Two weeks ago, I posted a video on why flying
is so expensive, and, people seemed to like it, however, they wanted to know, how are
budget airlines so cheap? Well it’s another complex answer but an
interesting one. For the purposes of simplicity, and to keep
our European friends from feeling left out, we’ll focus on the European model of budget
airlines. While there are low-cost carriers in North
America, South Africa, India, Asia, and plenty of other places, budget airlines really were
first successful in Europe and that’s where they’re still most prominent today. The magnitude to which airlines like Ryanair
and EasyJet reduce the cost in Europe is also much more significant. Budget airlines in the US might be 10 or 20%
less expensive than their traditional competitors while in Europe a fare on a budget airline
might only cost half or a third of what you would pay to a normal airline. You can regularly find 2-3 hour flights on
budget airlines for less than 10 euros So how do they work? Well, unsurprisingly, budget airlines essentially
take every expensive part of the flight and make them less expensive. The most essential thing an airline needs
is airplanes and it is possible to spend less on those. In the months and years following 9/11, the
growth of air travel stalled and most airlines were simply fighting to survive. Meanwhile, Ryanair was thriving and placed
a massive order of 151 737’s from Boeing at unbelievably low-prices. A circumstance like that luckily isn’t frequent
but budget airlines can place large orders at any time which gives them a bulk discount. It might seem weird that a budget airline
would buy brand new airplanes, but the newest planes are the most efficient which saves
fuel. The fuel efficiency of new aircraft offsets
the higher purchase price, so EasyJet (4.0), JetBlue (4.7), Ryanair (5.0), and Spirit Airlines
(5.7) all have younger fleets than any major airline (KLM 9.4, Air France 11.5, Lufthansa
12.4). Budget airlines will also typically have only
one type of plane. Ryanair only operates 737’s and EasyJet
only operates the a320 family. Having only one type of Aircraft means that
pilots, flight attendants, mechanics, and ground staff only need to be trained on one
type of aircraft which saves an enormous amount of time and money. Within the planes, budget airlines will often
avoid luxuries to keep costs down. Ryanair seats, for example, don’t recline
because that increases the initial purchase price for seats and also requires more maintenance. The seat design also saves time for flight
attendants since there are no seatback pockets to clean between flights. Flight attendants on budget airlines are often
in the beginning of their careers and receive little training. Of course they’ll get the required safety
training but only minimal hospitality training. They’ll also often serve multiple roles. While on the ground, some of the flight attendants
might go to the gate and check tickets while others clean the airplane. Through this, the airline eliminates three
or four positions that they regularly would pay for. Onboard, flight attendants are of course responsible
for food and drinks which are almost never free. Onboard service can be an excellent way for
the airline to make money. Many budget airlines also do duty free sales
and Ryanair even sells lottery tickets. Let’s talk Airports. You’re never going to see Ryanair fly to
London Heathrow or Paris Charles de Gaulle because those airports are expensive. There’s only a set amounts of flights per
day that can operate out of them so supply and demand dictates that landing fees are
high and slots are regulated. Instead, Ryanair flies to Gatwick, Stansted,
or Luton in London or Beauvais in Paris, which, by the way, is a 80 minute bus ride away from
Paris, isn’t even technically in the same region of Paris, and has a website that looks
like this! In a lot of cases, Ryanair or other budget
airlines are the only or one of a few airlines flying out of an airport which gives them
huge negotiating power. Often they will take a small regional airport
a ways away from a city and rebrand it as another city airport. They can ask for lower landing and takeoff
prices and, if the airport doesn’t comply, just leave and the airport will essentially
cease to exist. If there isn’t a viable cheap airport available
around a city, budget airlines can also fly to regular airports at less busy times when
landing fees and the chance of delay might be lower. Now let’s get into the nitty-gritty—the
small details. The planes of budget airlines tend to operate
all day non-stop. For example, in one day, this Ryanair plane
went from Brussels to Copenhagen, Copenhagen to Brussels, Brussels to Prague, Prague to
Brussels, Brussels to Nimes, Nimes to Brussels, Brussels to Trevioso, then finally Trevioso
