With traffic expected to slow, low-cost air carriers are getting fancy

SINCE taking off in the mid-1990s, Europe’s budget airlines have soared to account for a third of all air travel in the region. But their growth is slowing. Having introduced holidaymakers to once obscure places like Tallinn and Sharm el-Sheikh, the low-cost carriers are left with few new places to explore. National airlines such as British Airways and Lufthansa have tried to defend their business by offering stripped-down service and cheaper fares on more short-haul routes. “The low-cost carrier market used to be about fast growth and uncomplicated strategies,” says Keith McMullan, of Aviation Economics, a consultancy. “Now it is about slow growth and complicated strategies.”

The model for all the new outfits was Southwest Airlines, the original American budget carrier. Low-cost airlines held down maintenance costs by using just one kind of aircraft, bought in large numbers with bulk discounts. They charged for, or did away with, frills like meals and drinks. Aeroplanes flew back and forth along a single route, often between quiet, out-of-the-way airports, rather than using busy hubs. As a result the airlines could turn planes around in less than half an hour. Almost from the beginning, bookings took place online. Such savings were passed on to customers. …