Expert insights

Spot the difference: budget airlines vs. traditional carriers

7 March 2017 by Corrie Long

With the gap between low-cost and traditional carriers narrowing, is there now any real difference between them?

Since the launch of easyJet in 1995, and the subsequent entry of other budget airlines such as Ryanair, Norwegian and more into the UK and European market, the growth in this sector of the aviation has been phenomenal.

Low-cost carriers now occupy a massive part of the competitive landscape both in the UK and Europe, and their influence can be felt far and wide. The question I'm interested in, is whether there is any real reason to continue to segment these carriers in such a way?

Are there really any significant differences between low-cost carriers and the traditional scheduled airlines in the domestic and short-haul marketplace? Or have we now arrived at a place in which all airlines are essentially competing head-on, in terms of services?

Narrowing the gap

There used to be a clear distinction in the aviation market. If you wanted a low-cost carrier ticket, you had to book direct with the supplier, outside of the global distribution system (GDS) used by business travel bookers. And you’d get nothing in the way of frills on board the flight.

In contrast, scheduled carriers were only available to business bookers through the GDS, and provided a full-service experience with no additional charges.

Cut to 2017, and it would seem that we have arrived at a point of near parity, with services becoming increasingly homogenised across the market.

Over the years, the scheduled carriers have eroded their core offerings of all-inclusive fares, while budget airlines have tried to add value into their services (for a fee), in order to mimic the experiences provided by their competitors.

Here are the key changes in the marketplace:

Airline content is more accessible than ever

As we have discussed, historically the budget airlines did not always make their fares available to business travellers through the GDS. However, major low-cost carriers such as Ryanair and easyJet now sell flights both directly and via the GDS – as do all the scheduled airlines, including British Airways (BA), Air France and Lufthansa.

Airline content (ie both your basic fare and any extras) is also available to business bookers through an ever-increasing number of intermediary technology platforms such as Travelfusion. So there are more channels than ever to book business flights in 2017, whatever type of airline you want to travel with.

Unbundling is the new norm

We now inhabit a market in which seat preferences, hold baggage, food and a number of other such ancillary benefits are stripped out of the base price, but can be added in, depending on your requirements – irrespective of whether the carrier is a scheduled or low-cost carrier.

There is perhaps a little way to go before we see a totally level playing field between the airlines, in terms of what is included in your ticket price. But this is an area where the gap has significantly narrowed.

The cabin experience is converging

Historically, scheduled carriers operated business-class seats even on domestic routes. However, these have all but disappeared. This means that, generally, there is just one standard cabin for all airlines in the domestic market.

Interestingly, just as this article goes live, BA has announced the reintroduction of business class on its domestic and short-haul European routes from April. Is this the start of a strategy of differentiation that other carriers in Europe will follow? Only time will tell…

However, in general terms, across the majority of flights there is little or no material difference between domestic and European operators when we look at seat pitch, in-flight entertainment (or lack thereof) and general service levels.

There are full-service deals across the board

All carriers offer varying degrees of bundled pricing for business travellers, with some or all elements of a booking included in the fare – for a premium. Again, there is very little to choose between traditional and low-cost carriers on this one.

Summary: budget airlines versus scheduled carriers

Without a doubt, the domestic and European aviation marketplace has seen huge change over the past decade. As we have reported, low-cost and scheduled carriers are competing with products and distribution models that are very similar.

As such, it would seem to be the right time to stop thinking of scheduled and low-cost airlines as inherently different, and accept them all as carriers operating in the domestic and European market.

There will always be items that muddy the water and give certain airlines the edge for your travellers, such as frequent flyer cards, use of hub versus regional airports, and better long-haul networks. See our expert analysis of whether budget airlines really offer better value than scheduled carriers for business travellers.

But at their core – at least in the local marketplace – the distinction between low-cost and scheduled carriers is now increasingly blurred…

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