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There was a time when flying was considered a luxurious and glamorous mode of travel. Wealthy and business travelers made up the majority of passengers on airlines dressing formally, and the cabin crew exuded elegance and sophistication.
As air travel grew and passenger traffic increased, the industry's popularity waned just as low-cost airlines arrived driving down the costs. It challenged the traditional legacy airlines by offering cheaper fares and simplified services. They typically offered basic services, focusing on providing transportation without the unnecessary extras. This meant that you get no complimentary meals with limited baggage allowances, and charging additional fees for services such as seat selection or onboard amenities.
Revolutionizing Air Travel
The origin of low-cost airlines can be traced back to the 1970s when airlines such as Southwest Airlines in the United States and Ryanair in Europe pioneered the concept. These airlines challenged the traditional model of full-service legacy carriers by focusing on cost efficiency aiming to make air travel more affordable and accessible to a broader segment of the population. Since then, they have gained significant market share, particularly in the short-haul and leisure travel markets. This shift has compelled legacy airlines to reassess their route networks and identify opportunities to counter the growing competition.
These low-cost airlines have introduced innovative pricing models, including dynamic pricing and flash sales, which allow travelers to find even more incredible deals. These pricing strategies have empowered individuals to plan and book flights based on their budget, making air travel a more feasible option for a wider range of travelers.
Shifting Passenger Preferences
Passengers are shifting their preferences, gravitating towards low-cost airlines that offer simplicity and affordability in an industry once known for luxury and exclusivity. These airlines made a new way to fly to any desired location for affordable fares without compromising on safety or reliability.
Low-cost airlines have become the champions of wanderlust, enabling travelers to stretch their budgets and embark on more adventures, making dreams of exploring the world a reality.
Implications for the Travel Industry
They have often opened up new routes and connected underserved airports, providing travelers with more options and convenience. This expansion enhances connectivity, especially to secondary cities and tourist destinations, creating more opportunities for travel and boosting local economies. The competition has also led to airlines improving their service offerings including enhancing in-flight amenities, upgrading cabin interiors, and introducing new services.
However, as low-cost carriers have gained considerable market share, airports have experienced increased congestion due to higher passenger volumes resulting in long security queues, crowded terminals, and potential delays, impacting the overall travel experience for passengers. Take for example, in 2013, the Soekarno–Hatta International Airport (Jakarta) designed to accommodate 22 million passengers annually had 52 million passengers that year operating at nearly 42 percent above its capacity. In 2014, The Guangzhou Baiyun International Airport located in China operated at nearly 20 percent above its capacity.
Other major airports— such as Beijing Capital International Airport in China, Haneda Airport in Tokyo, and London Heathrow Airport—come close to saturation during peak travel periods and show no signs of slowing down. come to peak during top travel periods.
The battles between low cost airlines and legacy airlines have implications for airline employees as well. Cost-cutting measures by low-cost carriers had led to job losses or lower wages, affecting the livelihoods of airline workers.
The Future of Air Travel
The market for low-cost airlines is anticipated to expand at a CAGR of 9.87% and reach US$ 302.85 billion by the year 2030 (Contrive Datum Insights Pvt Ltd).
While increased affordability, expanded route networks, and improved service options have benefited travelers, concerns about their service quality, airport congestion, market consolidation, and employment impact need to be considered. The industry continues to evolve as legacy carriers strive to find the right balance between cost efficiency and maintaining service quality, while the low cost airlines aim to innovate and capture a larger market share.
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