How does a low cost airline stay afloat?

April 15th, 2015

Large major airlines struggle to stay afloat, so how can these low-cost smaller airlines do it?

 

Today’s post is from your team at SafeSourcing Inc..

Large major airlines struggle to stay afloat, so how can these low-cost smaller airlines do it?

When I need to buy a plane ticket, I go to a search engine for various airlines and enter my destination and time. I am then given several flight options. They all get me to the destination, but at different times, and that makes all the difference in price. My decision for a flight is weighted between cost and departure/arrival times. Others may also factor in layover ports or even preferred airlines.

We have had a few smaller airlines develop inexpensive and basic flights from limited cities at very low costs. These low costs mean that corners have to be cut. No food service offered during flight, no free non-alcoholic beverages, a lack of air conditioning until in the air, less foot-room, or poor customer service are just a few of the differences in low-cost flights. Other cost-cutting initiatives are present with legacy airlines, such as fees for checking bags or no food service on short distance flights.

So the low-cost airlines cut out frills to save money, but what major costs are also cut?

    •  Labor costs at majority of low-cost airlines are non-unionized (Nice to know whenever you are looking into service. The consumer will eat that cost).
    •  Selective routes and airplanes opt for less training, which help costs.
    •  Sell directly to the consumer – low-cost airlines do not use search engines for their tickets because it costs extra money. To buy from them you will want to go directly to their website.

When you go to search for flights, you will see pricing, arrival/departure times, and any layovers, but rarely do you see “Less foot-room” or “No Free Non-Alcoholic Beverages”. These facts do not sell tickets to all audiences. So how do you know what your money is buying you without experiencing it yourself? Or why is the airline cheaper; is it because of cost cuts mentioned above or poor service?

when it comes to personal purchases, the best practice is to read reviews before buying any good or service. If you are a corporation, the purchase can be done with more confidence. Through RFI/Ps the hidden costs and/or lack of ability is uncovered.

SafeSourcing works with corporations to uncover what suppliers may be hiding. We will help your company reach its end goal, discover what factors are important, and help with what your company needs.

Please contact a SafeSourcing Project Manager in order to learn more.

We look forward to and appreciate your comments.

 

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