Airplane travel is nature’s way of making you look like your passport photo¨.
Introduction and History of Budget Airlines
In the 2000s, budget airlines became a fact of life throughout the airline industry worldwide. Today, they even provide 50% of the air traffic in Europe.
As a result of budget carriers, air travel has become more accessible worldwide. More and more first-time flyers (particularly in Third World, Emerging Countries), and many young and lower-income people fly more often.
Following the deregulation of the US airline industry in the 1970s, many new carriers were formed to challenge the dominance of the so-called legacy carriers (United, American, etc.).
Most of these challengers attempted to undercut the legacy carriers’ prices. (Before deregulation, the government decided what routes the airlines would fly and determined the pricing system. Most tickets, by the way, were priced based on the number of miles traveled.)
In the first decade or two after deregulation, dozens of these challengers appeared and disappeared seemingly overnight. If consumers could buy a ticket on these airlines before the company went bankrupt, they could get a good deal. However, as a whole, these challengers entered and left the scene so quickly. They made only a small impact on the cost of the fares that most consumers paid.
In the 1990s, Southwest Airlines began to challenge these legacy carriers very effectively by developing an entirely different business structure. It:
- Simplified its pricing structure. Southwest usually has only three to five prices for each flight based on reasonably simple criteria such as:
- how many days in advance you buy a ticket and
- whether you buy a ticket online
- Hired nonunion labor and gave employees the ability to make decisions on the spot)
- Allowed passengers to pick their seats. They assign passengers a boarding group only. When they call your boarding group, you can choose any available place you want.
- Radically altered the industries’ traditional routing structure by:
- Using less-popular airports (such as Burbank in Los Angeles, Oakland in the San Francisco Bay Area, Islip in New York City, and Midway in Chicago)
- Specializing in short hops rather than long haul flights. (If you flew across the country, you made at least one, often two or three, stops on Southwest).
Southwest proved profitable. The legacy carriers, until the last seven or eight years, floundered.
As a result, the legacy carriers and Southwest became more alike. The legacy carriers adopted Southwest Airline’s pricing strategies in the late 1990s and 2000s. In the meantime, Southwest started to look more like legacy carriers did in the past. They implemented a frequent flyer program and became the only major airline in the US that does not charge baggage fees.
Southwest, also in the last few years, has like some other longer established budget airlines:
- Expanded its flight schedules to include destinations outside of the US,
- Began to fly longer-haul domestic flights,
- Provided more service between large US airports.
Budget Airline Tickets Today
Budget airlines (also called low-cost carriers) charge twenty to thirty percent fewer fares than legacy carriers. Then, they add additional fees for everything from baggage, seat selection, carry-on luggage, beverages, food, etc. Often, budget airlines also do not have onboard entertainment systems. (If they do have them at all, they cost extra). If you are not careful, you can pay as much for a budget airline as for a legacy carrier once you consider these fees.
Conversely, like what happened in the US twenty years ago, large overseas carriers are becoming more and more like budget airlines to remain competitive. I suspect that similar to what happened in the US; we will also see the following changes throughout the world:
- Some budget airlines will disappear,
- More national airlines will consolidate,
- Increased ticket prices from budget carriers (especially as their staff and planes get older).
- Large budget carrier will join alliances with the legacy carriers.
When is it Worth Using Budget Airlines?
During my five years traveling around the world as a Fifty-Plus Nomad, I used a mixture of budget airlines and legacy carriers. Generally, budget carriers charge around 10-25% less than legacy carriers. The fare difference can be well worth the hassle outside of the US, especially on flights between continents. Usually, the US-based budget airline tickets are not worth the trouble unless you have no luggage. (That said, Allegiant Air can be a good deal if you live in a small city far away from a large airport).
If the difference between flying a budget and a legacy carrier is:
- Less than $50 one- way on a flight within the same continent.
- $100 one-way between continents,
I will choose the legacy carriers for the reasons described below. (Note: This assumes that the ticket terms are somewhat similar).
However, I expect that with time, the line between budget and legacy carrier will become fuzzier and that I may change this policy in the future.
See here for a list of budget airlines.
What are Traditional (Legacy) Carriers?
The large, traditional airlines (often called ¨legacy¨ carriers) are increasingly beginning to resemble budget airlines. Sometimes, budget airlines are similar enough to legacy carriers to be a good deal. Sometimes, they are not.
Legacy carriers are airlines that existed before airline deregulation. Most legacy carriers are also either:
- Large commercial airlines founded before the 1970s (in the US, the legacy carriers are United, American, and Delta).
