How can low cost airlines sell cheaper tickets?
When I was a child, there were a few aviation programs in the TV. At that time, I was waiting curiously programs that seem only one time in a week. It has been almost 15 years and now there are various platforms to reach. In addition to this, the aviation sector has jumped from TV and magazines to many various fields of our life. This jumping has been bringing new concepts for the terminology and economy. In comparisons of different sectors, while Akbank is the most valuable brand in 2015 in Turkey, Turkish Airlines has become first in 2020.
One of the new terminological concepts is “low cost” term. In terms of aviation, it was seen firstly in the U.S. like other inventions. The low cost management model born in 1960s has become essential administration method of Southwest Airlines founded in 1971. In following years, this trend had been taken by Europe companies such as Ryanair, Easy Jet, Wizz Air, Norwegian. The most popular and well-known representer is Pegasus Airlines in Turkey. LCC is popular with selling cheaper tickets. So, what are main reasons of calling as “Low Cost Carriers” of these airlines? Let we explain them.
- Minimalism
Minimalism term is being popular day by day in the world becoming expensive. Although it has been known by public for last few decades, airlines explored it earlier than us and started to carry out. So, how do they practice the policy?
- All passenger classes consist of only one class, economy.
- The less knee distance, the more seats.
- The more luggage, the more money.
2. Narrow Body, New Generation, and Same Type of Aircrafts
Today, fuel is the biggest cost of airlines, so LCC mainly thinks aircrafts whose low fuel consumption. Operation costs of narrow body planes are cheaper than wide body. In addition to this, to sell 300 seats are harder than 186. Unless all seats are sold out, maximum profit is seen far away. That’s why LCC prefers narrow bodies.
Thus, they would like to make huge number of aircraft contract during buying process. Thanks to the agreement, they would easily down the price of $/aircraft. For example, Pegasus Airlines has a contract with Airbus for 100 airplanes. As you know, an aircraft is a manmade things so it has different systematical and mechanical problems. If there is a mechanical problem, it must been completely solved by using only licensed components. Because many kind of regulations and agreements such as ICAO, EASA, trade and the state authority exist in the aviation sector, consequently they increase outgoings. As a result, the young fleet, the less mechanical issue. One more benefit of new generation aircrafts is that after a few years of using, LCC can sell with huge amount of money. Lastly, we touch the homogeneous fleet. If all aircrafts are same, you could readily make swap of components and aircrafts with each other in order to perform a non-stop operation. Even engines are swappable for the fleet.
3. Regional Airports and Short Ground Times
Some cities where the aviation is developed would have several airports. For instance, London has 6, Paris 3, and İstanbul 2, too. So, their pricing policy that has directly impacts on the schedule is different from each other. The price depends on the traffic flow, landing and take-off time in UTC, number of parking positions and services of an airport. Furthermore, the amount changes regarding to days and seasons.
In the last February, Atlas Global declared the bankruptcy and it showed the main reason of the failure is moving to İstanbul New Airport. It is an apparent sample of how an airport affects a budget. Because of this, low cost companies avoid expensive airports and heavy traffic hours to reduce outlays. Another matter is short ground time. When I was at the university, my lecturer said that aircraft get money, if it is in the sky. When an airline take slots, it should declare slot times by acting upon minutes. So, one of the bonanza for the low cost is short occupation time.
4. Less Number of Staff
In terms of salary, cockpit staff has the biggest part. Due to aviation regulations and their syndicate, it is unlikely mentioned about reducing neither the number of pilots nor their salary. Consequently, airlines save on other staff. For instance, Qatar Airways has 45,633 staff, Turkish Airlines has 37,670 but Pegasus Airlines has 6,164. On the other hand, low cost company staff has various workloads. Cabin crew could do both cabin cleaning and boarding in some low costs. Salary of all staff, except pilots are on average level or below. The another policy is to have base in different countries where labor force is low. For example, some companies move their call center to poor countries.
5. Everything on Internet
Internet reaching point was not imagined 20 years ago. Many type of applications are quickly been installed to mobile phones. The aviation sector has taken the position. Thanks to internet, buying or cancellation of a ticket process are done by website or application. Reservations are made through the internet For example, EasyJet sells 95% of its seats in this way, or by phone, but usually avoiding travel agencies. In case of Ryanair, 99% of tickets are sold via its webpage. They want you to do online check-in because it would reduce workloads, stationary expenses and the number of staff.
6. The More Money, The More Services
The main goal of a low cost carrier is transportation of a passenger from A to B point. However, it does not mean that there is no extras. If you want various services such as entertainment systems, foods, Wifi, they have prices as well as. While pilots can take some foods and drink by paying, how to a passenger buy without money. They have yearly membership campaigns so a passenger get points as soon as fly. In another way, passengers would obtain points by renting a car or buy a hotel room. The actual aim of all campaigns is to attract themselves.
During Covid-19 period, flag carrier airlines such as Qatar Airways, Turkish Airlines, Lufthansa, and Emirates have declared loss of budget. Problems under the loss are number of staff, advertisement agreements and huge amount of other costs. Low cost model has become the main topic of the aviation industry during struggling with Covid-19.
