Friday, November 21, 2008
What Kind of Airline Am I Flying?
When air travel is discussed in the American media, it seems that certain buzzwords are thrown out quite a bit. "Legacy Airlines," "Low Cost Carriers," and "Ultra Low Cost Carriers" get thrown around quite a bit. But explanations over what those terms mean seem to come few and far between. So, in a quest to end some confusion, here's a list of the three main types of airlines flying the skies and examples of each.
1. Legacy Airlines
Legacy Airlines is a buzzword that has been thrown out a lot recently. These tend to reflect airlines with long histories that have a large route and feeder structures. They also have a tendency to have a large international network and will have at least two classes of service on most flights. These are the big, mainstream airlines that most people have heard of for years. They used to differentiate themselves by greater service on board flights than other airlines, although economic challenges have ended that practice by and large. Part of the challenge that legacy airlines face has to do with the baggage that comes with a long history. Long term loyalty to a business does have some higher costs, as well as retirement and healthcare expenses that can handicap the bottom line as well.
In the US, the main legacy airlines consist of American, Delta, Northwest, United and Continental. US Airways could be a legacy airline, but they are changing their business model (although not necessarily their reach) to a hybrid between a low cost carrier and a legacy airline.
2. Low Cost Carriers
Low cost carriers are airlines that offer some limited services, but have limited routes as well. They are able to keep costs lower and as such are able to offer somewhat lower fares than the average airline. Many of these airlines will cap out their highest fares as well. In many cases, Low Cost Carriers actually offer more or better service than their legacy counterparts. Having a limited route network and having fewer stations to service and newer planes make this possible. Many of them offer in seat entertainment across the fleet. Some offer no entertainment but allow you to check baggage for free, something that is now history among the legacy carriers. Low Cost Carriers generally limit themselves to domestic flights or some limited international flights (generally Canada or the Caribbean and Mexico.)
The largest or best known Low Cost Carriers in the US consist of Southwest, JetBlue, Alaska, Virgin America and Frontier. There are a couple international carriers that would qualify for this status as well, Icelandair, which services a variety of Northern and Western Europe airports through its Reykjavik hub and Aer Lingus which does the same through Dublin.
3. Ultra Low Cost Carriers
The Ultra Low Cost model is a difficult one to see work. The flights themselves generally don't make money, the money is made in ancillary revenue. On board sales, extra fees, charging for privileges for example. There are very few airlines that have made this model work, and the history books are littered with ULCC failures, most notably Skybus which crashed and burned a mere 10 months after launch earlier this year. Your ticket gets you a seat and nothing else. Need to check a bag? That's extra. Want a specific seat? That might cost extra too. Food or a drink? Get ready to pay.
The only Ultra Low Cost Carrier that has had any degree of success within the US is Spirit airlines which offers fares for as low as $2 plus tax. Add in the extra fees though that you might need and it might not be any cheaper than anyone else. In Europe, Ryanair is the king of the Ultra Low Cost Carriers.
Ryanair has managed to maintain consistent profitability even in times of exceedingly high fuel costs. Fees play a big part of that - for example, a ticket from Dublin to London cost 1 Euro this October. For the American making that reservation, there was a 5 Euro fee to check in because online check-in was only available to EU citizens. Checking bags cost another 20 Euros, and then there was a separate 5 Euro fee to talk to the baggage handler who checks in your bag. All said and done, the flight ran a total cost of about 40 Euros ($55). Still somewhat cheaper than the average flight that day, but not nearly the steal that the 1 Euro fare originally indicated.
1. Legacy Airlines
Legacy Airlines is a buzzword that has been thrown out a lot recently. These tend to reflect airlines with long histories that have a large route and feeder structures. They also have a tendency to have a large international network and will have at least two classes of service on most flights. These are the big, mainstream airlines that most people have heard of for years. They used to differentiate themselves by greater service on board flights than other airlines, although economic challenges have ended that practice by and large. Part of the challenge that legacy airlines face has to do with the baggage that comes with a long history. Long term loyalty to a business does have some higher costs, as well as retirement and healthcare expenses that can handicap the bottom line as well.
In the US, the main legacy airlines consist of American, Delta, Northwest, United and Continental. US Airways could be a legacy airline, but they are changing their business model (although not necessarily their reach) to a hybrid between a low cost carrier and a legacy airline.