- Airlines that used to be run or highly regulated by the government.
Today, budget carriers represent a substantial share of the airline industry (50% of the market in Europe) and are usually profitable. You will find budget airlines throughout the world. They are becoming increasingly common throughout Latin America and Asia.
The differences between the basic economy bundle offered by legacy carriers and the services from budget airlines are often not significant.
However, there are some differences between legacy and budget carriers that are important for consumers to understand:
Benefits of Flying Legacy Carriers
There are some small benefits to the legacy carriers, including:
- Budget airlines are more likely to be in the farthest reaches of the airport with uncomfortable, overcrowded lounges.
- Often you will need to take a shuttle from the plane to the airport on a budget airline. (Shuttles are usually crowded and uncomfortable particularly if the weather is terrible).
- You may have fewer options if a flight is delayed or canceled on a budget airline than a legacy carrier. (Note: You do not have that much recourse even on a legacy airline).
- Since budget carriers only fly regionally and don’t partner with anyone, you can’t use them on your round-the-world ticket.
- Some budget airlines use lesser-known, further out airports like Luton in London and Islip in New York City. Sometimes, the costs of the additional fare to get to the airport may be more than your cost savings on your tickets. (More and more budget carriers are, fortunately, using major airports). That said, always check to see where the airport is on both ends before booking the ticket.
- Budget airline seats are small and generally cannot recline.
- Most flights between different continents (i.e., Cross Atlantic/Pacific, flights between North and South America, etc.) on legacy carriers include in-flight entertainment, meals, and beverage service (often including free alcoholic drinks). The budget airlines usually either charge extra for these services or do not include them at all.
- You should print your ticket before boarding some budget airlines. Easy Jet, for example, charges a fee if they have to print your ticket.
- Sometimes budget airlines charge a high fee to check-in baggage. I have paid as much to check a bag on Easy Jet as for the fare itself. Also, you can sometimes save money by paying for your baggage fee when you purchase the ticket.
Some Additional Air Travel Related Posts
- Why Alliances are Essential to Travel Providers. Are they Good or Bad for Consumers?Travel industry alliances are essential to the business´s survival. However, alliances have both good and bad implications for consumers
- Extra Fees: What are Ancillary (Extra) Fees and Why Are They Increasingly Becoming A Travel Industry Lifeline?More and more the travel industry depends on the sale of other products to expand and maintain its profitability. Expect to be bombarded with hints to buy other things (ancillaries) on your next cruise, flight, etc.
- The Internet Has Changed the Face of the Travel Industry More than Any Other Major IndustryThe internet has changed the travel industry probably more than another industry. This article discusses how these changes affect the consumer.
- Travel Industry Cost Saving Techniques: The Good, the Bad, and the UglyThe travel industry has made several changes to save costs in recent times. Some like using more fuel-efficient planes do not affect consumers that much. Others like reducing staff have made the experience worse for consumers.
- Business Travelers Versus Leisure TravelersThe travel industry gets most of its clients from leisure travelers. However, it makes more money from business than leisure passengers. The airlines put up with us leisure travelers because they couldn’t survive without us. However, they don’t hide their preference for business travelers.
- Why Are There So Many Connecting Flights? A Discussion of Why Airlines Love the Hub-Spoke Model More than ConsumersUnbeknownst to most consumers, the cause of most of our airline-related complaints is the hub-spoke model. Unfortunately, however, the hub-spoke model is also essential to the airline industry’s financial viability.
- Airline Schedule Changes: Why Don’t Airlines Keep their Promises?Learn why airlines change their schedules after you buy your tickets and what you can do about it.
- How Many Taxes, Fees, and Other Charges Do Consumers Pay For Airfare, Hotels, and Other Travel Services?The amount and number of travel taxes, fees, and other charges added to your bill will probably surprise you. Many are hidden and like everything else, taxes keep going up.
- Airline Consolidation: What Are the Disadvantages and Advantages For the Consumer?The airlines have consolidated so fast in the USA and Canada that only 5 players dominate the market. Learn what this means for consumers.
- The 3 Reasons Travel Prices Are So Radically Different than Other Products: Perishability, Capital Costs, and Yield ManagementHave you ever wondered why travel products seem to be priced so crazily? Learn the three economic factors that contribute to the pricing of travel products: perishability, high capital costs, and yield management.
- Why Pack Light Advice Doesn’t Work for Me (and May Not Work for You Either)I have had more problems because I packed too light than too much. Packing light advice is mainly geared toward people who are going on a whirlwind trip through Europe independently. I usually travel for long periods and stay in only a few places often with great climate variations. I also hate washing my own clothes.
