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I dont know if i get this topic right, but the low cost airlines, focus on 1) minimized labor cost (entry level pilots, minimum number of hostess etc.), 2) Second hand assets or low cost assets, 3) maximized capacity in planes (more passengers / plane than regular) 4) special agreements with ports during high-seasons, 5) charging ANYTHING beyond the transportation itself.
They target to low income population and often to internal lines (within the same country)
I hope I helped a bit in this topic.
Low cost carriers (or LCCs) emphasize cost reduction and control to compete with legacy carriers. They offer competitive pricing to customers
The common cost-cutting strategies adopted by these carriers can be broadly classified into the following categories:
Fleet: LCCs own relatively newer aircraft of a single type. For example, Southwest (LUV) operates the largest Boeing fleet in the world, with a total of 680 aircraft comprising 614 Boeing 737s and 66 Boeing 717s. Jet Blue (JBLU), another low cost carrier, operated 194 aircraft comprising Airbus 320s and 321s and Embraer 190 aircraft. Its legacy competitors, Delta (DAL), United (UAL), and American (AAL) operate a diverse range of aircraft including combination of Boeing, Embraer, and Airbus aircraft. With aircraft from a single brand or manufacturer LCCs are able to reduce training and maintenance costs. The cost savings is enhanced by the use of younger fleets which are more fuel efficient.
In-flight services: LCCs don’t offer all services provided by a legacy carriers like free meals and drinks. However, some of these services are available at an extra price. They have high density seating arrangements with fewer galleries and toilets because they cater to shorter distance routes. Also, they don’t provide seat reservations.
Network: By using the point-to-point model, LCCs stay away from busy and expensive hubs that legacy carrier’s use. LCCs manage to operate from smaller airports through which ground times and delays are reduced. Smaller airports are usually less congested and enable a higher number of trips and aircraft utilization which leads to cost reduction.
Marketing and human relations: Since LCCs offer lower fares, it requires lesser marketing efforts to sell tickets. Most of the tickets are sold directly through websites which saves commission costs on sales through travel agents. LCCs also have lower labor costs compared to the legacy carriers.
Budget Airlines manage to keep their fares cheap by using a "no frills" approach. They sell added service as an add-on (e.g. baggage, preferred seating). Using this format they could manage to keep the fares down by just providing you the basic which is to take you from point A to point B. They also try to keep their overhead expenses low therefore by selling more cheap tickets they would eventually make money.
By using less amount of ground staff, same main carrier airways, higher risk operation strategies.
Thanks to Mr. Sathish for his very thorough answer. I am adding a few more points.
Fly Dubai, Air Asia, Tiger Airways, Ryan Air, Easy jet are successful Budget Airlines and they follow the similar strategies to provide low fare. Users of Budget airlines are people who have never used Airlines Flight earlier or migrant workers who would like to save money. So, the budget airlines have crafted a new market segment and they really do not compete with full service airlines
We can learn a lot from operations strategies and marketing strategies of Budget Airlines as follows
1. Use of same brand and same model new planes for all routes (Air Asia use Airbus for all routes) in order to minimize inventory cost, maintenance cost and pilot training cost.
2. No use of travel agent to sell ticket. The tickets are sold online or you can buy ticket in grocery shops (on line!) with a minimum fee. Travel agent’s commission is saved
3. Use ofsecondary Airports or landing /take off in off-peak hour in main airport to reduce Airport landing charges.
4. Minimum turnaround time in Airports (half an hour) so that the waiting charges in Airports is minimized and the use of aircraft in air is maximized. Pilots even help to clean the Aircraft
5. Baggage restriction to fifteen Kg. so that the plane has enough space to carry cargo and earn extra revenue. However, one can carry extra baggage at cost
6. No food is served during flight. However, you can buy food onboard or pre-book your food on payment.
7. Heavy penalty on date change thereby maximizing revenue.
8. Partnership with Bus company/even owning company bus, so that you travel at cheap fare from Airport to City
9. Partnership with Hotels to provide you cheap rate in hotels and you can book hotel with your ticket.
. Visa assistance to Customers (Migrant labors) so that you travel in their Airlines.
Although this is not my area but I fully agree with Sathish Prabhu.V