2. Low Cost Carriers
Low cost carriers are airlines that offer some limited services, but have limited routes as well. They are able to keep costs lower and as such are able to offer somewhat lower fares than the average airline. Many of these airlines will cap out their highest fares as well. In many cases, Low Cost Carriers actually offer more or better service than their legacy counterparts. Having a limited route network and having fewer stations to service and newer planes make this possible. Many of them offer in seat entertainment across the fleet. Some offer no entertainment but allow you to check baggage for free, something that is now history among the legacy carriers. Low Cost Carriers generally limit themselves to domestic flights or some limited international flights (generally Canada or the Caribbean and Mexico.)
The largest or best known Low Cost Carriers in the US consist of Southwest, JetBlue, Alaska, Virgin America and Frontier. There are a couple international carriers that would qualify for this status as well, Icelandair, which services a variety of Northern and Western Europe airports through its Reykjavik hub and Aer Lingus which does the same through Dublin.
3. Ultra Low Cost Carriers
The Ultra Low Cost model is a difficult one to see work. The flights themselves generally don't make money, the money is made in ancillary revenue. On board sales, extra fees, charging for privileges for example. There are very few airlines that have made this model work, and the history books are littered with ULCC failures, most notably Skybus which crashed and burned a mere 10 months after launch earlier this year. Your ticket gets you a seat and nothing else. Need to check a bag? That's extra. Want a specific seat? That might cost extra too. Food or a drink? Get ready to pay.
The only Ultra Low Cost Carrier that has had any degree of success within the US is Spirit airlines which offers fares for as low as $2 plus tax. Add in the extra fees though that you might need and it might not be any cheaper than anyone else. In Europe, Ryanair is the king of the Ultra Low Cost Carriers.
Ryanair has managed to maintain consistent profitability even in times of exceedingly high fuel costs. Fees play a big part of that - for example, a ticket from Dublin to London cost 1 Euro this October. For the American making that reservation, there was a 5 Euro fee to check in because online check-in was only available to EU citizens. Checking bags cost another 20 Euros, and then there was a separate 5 Euro fee to talk to the baggage handler who checks in your bag. All said and done, the flight ran a total cost of about 40 Euros ($55). Still somewhat cheaper than the average flight that day, but not nearly the steal that the 1 Euro fare originally indicated.
Labels: airlines, legacy airlines, low cost carriers, ryanair, tips, travel, ultra low cost carriers
Wednesday, November 05, 2008
Ryanair Threatens Transatlantic Service Again
The economic downturn is hitting everyone hard, and airlines already challenged by a year plus of high fuel costs are no exception. So expansion isn't something we are normally hearing about in the airline industry.
But Ryanair is again talking major expansion... across the Atlantic, despite tough financial times. If it happens? Who knows. The plans are vague, but they're there. Two to three years from now, Ryanair flies to L.A., New York, Boston, Florida and San Francisco. Starting seat rates? About $15 each way. Sounds great! Except for the actual flying experience, and that it's not terribly likely to happen.
Ryanair's profit fell 47% in its most recent report, and it expects a loss over the next six months. In fact, CEO Michael O'Leary forecasts that in Europe, the only airlines left standing when the economy finally recovers will be Lufthansa, Air France, British Airways and Ryanair. In fact, in order to make ends meet, Ryanair is forcing a week's vacation, unpaid, on the whole staff.
I'd consider this the airline equivalent of vaporware in the computer world. It's promised, but never seen.
But Ryanair is again talking major expansion... across the Atlantic, despite tough financial times. If it happens? Who knows. The plans are vague, but they're there. Two to three years from now, Ryanair flies to L.A., New York, Boston, Florida and San Francisco. Starting seat rates? About $15 each way. Sounds great! Except for the actual flying experience, and that it's not terribly likely to happen.
Ryanair's profit fell 47% in its most recent report, and it expects a loss over the next six months. In fact, CEO Michael O'Leary forecasts that in Europe, the only airlines left standing when the economy finally recovers will be Lufthansa, Air France, British Airways and Ryanair. In fact, in order to make ends meet, Ryanair is forcing a week's vacation, unpaid, on the whole staff.
I'd consider this the airline equivalent of vaporware in the computer world. It's promised, but never seen.
