Low-cost Airlines and Their Impact in the European Air Travel Market

One of the most significant trend in the European air travel market in the last decade has been the emergence of low-cost carriers that serve short haul markets at very low unrestricted fares and without many of the traditional product features of either scheduled or charter services. After full liberalisation of air services in Europe, implemented in 1997, they have started to pick up major slices of traffic from traditional, more established carriers, forcing them to review their offer. Low-cost carriers generate cost reductions by higher seat density, high aircraft utilization, using secondary cheaper airports, not offering inflight catering, using the Internet to distribute tickets and using just one type of aircraft. These advantages may result in cost levels that are up to 40 percent lower than those of their conventional competitors. The strategies of the leading low-cost airlines and their impact in the European market are anlysed in the paper. The paper also describes how the European low-cost market has evolved, highlighting major trends and predicting likely future developments.