How Budget Airlines Work

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.

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100 thoughts on “How Budget Airlines Work

  1. The reason budget airlines get a lot of money is because they charge extra for heavier bags, and charge a lot for in-flight snacks

  2. I travel to Estonia quite often and I only ever travel on easyJet.
    What’s great is that I’m on Three so I have priority so even if the tickets are cheap, I still get the vip treatment lol

  3. ryanair was going to charge me 150 bucks for having the wrong name on my ticket but the lady didnt look closely enough haha

  4. I purchased tickets from Easyjet for my wife and I, so flights are for 2 people from London to Malaga Spain for 5 nights, from Malaga to Geneva Switzerland 3 nights, Geneva to London, 1 month later London to Munich Germany 2 nights, Munich to Milan Italy 5 nights, Milan to London, all tickets together cost me £200. I always fly Easyjet, Hand luggage which we use for city breaks has no weight restrictions, you would be surprised what you can fit in a small case.

  5. thank you wendover! i am creating a budget european airline soon,called AeroEurope! i will tell you when its created!!!

  6. I wouldn’t say JetBlue is a budget airline, yes they aren’t the top of the line accommodations but there seats are pretty decent and they have there new first class seats.

  7. I mean what do you expect? This aint a cruise ship! And trust me id rather spend little on a 3-5 hour flight then spend alot at the holiday place then to bloe alot of money on the flight and spend less on the holiday, its a safe airline, you know you wont die so who cares if the hospitality aint top class? Who cares that the landings aint comfortable? Its what you get for the price.

  8. My family and I have flown ryanair about 25-30 times over the decade and we rarely have complaints, the food aint bad, the check in is USUALLY quick and there were rarely any delays. Now the seats are uncomfortable, finding a way to sleep on there is a side missiob of its own, the corridor can only allow that one food cart and lord forbid you get stuck behind one trying to go back to your seat! But all in all its dirt cheap, and we are rather thrifty and find a way to budget (haha) our trips and ryanair in 90% of the time the cheapest. So take our money, and take the millions that other people like us give you

  9. Ryanair is from my country and in one airport only the two airlines that come from my country fly there. So vote Ryanair or Aerlingus

  10. Southwest rocks! 2 included check in bags… How do you beat that? O and much more knee room than spirit or other budget airlines, your fine if your the size of a garden gnome but for us tall folks Southwest is the way to go

  11. Those cheap flights are also cheap because they give people less space for their legs so they can put more seats in a airplane

  12. Heres the thing. Worst airline I’ve heard of is Air India. They literally separated passengers based on race and the quality was different based on race.

  13. When I think of someone buying 151 airplanes I don’t think of getting a bowl discount but I guess anything you buy in bulk can

  14. That’s super smart having just one type of aircraft probably saves the most amount of hassle on money because you don’t have to be trained on 500 different planes which is probably the case for America’s airline.

  15. Correction: Transavia = Dutch and is the daughter company of KLM.
    Air France also created a budget company “JOON!”.

    And transavia = budget? Don’t think so… even KLM is cheaper in a lot of circumstances. The only thing people need to do is add up all the additional costs and not only look at the bare ticket price.

  16. Lol I have watched this video dozens of times, and I just realized the misspelling of “employees” at 7:55

  17. Transavia is Dutch.
    Airfrance is French.
    KLM is Dutch.
    Transavia isn’t owned by a big airline company. (I think)
    So hmmmmmmmmmmmmmm

  18. Transavia is a dutch company formed in late 1965 at Maasstricht Aachen Airport…
    Transavia France however is a newer company from 2006…

    The information is out there, for free.

  19. You forgot to mention the car hire, hotel, cruise, theatre and other external party tie-ins budget airlines use to earn comission outside the flight itself. Not to mention the advertising fees they can charge on their websites, in-flight magazines and so on.

  20. Just my 2 cents:
    Transavia is KLM's budget airline, not Air France's (although KLM and Air France have now merged so technically it is)
    Ryanair's staff continuously strikes (currently ongoing for example) due to demeaning working conditions, including terrible working hours and super low salaries. Their model only works because they are based in Ireland where there are different laws and rules. There are way more young pilots than the number of open jobs, so Ryanair's policy is simply, if you dont like our rules you're fired. That's why their model works, and it sucks.

  21. It's just sick that govt and airport bureaucracy is $40+. This is shitty large airlines trying to KILL Southwest airlines by increasing overhead for short-hop airlines, to susidize the biggest airlines! Criminal!

  22. Have done a 1,5 Day Trip from "Düsseldorf" (Weeze) to London (Standsted) for 9€ with Ryanair. 24€ Parking at the Airport and 11£ for the Bus Standsted-London. And that wasn't even the cheapest Flight. Ryanair sometimes sell's Tickets for 1€ or 2€ across Europe!

  23. Ryanair get a lot of unwarranted stick from consumers, I've used them five times and never been delayed once whereas I've used EasyJet eleven times and faced delays at least three times.

  24. Should be more expensive to fly. I don't fly often but last time I did I flew with Ryanair and a few days later got sick. The seats are pretty uncomfortable. And because I don't fly often, when I do I want to have a good experience so it doesn't feel like a waste.

  25. I've met some Business People who work near Cologne Germany who found a great way. Since they don't know when they are gonna required where, they buy a Ryanair Ticket, a Month before the week starts. Since the Prices are around 10€ they buy one For London, one For Paris, One for Oslo and so on. At Monday they know when to Fly where and just hop into the flight they booked. And since the company is Paying 80€ instead of 125€ for a flight with Lufthansa it's very very easy for them. At the end of the week they fly back and book than from Home the next flights for the next month

  26. It’s to bad so called budget Airlines in America didn’t embrace this model. It was cheaper for me to fly from San Francisco to Beijing than San Francisco to New Orleans.

  27. Yeah well this aint good for consumers more poeple fly cause off the cheap prices and there is much more envirmontel damage

  28. I work at an airport, and I can tell you Ryanair make there money by making check in fees of £55 if you don’t check in online…and they charge you for hand luggage ext…

  29. After Brexit it will be even cheaper in and out of the UK…because the UK will not be tied to bullshit EU regulations anymore!

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