Low-budget airlines have made it incredibly easy and cheap to travel far and often, and yet at first glance they seem nearly identical to traditional airlines. Sure, you have to pay for meals, but a few dollars/euros here and there shouldn't make THAT drastic a difference. So what is it that makes a budget airline a budget airline?
They operate a limited number of airframes if not a single one (for example Ryanair operates 420 737-800's and only a single 737-700 for chartering). This allows them to buy planes in bulk as well as cut down on spare parts reserves, pilot proficiency training in multiple airframes and overall maintenance costs by only needing to hire mechanics proficient in a single airframe. They can also easily substitute an aircraft on a given route as they are all configured the same.
By having seats that don't recline and sometimes no first class they can really pack people in. Those extra customers make a big difference. There has even been some buzz about packing more people in with "standing" seats but I have not seen anything certified on that front as of yet.
In my experience they tend to have less lenient refund and change policies. For example Spirit charges a $90 cancelation fee and most tickets are around that price.
The meals tend to be pre-packed and may have a longer shelf life than the hot food served on other airplanes. This means they can buy it in bulk (read cheap), in advance and store it, and there is no need to coordinate the delivery like there is with hot food. Cold food can hang out at the gate waiting for the plane.
There has been a big move to use mobile devices for a lot of classic functions like check in and boarding passes. This allows them to not need checking counter employees or curb side employees etc. This labor cost is a huge savings. In many cases the flight attendants may also be the boarding/gate personnel.
Some of them also avoid major airports and may elect to fly out of smaller regional airports. This helps keep fees down and some satellite airports may be substantially less busy allowing them to get in and out faster.
As per @Jamiec's comments
Shorter turn around times
- No seat back pockets so nothing to clear out.
- No pillows and blankets to pick up
- Cabin crew may do the majority of cleaning
As @757toga notes some of them also may keep pay low or act as a jumping off point for young pilots to get their type certs and build hours.
For a true LCC (Low Cost Carrier), the answer is simple :
- Single-line buisness model
- Cost & efficiency discipline
Those three items are what, fundamentally, makes an LCC an LCC.
I will briefly explain :
- Single-line business model
A true LCC will define its business model as "seeking to offer its customers the lowest fare possible for a flight".
That is ultimately the goal that underlies everything else that goes on in the LCC's business. That is their "mission" if you like that word !
In practical terms, the biggest element in the LCC's "mission" to minimise fares is to maximise the numebr of passengers on their aircraft. The industy terminology for this is ASK (Available Seat Kilometers). LCC airlines will have some of the highest ASK figures in the industry.
Part of the reason why the seats on LCCs are so "primitive" is to minimise the risk of a seats being taken out of service for technical reasons, hence impacting negatively on ASK.
Of course empty seats are worthless. So alongside high ASK figures, the LCCs will also have some of the highest load factor (i.e bums on seats) figures in the industry. Or in other words, they will have some of the highest ASK yields in the industry.
- Cost & efficiency discipline
Closely associated with the ASK figure is the CASK (Cost Per Available Seat Kilometer - excluding fuel and depreciation). Again, the LCC carrier's "mission" is to minimise CASK.
The LCCs achieve low CASK figures through aggressive cost and efficiency discipline.
EVERYTHING, every single tiny little thing you could ever think of (both "tangible" e.g. toilet paper and "intangible" e.g. the "cost" of someone taking a lunch break) in the business will be assigned a cost and there will be a constant and aggressive drive to keep lowering those costs. Management reporting will be heavily skewed towards costs.
One source of "excessive" costs is of course poor efficiency. Therefore alongside an aggressive cost control programme, there will be an efficiency programme running in parallel. One key component is finding ways to minimise time on the ground (if a aircraft is on the ground its not making money). But there are also things like making sure routes are efficient (so they can also minimise time in the air so they can pack more flights into the day).
Its fascinating but very complex topic. Far too complex for a StackExchange answer !
One of the largest differences is luggage. Originally, checked luggage was part of your ticket, but airlines have been steadily cutting those back, largely because the costs associated with handling luggage
- Less work for the ground crew
- Fewer complaints (lost luggage is a common traveler complaint)
Collins waited for his missing bags. And waited. Finally, he called Delta out on social media and connected with a customer-service representative who helped him track down the bags three days after they’d gone missing. Eventually, the airline cut him a check for $230, the amount of money he and his wife had to spend on clothes and toiletries.
While almost all major airlines charge for checked baggage (Southwest is still included for now), the cheaper airlines also make you pay for carry-on bags. If you've flown at all recently on a regular carrier, you know that almost everyone now tries to cram it all into carry-ons since they are still free. This creates all sorts of hassles in boarding as, once the overhead space is full, you now have to start checking those carry-ons (I invested in a smaller carry-on to avoid that problem).
