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Budget airlines are raking it in thanks to low-cost fares

Get ready for ‘ultra low-cost,’ a new model designed to lower fares even further

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Photo (c) AndreyPopov - Getty Images
Budget airlines are enjoying some tailwind these days. A new report verifies that U.S.-based low-cost carriers (LCC) chalked up 246 million seats sold in 2018, far and away more than any other country.

GlobalData’s latest report, ‘Global Low Cost Airlines Market to 2023’, found that out of the 59 different airlines in the U.S., it’s the growth of the LCC’s that’s held steady over the last few years. The researchers say that is the way things should stay until at least 2023.

Deal or no deal

The key factor? Price. Delta, American, and United have all felt the pinch of Spirit, JetBlue, and Allegiant -- airlines with average fares of $113, $175, and $67, respectively. One little caveat about that Spirit fare: it’s a stripped-down, “unbundled” fare, which means travelers have to pay extra for anything other than a seat. Spirit’s fare strategy appears to be working its magic. Passengers are dropping an extra $50.94 in ancillary revenue on top of the average $67 fare.

"Affordability factors are the most important within the consumer booking process according to GlobalData’s global consumer survey and is likely to continue to be at the forefront of a traveler’s decision over the next few years,” Johanna Bonhill-Smith, Travel & Tourism Analyst at GlobalData told ConsumerAffairs.

“Followed by the birth of the more independent traveler that is heavily invested in experiences over services, the growth of LCC’s will aid the growth of younger generational travel saving costs on flights and potentially spending more on memorable activities when in a destination. "

Get ready for “ultra” savings

Bonhill-Smith says U.S. travelers are about to see a new level of fares coming into play in 2020 -- the “ultra-low-cost carrier (ULCC).” 

JetBlue’s founder, David Neeleman, is first out of that ULCC gate with “MOXY” -- an interesting partnership with Marriott that pitches a high-tech experience on all-new Airbus jets, markets the big carriers don’t cater to, and an ultra-low-cost fare designed to offer a level of customer service the Delta, American, and United only offer in first class.

“JetBlue currently holds the fifth largest airline market share within the US in 2018 and the introduction of brands such as this may be sure to both rattle the industry for full service carriers (FSC) and contribute to the growth of the LCC operator,” Bonhill-Smith said.

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