Summary LCCs focus on cost-efficient operations to maximize profitability. Strategic tactics include buying surplus aircraft, employing uniform fleets, and focusing on ancillary revenue. LCCs also save money through cabin simplicity and point-to-point route networks.
Many people believe low-cost carriers (LCCs) are named “low-cost” because of their cheap ticket prices. However, the term actually refers to the low costs on the airline’s part. This is explained to CNBC by Scott Keyes, the founder of Going (formerly Scott’s Cheap Flights): “.
..the low cost refers to low expenses on the airline’s part, that they try to really go all out to minimize their expenses so that the money that they bring in is much more profitable.
” With such low ticket prices, many travelers wonder how LCCs can generate a profit. These airlines must follow several strategies to ensure they make money, such as purchasing surplus newer aircraft in bulk from other airlines, building fleets of just one aircraft type or family, simplifying cabin amenities, offering ancillary services, using a point-to-point route network model, and operating from smaller airports. Deregulation: Paving the way for low-cost carriers In 1949, Pacific Southwest Airlines (PSA) was the first airline to implement the low-cost model .
Until its 1988 merger with US Airways, PSA operated successfully as a California intrastate airline. In 1971, Southwest Airlines followed PSA’s model to create its own network within th.