The cheap airlines hate carry-ons for this reason. So much so, they actually charge you more for a carry-on than a checked bag (as of this writing, both US cheap carriers, Spirit and Frontier, are \$35 for a carry-on and $30 for a checked bag, provided you pay at online booking). Personal items (a large handbag/purse or backpack) are still free.
The target demographics of legacy (or full-service or whatever name you prefer for non-LCC) carriers is different from that of low-cost carriers (LCCs.) LCCs target primarily infrequent leisure travelers who choose flights primarily based on lowest price, even if the flights are less convenient and less reliable. By contrast, legacy carriers cater more to business travelers who are typically willing to pay more for a higher level service and a higher degree of reliably getting the passenger to their final destination in the quickest manner possible.
Interlining Agreements, Codeshares, and Alliances
Most legacy carriers are part of one of the major airline alliances, namely, oneworld, Star Alliance, or SkyTeam. Airlines within an alliance will generally have interlining agreements and often codeshare agreements with each other. Additionally, legacy airlines often have separate interlining or even codeshare agreements with other individual airlines outside of their alliance, those these bonds will typically not be as strong as those within an alliance.
Selling Single Itineraries
Interlining agreements allow the member airlines to sell tickets that include connections to or from other member airlines as part of the same itinerary. By selling the entire itinerary as a single ticket, the airlines then take on the liability of ensuring the passenger gets from their origin to their final destination. For example, with separate tickets, if a passenger takes airline X from A to B and airline Y from B to C, airline X is only responsible for eventually getting the passenger to B and airline Y is only responsible for getting the passenger from B to C if they show up on time at B. On the other hand, if airline X sells the passenger a single itinerary from A to C via B, even if the flight from B to C is operated by a partner airline, the airline assumes the responsibility for eventually getting the passenger all the way from A to C, even if the connection at B is missed due to a delayed flight or similar.
Assuming this liability costs the airline money. Therefore, LCCs typically don't do it. LCC flight cancelled? You're likely stuck until their next flight (which may be a day or three later.) Only in extreme cases (e.g. the airport is closed for an extended period) would you have delays that severe on a legacy carrier, since they'd usually have one of their own flights or a interlining partner flight they could transfer you to.
Interlining agreements between airlines, especially those within an alliance, also often include allowing passengers to through-check their bags across multiple carriers instead of needing to re-check at connections. This makes life much easier for the passengers, especially the business travelers who need to frequently travel from one region of the world to another. However, working out the necessary organization between airlines to do this costs money, both in getting their IT systems to play nice with each other and in getting their ground crews to efficiently hand baggage off to each other.
Transfers in Irregular Operations
Interlining agreements will also frequently include provisions for the airlines within the agreement to transfer their passengers to each other's flights in the event of irregular operations in order to help get them to their destination as quickly as possible.
In addition to the above interlining agreements, legacy carriers also often enter into codeshare agreements with each other. These agreements allow one airline to actually market another airline's flights with their own flight numbers. For example, Delta can sell seats on Air France flights using a DL flight number and vice versa. The airlines will then work out as part of this agreement how they'll split the revenue.
Perhaps one of the biggest differences between legacy carriers and LCCs is that legacy carriers typically have extensive loyalty programs designed to entice their highest-profit customers to keep their flying within that airline and its partners rather than shopping around for the cheapest flight for each trip. LCCs, by contrast, typically have little-to-no loyalty program. The award tickets and other various perks offered to frequent fliers by these programs can represent a quite large cost to airlines, but they ultimately deem them worthwhile expenses in order to attract and keep their most profitable passengers. Since LCCs typically cater to people who aren't willing to pay extra for these benefits, they cut these costs and don't provide the benefits.
Classes of Service
LCCs typically offer economy-only configurations or at least relatively fewer and less extravagant premium cabins. Legacy carriers, on the other hand, typically have multi-class cabins. These range from wider seats with more legroom in regional first class cabins to seats the fold out into 6-and-a-half-foot-long flat beds in long-haul business class to extravagant apartments in the sky complete with dedicated beds, separate living rooms, and showers in long-haul first class. Again, this comes down to a difference in target demographic. Business travelers who need to get to the other side of the planet and arrive well-rested for an important meeting are going to be more willing to pay for those highly-profitable premium-cabin seats, while the infrequent leisure travelers targeted by LCCs won't be.
Another major difference between LCCs and legacy carriers is that legacy carriers usually have much more extensive route networks. Legacy carriers are more willing to provide service to less-highly-trafficked airports in order to connect those passengers to their more profitable routes elsewhere and in order to allow business travelers to reach more remote areas. By contrast, LCCs normally only (or at least primarily) run routes with high demand, especially high leisure demand. The LCC model is to be able to fill every seat on every flight of a 150+ passenger aircraft. Meanwhile, the legacy carriers are often content to fly half-full 50-seat regional jets to the middle of nowhere if it can connect passengers to their hubs for more profitable onward connections.