Low-cost carrier
A low-cost carrier (LCC) or low-cost airline, also called no-frills, budget or discount carrier or airline, is an airline that is operated with an emphasis on minimizing operating costs. It sacrifices certain traditional airline luxuries, for cheaper fares. To make up for revenue lost in decreased ticket prices, the airline may charge extra fees such as for carry-on baggage. As of April 2020, the world's largest low-cost carrier is Southwest Airlines, which operates primarily in the United States, as well as in some surrounding areas.
The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors. The term is often applied to any carrier with low ticket prices and limited services regardless of their operating models. Low-cost carriers should not be confused with regional airlines that operate short-haul flights without service, or with full-service airlines offering some reduced fares.
Some airlines advertise themselves as low-cost while maintaining products usually associated with traditional mainline carriers’ services. These products include preferred or assigned seating, catering, differentiated premium cabins, satellite or ground-based Wi-Fi internet, and in-flight audio and video entertainment. The term ultra low-cost carrier (ULCC) has been used, particularly in North America and Europe to refer to carriers that do not provide these services and amenities.
Criticism[edit]
Some elements of the low-cost model have been subject to criticism by governments and regulators; and in the UK in particular, the issue of "unbundling" of ancillary charges by both low-cost carriers and other airlines (showing airport fees or taxes as separate charges rather than as part of the advertised fare) to make the "headline fare" appear lower has resulted in enforcement action.[42] Considering that this amounts to a misleading approach to pricing, the United Kingdom's Office of Fair Trading (OFT) in February 2007 gave all carriers and travel companies three months to include all fixed non-optional costs in their basic advertised prices. Although the full-service carriers had complied within the specified timescales, the low-cost carriers have been less compliant in this respect, leading to the prospect of legal action by the OFT.[43]
Some destination cities lie relatively far from the airports that low-cost airlines use to save costs. Examples of this are Hahn, Weeze and Girona airports—which low-cost airlines advertise as the destinations for Frankfurt, Düsseldorf, and Barcelona, respectively—even though these airports are 50 to 90 kilometres away. This has drawn criticism, mostly from competing airlines that fly closer to the destinations.[44]
IAG CEO Willie Walsh found established airlines arrogant facing the LCC model. For instance, Aer Lingus turned down the opportunity to buy Ryanair for £29 million Irish pounds (€36.8 million). The company further stated that it would not have developed Ryanair and instead would have shut it down.[45]
