The impact on air travel
Undoubtedly, the UK airline market looks radically different today to that of the early 1990s. Many no-frills carriers have proven to be very successful businesses, combining a number of factors to take advantage of new opportunities and exploiting them very effectively. As a result, they have taken a large share of passenger traffic from their competitors.
Many of the aspects of the no-frills operating model are not however in themselves new. There has, for example, been no technological breakthrough such as a new type of aircraft that has allowed these airlines to flourish — no-frills carriers use the same aircraft that are available to other carriers, and face the same fuel costs. And it has long been known that high utilisation and simplified fleets reduce costs. Indeed, charter carriers have traditionally achieved very high rates of utilisation (and still do).
But the no-frills carriers’ rigorous focus on reducing costs and simplifying operations has resulted in a changed approach to issues such as fleet operation and renewal, airport operations, and sales techniques. No-frills carriers have combined these various factors into a business model that is radically different from that of traditional scheduled airlines.
The paper notes, however, the increasing convergence between business models. The “no-frills carrier” tag may no longer be a relevant way of describing a particular type of airline, as many of their characteristics have been copied by other airlines operating short-haul services. Perhaps in the future the key distinction will be between airlines only offering point-to-point services as opposed to those offering a wider choice of destinations through an interconnecting network. This may lead to increasing numbers of passengers “self-interlining” (buying separate tickets for two legs of a journey and making the connection themselves).