ABSTRACT
The low-cost no-frills airline business model is a relatively recent phenomenon whose emergence is linked directly to the spread of deregulation at first domestically in the United States and later in particular international markets. In Europe, the emergence of the low-cost model was dependent on the liberalisation of intra-European air services. The essence of the low-cost business model is twofold. First, ‘keep it simple’ by providing a simple no-frills product or service based on simple operations and a simple point-to-point network and thereby minimise costs. Second, ‘create demand’, which means do not try merely to satisfy an existing passenger demand but set out to generate and stimulate new demand both by offering very low fares and flying to and between destinations or airports not previously served. In terms of direct costs they can perhaps operate with lower cabin crew costs by using non-union labour or pilots on a pay-to-fly scheme or crews from low-wage economies.
