How Cheap Airlines Survive

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Low-fare airlines or LFAs are the fastest growing segment of air travel. Also called LCCs or low-cost companies, LFAs currently make up 35% of flights scheduled for intra-EU point-to-point destinations. With the U.S. leading the cheap flying revolution on the 1970s and Europe following suit in the 1990s, many companies have joined in. How do they do it? Read on to find out.
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How come cheap airlines are so cheap? Fastest growing segment of air travel are low fare airlines (LFAs), sometimes called low cost companies (LLC). LFAs now constitute 35% of scheduled intra-EU point to point traffic - and the cheap flights revolution in Europe only started in 1990 by Ryanair. In the USA it was the Southwest Airlines that has led the attack against high flights prices since 1971. Low cost airline Regular airline So how cheap are the cheap flights? Aver far (E) Ryanair Easyjet Aer Lyngus Southwest Lufthansa Air France British Airways 44 65 94 106,60* 235 267 324 RYANAIR easyJet Aer Lingus SOUTHWEST Lufthansa AIR FRANCE BRITISH AIRWAYS Higher seat density - 737-300; 148 seats, single class cabin 128 seats in a regular one Fast turnarounds (up to 25 min.) - higher utilization of the plane Turanround slowed down by use of major airports with large amount of traffic (approx. 45 min.) Direct flights - point to point, no transfers, short routes Transfers, long hauls Smaller airports - cheaper; simple ground facilities. Bigger airports - more expensive. Tickets sold directly, mostly by Internet (easyJet - 95%). Many tickets sold by travel agencies, incurring extra charges No Frills - no additional costs. Entertainment programme, quick check in, lounges, paper tickets, business class, catering. Standardised fleet (only one aircraft type) - cheaper maintenance, training. Various Aircraft. High variable-proportion of salary (up to 26%), better HR utilisation High basic salaries (variable proportion up to 11%), trade union affiliation The case of extreme productivity Passengers per employee : Easyjet : 6772 British Airways : 735 Ryanair : 9679 Air France\KLM : 715 Where do all those savings, on average, come from? 16% 3% 3% 6% 2% 10% 6% 6% 3% 2% 43% Higher seat density Higher aircraft utilization Lower crew costs Cheaper airports / landing fees Single aircraft type Minimal station costs No inflight catering No agents commission Reduced sales / reservation costs Smaller administration Total advantage

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