Low-cost airline or budget airline is an airline that, after the abolition of rules limiting competition by the United States in 1978, later on other continents, takes the market niche of low cost air transport by limiting or eliminating ancillary services on the ground and in flight.
At the same time, these companies have adopted a network based on point-to- point structure, a fleet of one aircraft type, multi-functional personal, etc., enabling them to reduce their operating costs.
The United States is still the largest air transport market in the early twenty-first century. Its business concepts still greatly influence global practices.
Until 1978, the date of the publication of the Act of airline deregulation, the domestic market of the United States was subject to regulations restricting competition between companies. After this date, the “traditional” companies were engaging in a price war without fundamentally changing the service or increasing the supply of ancillary services. New companies have embarked on a different niche: providing the basic package – transport – at the lowest possible rate, and additional fees for each ancillary service. Advertising and some consumers have retained only the price difference, hence the name “low cost airline.” Other countries have followed the path of deregulation, the European Union, for example, abolishing checks on the competition in 1997.
In the U.S., Southwest Airlines is the one most often credited with the label of the first companies with lower prices; it won its nickname peanut airline because it provided only a bag of peanuts on board and peanuts means figuratively a ridiculous price. The model was then spread to Europe, the most notable successes being Ireland’s Ryanair, which entered the market in 1991 and the British easyJet, founded in 1995. In 2004, there was a wave of creation of low-cost airlines in Southeast Asia and Australia as Air Asia and Virgin Blue has once again shown that the low cost model was applicable almost everywhere, although deregulated areas are more conducive to its development.
Many companies have opted to launch their own low cost chains. KLM launched Buzz, bought in 2003 by Ryanair, British Airways launched Go Fly United Airlines launched Ted, Air France and more recently expanded, starting Orly services Transavia, KLM subsidiary.
The term “low cost” have no legal significance and do not appear on the homepage of companies. The emphasis is usually placed on the minimum ticket price. It is up to the consumer to compare all prices and services offered between the various “traditional” companies or “cheap” ones.
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