to Brussels. Budget airlines will schedule only 30-45 minutes
between the landing of one-flight to the take-off of another which often leads to delays and
leaves very little time to clean the aircraft. This does, however, mean that the airplane
is always making money and passengers are not paying for the time it’s sitting around. Ever wonder why Southwest doesn’t have reserved
seating? Well by having a first come first serve system
for seats, people almost always show up to the gate early and line up in an orderly line. This way, less time is spent on the ground
boarding and more time in the air flying. Another principle of budget airlines is the
point-to-point model. Most traditional airlines have hubs where
most or all of their flights go in and out of. British Airlines has London, Air France has
Paris, KLM has Amsterdam. To get to most places on these airlines, you
have to connect through their hubs. Budget airlines, on the other hand, try to
have a lot of destinations from everywhere. That does mean, however, that many destinations
are served only a few times per week. The cheapest budget airlines don’t even
allow for connections between their flights. Allowing connections adds cost because then
you have to pay for ground crews to transfer bags, create a more complicated ticketing
system, and pay to rebook a passenger if a delay in their first flight makes them miss
their second. Speaking of ticketing, there’s often no
way to get a ticket from a real person on budget airlines. Ryanair charges 45 pounds if you fail to print
your boarding pass at home and EasyJet and some other carriers have almost all their
check-in’s handled by machines. This, once again, cuts down on personnel costs. At the airport, these budget airlines won’t
bother using jetways because they’re expensive. They’ll use steps and just have passengers
walk across the tarmac or take a bus to the plane. Budget airlines make a lot of money, if done
right. EasyJet (11.15%), Ryanair (24.10%), and Wizz
Air (10.2%) all have higher profit margins than Lufthansa (4.03%), British Airways (7.09%),
and Air France (2.15%). Many of the traditional airlines have unionized
workers with salary agreements that cannot be changed while the budget airlines can hire
anyone and train them in a few months. It’s also hard for these traditional airlines
to grow. Any route they make has to be one with a lot
of preexisting demand since much of their business comes from business travelers. Since budget airlines are targeted more towards
tourists, any destination that Ryanair, for example, opens up in will become a popular
destination just because it’s possible to go there for so cheap. Some traditional airlines in Europe are opening
their own budget airlines to get in on this profit. Air France created Transavia and Lufthansa
created Eurowings, both of which are losing massive amounts of money. What they seem to forget is that the US went
through this budget airline within an airline phase a couple decades ago. Delta created Song, which failed. US Airways created MetroJet, which failed. United created Shuttle, which failed, then
they went into bankruptcy and decided they should try again and make Ted, which failed. None of these worked! Traditional airlines can’t get away from
their labor agreements, honest business practices, and devotion to their hubs. The reason Ryanair and EasyJet are able to
succeed where others have failed is largely because they are so large and flexible. They have hundreds of planes, hundreds of
destinations, thousands of employees, and negotiating power that allows them to overpower
competitors. In the end, for us consumers, any competition
is good competition. Even failing budget airlines will bring down
the cost of traditional airlines and allow us to travel the world for less. Thank you for watching. I hope you enjoyed this video. Make sure to click subscribe and follow me
on twitter @wendoverpro. If you want to discuss this video with me
and others, I’ll link the first reddit thread of my video here. I’ll be back next week with another episode
from That Wikipedia List.
Fascinating! My daughter is studying abroad in Germany this semester and was able to get a round trip ticket from Frankfurt (about an hour from where she is studying) to Glasgow for roughly $75.00 roundtrip (FRA to Glasgow was 10Euro, Glasgow to FRA was 40Euro).
So she is pretty excited to be able to take side trips very inexpensively. She got a youth hostel for 40 Euro for two nights. So she will be in Glasgow and Edinburgh for a few days after Easter.
W E N D O V E R R U L E S
Ah Wendover! Dude really loves planes but I can dig learning about the aviation world when I know next to nothing. Always something fascinating.
This is not a documentary, as much as I love the guy's content.