An interesting report from OAG today highlighted the differences in the presence of low-cost carriers in different countries around the world. In the UK, for example, the split between low-cost carriers and traditional airlines is about 50/50. In other major markets such as Spain, Brazil and Italy, the presence of low-cost carriers is even higher, while in India, more than 70% of capacity is accounted for by low-cost carriers.
In the US, the ratio is about 2:1, with 67% of capacity provided by traditional airlines. That seems pretty high considering how profitable the low-cost model has proven for some airlines abroad, such as Ryanair, Wizz and AirAsia. But the model appears to be struggling in the States: Spirit is in financial freefall, Frontier is just barely staying afloat and most passengers would argue that Southwest, while a pioneer, is no longer a low-cost carrier at all.
I’m curious why the low-cost model hasn’t worked so well in the US. I suspect that US passengers place a lot more value on earning miles than overseas travelers, meaning they mostly stick with the traditional airlines. Also, it can be difficult for low-cost carriers to get positions at popular airports where the traditional airlines dominate, which would mean that low-cost options are often not available there.
But is there more to it? What do you think?
(PS: If you want to read the OAG report, you can find it here: https://www.oag.com/blog/what-next-low-cost-carriers-aviation)
