Low cost airlines business model practices vary widely. Some practices are more common in certain regions, while others are generally universal. The common theme among all Low cost airlines is the reduction of cost and reduced overall fares compared to legacy and flag carriers.
Some Low cost airlines operate aircraft configured with a single passenger class, and most operate just a single type of aircraft. In the past, Low cost airlines tended to operate older aircraft, such as the McDonnell Douglas DC-9 and older models of the Boeing 737. Since 2000, fleets generally consist of smaller, newer, more fuel efficient aircraft, commonly the Airbus A320 or Boeing 737 families, reducing training and servicing costs.
Like the major carriers, many Low cost airlines develop one or more hubs to maximize destination coverage and defend their markets. Many, like Southwest Airlines, do not operate a traditional hub in any market. Southwest operates point-to-point service, with focus cities serving as mini-hubs for passenger connections to other cities.
Aircraft often operate with a minimum set of optional equipment, further reducing costs of acquisition and maintenance, as well as keeping the weight of the aircraft lower and thus saving fuel. Pilot conveniences may be excluded such as Aircraft Communications Addressing and Reporting System (ACARS) and Autothrottle. Often, in-flight entertainment systems are not made available, though many US Low cost airlines do offer satellite television or radio in-flight. Some do not offer reserved seating, hoping to encourage passengers to board early and quickly, thus decreasing turnaround times. Some airlines even use only non-reclining seats, or operate aircraft with no window shades.
Low cost airlines often offer a simpler fare scheme, such as charging one-way tickets half that of round-trips. Typically fares increase as the plane fills up, which rewards early reservations. Often, the low cost carriers fly to smaller, less congested secondary airports and/or fly to airports in off-peak hours to avoid air traffic delays and taking advantage of lower landing fees. The airlines tend to offload, service and re-load the aircraft (turnaround) in shorter time periods, allowing maximum utilization of an aircraft.
In Europe and early in Southwest's history, luggage is not automatically transferred from one flight to another, even if both flights are with the same company. This saved costs and is thought to encourage passengers to take direct flights. Modern US-based Low cost airlines generally transfer baggage for continuing flights, as well as transferring baggage to other airlines.
In many cases, low cost carriers generate ancillary revenue from a variety of activities, such as à la carte features and commission-based products. Some airlines may charge a fee for a pillow or blanket or for carry-on baggage. In Europe, it is common for each and every convenience and service to have an additional charge. In other regions this practice is more limited.
Low cost airlines are intended to be low-cost, so in many cases employees work multiple roles. At some airlines flight attendants also clean the aircraft or work as gate agents (limiting personnel costs). Southwest Airlines is well known for using fuel hedging programs to reduce its overall fuel costs. Some airlines eschew the use of gates that include jetways, since these generally cost more to lease.
Where permissible, some airlines have a disinclination to handle Special Service passengers, for instance by placing a higher age limit on unaccompanied minors than full service carriers. Often these airlines offer no refunds or transfers to later flights in the event of missed flights; if the aircraft leaves on time without a passenger who arrived late, he will have to buy a wholly new ticket for the next flight.
Not every Low cost airlines is necessarily low frills in terms of service. For example, some try to differentiate themselves with allocated seating, while others operate more than one aircraft type, still others will have relatively high operating costs but lower fares. JetBlue for instance has in-flight entertainment (i.e. LiveTV) in every passenger seat. Other airlines are limited on what points they can implement based on local laws. Ryanair for instance cannot remove window blinds from its aircraft as they are required to be fitted by the Irish Aviation Authority. As supply increases, this sort of differentiation by brand is one of the most important criteria for the future success of low-cost-carriers, since price-competition alone is not believed by many experts to be enough given the number of carriers.
As the number of Low cost airlines has grown, these airlines have begun to compete with one another in addition to the traditional mainstream carriers. In the US, airlines have responded by introducing variations to the model. Frontier Airlines and JetBlue Airways advertise satellite television. Advertiser-supported Skybus Airlines launched from Columbus in 2007, but ceased operations in April, 2008. In Europe, the emphasis has remained on reducing costs and no-frills service. In 2004, Ryanair announced proposals to eliminate reclining seats, window blinds, seat headrest covers, and seat pockets from its aircraft.
Sri Lanka's budget carrier, Mihin Lanka and India's Air India Express offers a complimentary meal with beverages on most of its flights.
The price policy of the low cost carriers is usually very dynamic, with discounts and tickets in promotion. Like other carriers, even if the advertised price may be very low, it often does not include charges & taxes. With some airlines, some flights are advertised as free (plus applicable taxes, fees and charges). Depending on the airline, perhaps as many (or as few) as ten percent of the seats on any flight are offered at the lowest price, and are the first to sell. The prices steadily rise thereafter to a point where they can be comparable or more expensive than a flight on a full-service carrier.
Most airlines charge additional taxes and fees on their tickets. Some Low cost airlines have been known to charge fees for the seemingly ridiculous, such as levying a credit card charge where credit card is the only payment method accepted. Many consumers and governments consider this to be fraudulent, but some still allow this and similar practices.
Traditional perceptions of the "Low cost airlines" as a stripped-down, no-frills airline, as seen on Southwest Airlines, have been changing as new entrants to the market adapt the business model in new ways. AirTran Airways and Spirit Airlines offer a premium cabin while Frontier and JetBlue offer live in-flight television, sometimes for an extra fee. AirTran has XM Satellite Radio available at every seat. Frontier, JetBlue, and AirTran all use assigned seating. Some airlines even have services not available on some legacy carriers, such as mood lighting, found in Virgin America.
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