- Some Hard-Learned Packing Tips From My 5 Years Traveling Round the WorldWhile I do not always follow packing light tips, there are many other tips that I use all the time. This post outlines the tips that were most useful during my 5 years traveling around the world.
- 3 Simple Baggage Tips to Avoid Wasting Time, Money, and TroubleA series of simple steps to avoid problems with your bags such as making your bag stick out from the others on the carousel and finding the most durable bag.
- Get an Upgrade to Avoid Uncomfortable Air TravelI have frequently managed to score business class seats either as an upgrade or for a modest additional fee. Learn how I did it and how you may be able to follow in my footsteps.
- Airline Bumping: What is it REALLY All About? Why It is Often a Blessing?Airlines routinely sell more tickets on a plane than there are seats. They expect no-shows. Most of the time this causes no problems. If there is trouble, often they can find volunteers who will receive some compensation to take a later flight. Once in a rare while, airlines have to involuntarily bump someone. This explains your rights if this happens to you and why I am glad I have volunteered to be bumped a couple of times.
- Round the World Tickets 101: Are They Worth the Trouble or Not?Once in my life, I bought a round the world ticket. My experience was favorable but I think the number of times these tickets are useful for most travelers is fairly limited for the reasons outlined in this post.
- Flight Schedule Changes: Simple Tips to Keep Flight Changes from Destroying Your TripIn the last ten years, I have spent nearly half of my life traveling around the world. One of the few unexpected changes is the sheer number of times airlines have changed my itinerary significantly. Sometimes it has worked out to my advantage. Other times, not. This post tells you what you can do if this happens to you.
- Why Buying the Cheapest Airfare is Often a Big MistakeI am surprised how often I can get significant improvements in convenience and comfort when I don’t buy the cheapest ticket. Often, for example, I can fly in business class from the US to Cancun for only $20-40 above the cost of the cheapest ticket. Often for a few dollars, I can get much more convenient flights as well.
- Top Tip: Eliminate International Flight Connections StressProbably the worst type of flights involve having to make a connection in a foreign country. Here are some tips to make these connections as stress-free as possible.
- Are Budget and Traditional Airlines Really that Different? Why Occasionally You Should Avoid Budget AirlinesOften nowadays there doesn’t seem to be that much difference between budget and traditional airlines (legacy carriers). However, unless the difference in ticket prices between budget and traditional airline is above 15%, I would recommend choosing traditional airlines for the reasons outlined in this post.
- Finding the Cheapest Flights 101: A Simple GuideA synopsis of my experiences with finding the cheapest flights and using search engines. The article also covers many tips for finding the cheapest flights, some of which are not discussed that widely elsewhere.
- Airfare Bundle Tickets: Advantages and DisadvantagesI often buy tickets with a mid-price range of bundled services attached. I often think the few extra dollars are worth it. You may or may not choose to follow in my footsteps after reading this post.
- Travel Hacking: How to Exploit Frequent Flyer and Loyalty Programs for Your Own BenefitHere are dozens of tips to hack your way toward low-cost flights and hotel rooms using frequent flyer and other travel loyalty programs.
- Frequent Flyer Miles: A Lazy Man’s GuideThis is a synopsis of my use of frequent flyer miles during my round the world travels from 2011 to 2015. It should help you to see how the programs have changed in the 2010s and give you some ideas how you can design a frequent flyer strategy that works for you.
- Airport 101: Avoid Immigration, Customs, Airline Check-In, and Security ProblemsWithout a doubt, one of the most frustrating parts of living as a fifty-plus nomad is dealing with airports. In my five years traveling around the world, I encountered several issues I did not anticipate including finding the right terminal, not having proof of onward passage, and unexpected fees. This post helps you avoid some of my mistakes.
- Frequent Flyer Miles: How to Master the Art of Redeeming MilesOnce you earn frequent flyer miles, you then have to figure out how to redeem them efficiently, Here are some tips from my own experience and that of experts.
- Earning Frequent Flyer and Other Travel Loyalty Points Without Leaving HomeI used frequent flyer points to pay for 40% of all my flights during my five-year trip around the world. It was easier to do in 2011-2015 when I traveled; however, it is still a good way to help pay for your travels. Here s a guide to how you can earn miles without traveling by using credit cards and buying affiliated products.
- Getting to the Airport Trouble-Free: 6 Simple TipsGetting to and from the airport and airport parking will be easier if you follow the six simple tips in this post.