AirAsia, Southwest Airlines, easyJet, FlyDubai, Jet Blue, Jet Star, and Ryanair are synonymous with affordable air travel. These low-cost carriers (LCCs) have revolutionized the aviation industry, making air travel more accessible and convenient for a broader range of people. Interestingly, the concept of LCCs isn’t a recent development; it dates back to as early as the 1950s.
In the current travel landscape, low-cost airlines have become the go-to option for many, especially for short-distance journeys. An hour-long flight without in-flight meals or additional frills perfectly suits the needs of these passengers. Furthermore, airlines like AirAsia have adopted a multi-hub strategy, allowing them to serve a larger market with more diverse routes and destinations. This approach not only broadens their reach but also enables them to offer even more competitive fares, further democratizing the experience of air travel.
The concept of low-cost air travel wasn’t a novel idea in the history of aviation, but it wasn’t until the post-Vietnam War era that this business model truly took off. Earlier, tour and package operators had offered budget-friendly travel options, but it was the rise of ticket consolidators, charter airlines, and innovative low-frills airlines like Channel Airways and Court Line that conditioned the public to desire more affordable air travel to farther and more alluring destinations.
Pacific Southwest Airlines is the World’s First LCC
The world’s first recognized low-cost airline was Pacific Southwest Airlines (PSA), which commenced its operations on May 6, 1949, connecting Southern and Northern California. PSA’s blend of a light-hearted atmosphere and efficient operations quickly became a model for numerous low-cost startups across the United States, particularly from the mid-1960s onwards. Herb Kelleher, the founder of Southwest Airlines, closely mirrored PSA’s culture when he established his airline in 1971.
The Transatlantic Game Changers
The first airline to offer budget-friendly transatlantic fares was Icelandic airline Loftleiðir in 1964, often dubbed “the Hippie Airline.” It catered to young Americans seeking to explore Europe’s “old-world culture.” Despite not being known for speed or punctuality, Loftleiðir became a rite of passage for many, including future US President Bill Clinton.
The late 1970s saw the introduction of Freddie Laker’s Laker Airways and its “Skytrain” service between London and New York City. This no-frills transatlantic service was eventually priced out of the market by competitors like British Airways and Pan Am.
The American Low-Cost Landscape
Following the Airline Deregulation Act of 1978, new carriers like Midway Airlines and America West Airlines emerged, realizing a cost advantage over legacy carriers. This advantage was often attributed to lower labor costs and simpler aircraft fleets and route networks.
To counter the rise of low-cost carriers, major airlines developed no-frills divisions within their brands, such as Continental Lite, Delta Express, and MetroJet. However, these were mostly short-lived solutions.
The US also saw the emergence of virtual airlines like Direct Air and PeoplExpress, which operated using the services of established charter airlines.
The Global Spread
Low-Cost Carriers in the Philippines
The Philippines’ LCC history began with the establishment of Cebu Pacific in 1996, marking the country’s first venture into low-cost air travel. Initially adopting a full-service model, Cebu Pacific soon transitioned to the low-cost carrier (LCC) model, taking inspiration from Southwest Airlines. This shift became more pronounced in 2005 when Cebu Pacific replaced its DC-9 fleet with new Airbus A320 jets, making air travel more affordable for Filipinos and significantly expanding domestic air travel.
In 2008, the landscape of low-cost air travel further evolved with the acquisition of Asian Spirit by AMY Holdings, owned by Alfredo Yao. The airline was rebranded as Zest Air, becoming the Philippines’ first ultra low-cost carrier. By 2013, Zest Air had transformed into AirAsia Zest through a merger and was fully integrated into AirAsia Philippines in 2015.
During this period, Air Philippines, which had rebranded as PAL Express in 2008, underwent another transformation in 2010 to become AirPhil Express, positioning itself as the second ultra low-cost carrier in the Philippines. However, in 2015, it reverted to the PAL Express brand, adopting a hybrid model rather than a full LCC approach.
As of today, the Philippines’ low-cost carrier landscape is dominated by three major players: Cebu Pacific, which commands over 50% of the domestic market share, AirAsia Philippines, and Royal Air Philippines, each contributing to the country’s growing and dynamic aviation sector.
Low-Cost Carriers in Japan
In 2012, Japan witnessed the entry of low-cost carriers like Peach, Jetstar Japan, and AirAsia Japan, each backed by domestic legacy airlines and foreign investors. Despite higher operational costs compared to carriers like AirAsia in Malaysia, they significantly impacted the Japanese market.
Market Share Achievements
By 2017, low-cost carriers had achieved significant market shares globally, with 57.2% in South Asia and 52.6% in Southeast Asia. In Europe and North America, the market share was 37.9% and 32.7%, respectively.
The European Commission reported that by 2012, low-cost carriers had surpassed legacy carriers in market share. The growth was particularly notable in the UK, Italy, and Spain, with still room for expansion in countries like France and Germany.
As of early 2019, over 100 low-cost carriers were operating around 6,000 aircraft, a significant increase from 2,900 aircraft in 2009. These carriers accounted for a substantial portion of intra-regional and inter-regional seat capacity, with notable penetration rates in Europe, Latin America, North America, and the Asia Pacific.
First love never dies. I fell in love with airplanes and aviation when I was a kid. My dream was to become a pilot, but destiny led me to another path: to be an aviation digital media content creator and a small business owner. My passion for aviation inspires me to bring you quality content through my website and social accounts. Aviation is indeed in my blood and blog!
