travel in Europe: for any flight less than about 2 hours, the time spent getting to and through the airport, waiting for luggage and getting to your final destination from the airport far exceeds the time in the air. And since the “non-air” part of the journey is (a) the same for everyone and (b) increasingly such a stressful and unenjoyable experience, it makes little difference to the *overall* experience however marginally more pleasant the limited time in the air is.

    Of course the longer the journey, the more the air-time part matters and the more therefore there is advantage in a pleasant on-board experience. But our experience is that for short hops, people just want to get the travel part done: their expectations of enjoying it are pretty minimal anyway.”

    Which makes sense to me, even if it is rather depressing.


    lloydah
    Participant

    Whilst the above is true I find that now, for journeys of less than 2 hours and travelling with family, I’ll go BA economy rather than budget airlines. I find the fares are as cheap, or cheaper, when you add all the “extras” you get charged for from Stansted on Easy or Ryanair plus the service is still better. Too many times I’ve been delayed or cancelled and left stranded, especially on FR. When this happened at Nice with BA last autumn a replacement aircraft landed within 31/2 hours.
    I just feel safer with them.


    NTarrant
    Participant

    The budget airlines are also very good at marketing their lead in low prices. As lloydah points out fares on BA can be as cheap or cheaper than EZY or FR. People sadly believe what they read and think that the low cost operators are cheaper than BA or others.

    Some years ago friends of my parents where waxing lyrical that they had found a cheap flight to wherever it was in Spain from STN, oh yes they said, £10.00 cheaper than BA from LGW each. What they didn’t realise was that the taxi fare from the south coast to STN was £264.00 return, whereas LGW was only £85.00 return. Needless to say they didn’t get such a bargain after all!!


    MarcusUK
    Participant

    Certainly in Asia, for Air Asia (& X), they have eaten away MH’s domestic network in a big way. They have also taken much business from TG, & intra Asia routes they have brought down prices for those that would not have had the opportunity to travel before.

    In Australia, where the domestic market especially was a Monopoly with some flights costing the same as a flight to another country, both VirginBlue, & Jetstar have created inroads into the market like never before. Prices have come down to 1/3rd, but they have the buyable extras, such as lounges, spacious seats, decent luggage allowances.

    Interestingly, the low cost carriers are the ones with the new modern Aircraft, they are not running old planes as they used to. Some Established full service Airlines have become shabby & worn, MH, SQ, TG recent trips all look faded & jaded. Technology & new planes appeal to flyers.

    The world order has clearly changed, with China, India, & some Asian Countries having a growing Middle Class population, able to afford, & have the inspiration to travel. The £ is at one of the poorest values abroad, & the Euro declining, which bumps up the value of the other currencies, making travel more affordable for them, more expensive from here in Europe.

    Technology, larger more economical aircraft, larger & more regional airports, but increased security & time at airports have made short haul travel a bind. Business class inter-Europe is dying off, a few hrs, with the essentials available at the airport rather than on board, make a Business ticket at 6 times the price irrational almost.
    The model of even the EU full service Airlines now is flexibility of ticket, laced up as economy premium.
    Still i gain the benefits from my Gold cards with KLM /AF, Etihad & Virgin Group, the latter giving me lounge access, upgrades & Miles on their Australia low cost flights & perks anyhow, as well as worldwide.

    The price of a LHR -AMS on KLM remains around £87, with low cost little different with all the add-ons.

    For me, with the rising costs of Medium / long haul travel, the real interesting development is the premium economy, & the low cost versions (Such as AirAsiaX STN-KUL, New flat business seat), priced at 1/3rd- 50% of other Airlines. Interestingly a “lower cost / PE is being developed by MH, CX.
    First Class with flat beds established in Business Cabins, is also in decline in all regions, amongst many Airlines.

    In Europe the Low costs have become greedy & I agree there is little difference in price all in. But in Asia, they have mass populations, & an abundance of new customers, & in Australia, they have truly liberated the domestic travel market, & are starting to do the same for some International routes.

    Population numbers, the changing world order, the currency values, ease of Visas, the world has become a smaller place, & the norm of travel country to country is taken as accessible to more. Indeed, it is seen as an intrinsic to peoples value systems, to be able to travel.

