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Skies over Europe

Low-cost airline carriers with names like EasyJet, Go, Wizz Air, SkyEurope and Virgin Air have introduced Europeans to a cheap and fast mode of transportation.With fares that are cheaper than a couple pitchers of Sangria (or a good bottle of wine), they entice travellers to places like Barcelona, Nice and Rome. In the process, Europeans are changing not only in their travel choices, but in the way they live. In Bratislavia, Slovaks who still can't afford the 200-mile train trip to Salzburg can now take vacations in Venice or Vienna, and every Friday afternoon at a Heathrow Airport bar, there is an informal gathering of the "Pojkvan Club," a group of London men who visit their continental girlfriends on weekends - according to travel writer Matt Welch.

Europe's low-cost airline companies have grown from 0 to 60 since 1994, and Europeans have increasingly been taking advantage of the ridiculously cheap airfare (one dollar, plus taxes) to visit partners, scope out real estate and turn EU's "freedom of movement" into reality. In 2003, nearly 45% of the entire E.U population took a low-cost flight, and from 1998 to 2003, thanks in part to RyanAir and easyJet, low-cost air traffic grew by 600 percent in Europe, compared to just 10 percent growth for full-service airlines, according to Tourism News.

The Business Model

All low-flight carriers are based upon a common business model based upon the same elements: a single-type fleet of planes; fast turn-arounds, the use of secondary airports; no frills - meaning no choice of seats, no food or drink, no connecting flights, no refunds - and no separate travelling classes.

Ireland's Ryanair and Britain's EasyJet are the two pioneers of the European market. Ryanair first expanded by flying Irish expatriotes and their family between England and Ireland, catering to what airlines call "VFR" (visiting friends and relatives) traffic. Their business quickly expanded to include customers who had never flown before, or did so very seldom because of high ticket costs.

Micheal O'Leary, the controversial CEO of the company known for his 'say-it-like-it-is' atitude, runs his company with a simple philosophy: "Our strategy is like Wal-Mart: We pile it high and sell it cheap."

Ryanair offers a no-frills service, sells most of its seats through the internet, and flys strictly to 'secondary' airports up to 60 miles from the real destination, where fees are low or the airline is even paid to fly there.

Ryanair spokeswman, Enda O'Toole, likens flying aircraft to major European airports as "queueing in the clouds."

The result is that different and more isolated parts of Europe are being opened up for tourism. Stansted, England; St. Etienne, France; Hahn, Germany, Aarhus, Denmark, Jerez, Spain are the so-called new 'boomtowns.' As Time Europe puts it, "As the summer vacation season reaches it's peak at the conventional hotspots, the air over Europe is filling with people going to places that, until recently, they had never even heard of. Beauvais near Paris, Charleroi near Brussels and Hahn near Frankfurt were essentially deserted airports until Ryanair came in a few years ago. Now they are among of the fastest growing in Europe, with Hahn and Charleroi each receive over 2 million passengers a year.

A recent article in the Prague Post states, “Six months ago the idea that Ryanair would fly to Brno, let alone Eastern Europe, was far-fetched…things change.”

In March of this year, the Irish airline introduced a new eastbound flight between Stansted, England and the Central European city of Brno. Already, it estimates that 40,000 people will fly its service to Brno in 2005. At the same time, the company has ordered 70 more planes from Boeing Co, signaling that the budget airline is continuing its rapid growth across Europe.

Yet cracks are showing in the budget aviation world. Low-cost carrier Buzz agreed to a takeover by Ryanair in August 2004. Ciao Fly, billed as "the low-cost airline with frills” lasted six weeks. More than 100 other such carriers have been launched in the past decade, and many of these have disapeared.

Low-cost carriers in North America face similar challenges. Canada’s Jetsgo, known for it’s one dollar seat sales, declared bankruptcy earlier this year, leaving millions of customers running to their credit card companies for refunds.

As Gert Zonneveld, an airlines analyst at WestLB Panmure, told The Guardian: “It sounds very easy to say, ‘let’s start up a low-cost airline and make lots of money.’ But in reality it’s not easy, and it takes quite a few years – if you’re lucky. With the exception of EasyJet and Ryanair, I would suspect that most of them are losing money.”

Despite predictions over the past few years that the low-cost carrier industry is destined for failure, it seems clear that these outfits won’t be going away anytime soon. In fact, many companies are now expanding into the cargo industry. Virgin Air is even looking ahead to a projected space tourism industry. And this will not just change Europe – it will change the world.

By Faye Mallett

© Copyright 2005. Galt Western Personnel Ltd. Unless otherwise specified, you may reprint this article, quote from it, use it in research or projects, duplicate it or distribute it. Credit of authorship and source MUST be given to galtglobalreview.com. Ownership of Copyright remains with Galt Western Personnel Ltd.

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