Is The End Nigh For Low Cost Airlines?

Published on 29/09/2008 in Holidays in Spain

EasyjetWith the announcement of yet another low cost air carrier hanging up their hat and calling in the receivers, can we look forward to a future of taking out a personal loan in order to be able to afford a flight to our favourite European destinations?

It seems that every month or so another airline goes out of business blaming external market forces such as high fuel prices for their demise. While this may be true in part, there are some who would say that, possibly, their business model makes them a victim of their own success. With such a large number of low cost airlines in existence all offering 'flights to Spain for only £1', the question we must ask, is 'can the market sustain all of them?' - after all, there are only so many passengers to go around.

Add to this the general confusion regarding their pricing structures, which seem to be designed so that the travelling public can never understand them or even the fact that no-one will ever actually travel for £1 and it makes sense that in such a cut-throat sector that not all of the airlines will survive and only the most ruthless, absolutely no-frills (i.e. lowest operating cost), will stand victorious.

This situation is obviously good news for the airlines that remain and have slashed their costs, cut staffing numbers and generally managed to weather the storm. The passenger numbers remain the same but there are now fewer airlines to choose from and it is unfortunate that these same passengers, the travellers who have kept the airlines going and have now become used to paying (relatively) small fares to visit their holiday homes or expat friends and family abroad, now find themselves scrambling for the fewer seats available and are limited to fewer and fewer departure airports.

The thirst for cheap travel is why the low cost model has become so popular but in a world heading for economic meltdown can any responsible government justifiably allow so much money to be taken out of the country? Deter travellers by increasing travel taxes seems to be the order of the day, but realistically, does that philosophy put people off escaping the rain, high prices and general doom and gloom of their home country? More likely, they will curb spending on other items in order to still have that break in the sun, with this lower consumer spending forcing many small businesses to close their doors leading to more and more people joining the ranks of the unemployed.

With less competition, it is highly likely that, even after considering the higher travel taxes, the airlines themselves may deem the low cost model to be no longer necessary to attract customers and therefore raise their own ticket prices to increase profits.

To return to the question 'Is the end nigh for low cost airlines?' then the answer could be, given the above mentioned scenarios, that it may not be the end of the airlines themselves, just the end of the 'low cost' travel option that we have enjoyed and have come to rely on.

Written by: Mark Buckingham

About the author:Mark Buckingham, Managing Director of Rentaccomspain.com, an online resource where you can find a wealth of Spanish property for rent and for sale.




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Comments:

Marlene said:
13 August 2013 @ 19:11

Wow that is not good at all. I was considering using them next week to fly home and see my mom and dad but I ddeecid to go and use Southwest instead. I saw that nickle and dime when I was trying to book the flight. I started at $145 for just me and by time I was done ticket was $300. I agree I will not use them either.


davmunster said:
01 October 2008 @ 20:25

Don't totally agree with your analysis. XL was a charter airline effected as much by the decline in package holidays as fuel costs. Zoom was a small long haul operator.
Although low cost airlines have been hit by higher fuel costs and some of the smaller ones are vulnerable the bigger ones may increase prices to cover the higher cost of fuel but in this highly competitive market there is unlikely to be a return to the old "Flag Carrier" pricing in the foreseeable future.



antyfred said:
30 September 2008 @ 16:07

interesting that your 737 is nose diving, for cover,no doubt, the £1 seat that i never found useing them for 5 yrs to book seats for customers ,it could only have been one seat per year and not per aircraft, your carrier shown has 137 planes at the last count, you try booking a flight with them from tfs,the later it gets the dearer,usualy on the day 200/250€, one person one way.
the demise of xl is interesting in that some of the people [no names]sold up and left too close to it's collapse to make one wonder! that they were in the know,then opened up a new airline in 'kiss air'also comming to tenerife.
the comany i used to work for, now gone! chartered different airlines, mainly from manchester, they had in their hay day more aircraft out of man to tenerife than all the other carriers put together,but alas could not keep pace with costs,since then 2 years ago the prices have doubled and choice dwingled, only looking to get worse,i fear, how sad !


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