    A Very broad & interesting topic…


    MartynSinclair
    Participant

    My take on budget airlines is that i just view them as another airline. Where i live in north London, Easy Jet offers a superb service from Luton. I can get to Luton within 20 minutes of my office and home, into the terminal, through security and onto the aircraft far quicker than it sometime takes me to get to Heahtrow or Gatwick. Easy Jets model of free seating is superb becasue it gets the people to the gate quickly on the basis that it fou dont get their on time, you wont get a good seat. I sm still happy to meander onto the aircraft last, take whatever is left and sit in my seat for max 2 hours and then get off at my destination and ready for work. The TV reality show “Airline” has shown people that you have to get to the airport an hour before or you DONT travel – end off – no excuses. You know what you get with Easy Jet and it works. In the states I use Jet Blue which has a very similar model except with better inflight entertainement. Have free live TV, bring your own headsets – is another novel way to keep pax entertained. Top marks to Easy Jet and Jet Blue for bringing short haul travel in a good and economical way.

    The other side of budget travel is Ryan Air, an airline that as a company we have banned our staff from using. I dont like airlines that lie, I dont like airlines that cheat elderly customers, i dont like airlines that cut their costs to the bone cos eventually bones shatter and i wouldnt trust an airline whose CEO goes on camera and suggests blow jobs should be a perk for travellers in its new business class (see You Tube).I am sure that Ryan Air has plenty of fans and good luck to them, but in my mind, Ryan Air has done for flying what Time Share salesman have donen for holiday property ownership.

    Why Are Budget Airlines so successfull? Well if you offer someting for £1, that is gerneally may hundreds of pounds, you are bound to become successfull. Its all about how you market it and the honest and forthright way you come come across as a brand leader or a fake!


    lloydah
    Participant

    All of the above I would agree with, especially often having to fly AA internally who, in my opinion, are not a patch on Jetblue. And, if you can get to a local airport and EZY go to your destination “eazily” then you’re onto a winner most of the time.
    But I’m not sure about your last couple of sentences MartynSinclair, FR are about the most successful airline, even with all the bad publicity of them being, what is seen by some, to be dishonest in their methods. Are they a brand leader as well as a fake?


    MartynSinclair
    Participant

    Hi Lloydah – Ryan Air are extremely succesful because they give the impression of being value for money.

    If you stand by their check in area and see how many people get caught out by not having checked in on line, incorrect baggage weight – worst of all – if the aircraft is only 60% full, you are crammed into rows together, not allowed to use seats in empty rows, because the crew say “it will out the aircraft c of g out of synch” is utter nonsense. The reason why Ryan Air cram you together and do not allow you to use empty rows is becuase it means that they do not have to clean these rows on a turnaround. I dont have an issue with this, but at least don’t lie using some techno talk to the pax.

    Also, there are constant runours about the pressures Ryan Air pilots are under in their turnaround times and also who pays for their uniform and part of their base training. Ryan Air may be successful in terms of their ticket sales, but t doesnt meant that they are up there with BA and Easy Jet in terms of professionalism and ‘honesty’!


    lloydah
    Participant

    Hi Martyn
    I have experienced the “centre of gravity” myth myself. Telling them “I used to be an RAF pilot” just gets them turning away and walking off. I just wonder how long it will take for their standards of professionalism and honesty to filter through to the public, or is it simply that getting there is the only criterium. And I wonder what is the percentage of their pax who only know the budget airlines so have nothing to compare them with. Last time I flew FR non of the cabin crew spoke fluent English and it was a hell of a job to understand them. Or is that me being a bit jingoistic?xenophobic?? I’ll certainly fly EZY if I have to but never again FR.


    NTarrant
    Participant

    Apparently Flybe do this “centre of gravity” as well. A friend of mine travelled EDI-SOU and there were plenty of seats free, but all passengers were told to stay in their allocated seats. This was on one of their new Embrarer aircraft.

    When BA used to operate this route they sometimes would ask certain passengers (usually me and another Exec card holder) if we would take one of the back seats until airborne, due to there being little to no luggage at the rear of the aircraft. These were prop planes.

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