Why cheap airlines are so cheap

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by kierank • 17 years ago

80 46 17 years ago

quizbiz2• 17 years ago

Title seems unrelated to Hacker News but this is a wonderful break down of the differences between standard airlines and low fare.

kierank2• 17 years ago

In my opinion Ryanair and Easyjet "hacked" the aviation industry creating a whole new class of low-fare product by cutting costs significantly.

vinutheraj• 17 years ago

But is safety still high on their priority list though ?!

scscsc5• 17 years ago

Yes, which fails to add up to the difference. They get a 43% "total advantage", but the low cost ticket prices seem around 30% of the high cost tickets...

dazzawazza• 17 years ago

I'm 6'2" and I don't fit in Ryan Air or Easy Jet planes :( I took and Easy Jet from London to Berlin (~1 hour) and I had to sit at an angle much to to consternation of the poor bloke sitting next to me.

I'm happy to pay for the more expensive carrier to get a better user experience. You can tell I'm a mac user can't you ;)

It's interesting to see how they save money. As well as hacking the system I think the LCC hacked the public in to thinking travelling like cattle is good. When they travel like cattle on the London Underground they all complain!

matthewking2• 17 years ago

Ah, glad its not just me! I usually try to rush on at the front to get the seats near the emergency doors, extra leg room there. If you don't get them though the entire trip is hell..

randallsquared2• 17 years ago

"You can tell I'm a mac user can't you"

I'm not sure there's a correlation. I'm a Mac user, but always travel the lowest-cost airline I can. I'm easily willing to pay an extra thousand USD for a better user experience over ~4000 hours, but until I make a LOT more money, I'm not willing to pay an extra hundred for a better user experience over ~2 hours. That is, per-hour, the expensive airlines are two orders of magnitude more expensive than Apple. It's the difference between quality pricing and luxury pricing. :)

scscsc5• 17 years ago

I think you took the wrong direction of reasoning. He says we can tell he's a Mac user because he is willing to pay more even for the two hours of a flight. Therefore, next to the flight expense, the Mac sounds like a cheap box.

seertaak• 17 years ago

> I think the LCC hacked the public in to thinking travelling like cattle is good

Your comment appears light-hearted so I don't want to come down too strongly, but I must say I detect more than a whiff of elitism in this sentence. The public didn't need any "hacking" or manipulation; they don't fly these airlines because they "like travelling like cattle" (again, I detect a whiff of disdain for the "cattle-like" public), they fly these airlines in spite of that fact, because they're much cheaper.

> When they travel like cattle on the London Underground they all complain!

Again, light-hearted, but in juxtaposing these two sentences you're implying that the public is inconsistent in its criticism of the London Underground (although one wonders if the LCCs are so successful at "hacking" the public, why can't the LU tear a page out of their machiavellian book?). But there is indeed no inconsistency; the two examples are simply not comparable. A single fare on the LU costs around £5, this for a median travel distance of perhaps a few klicks. The scenario is, shall we say, somewhat different for LCCs! In addition, people use the LU to get to work; and being subjected to "cattle-like" circumstances on a daily basis is, again, a different kettle of fish from having to endure a 2 hours of mild discomfort in order to enjoy a couple of weeks in the sun once a year.

> You can tell I'm a mac user can't you ;)

You might want to consider whether it is you who's been "hacked" into paying a substantial premium for an equivalent product ;)

nihilocrat• 17 years ago

The airline/subway comparison is a little bit apples to oranges. I don't know about you, but I rarely travel, so I don't mind being subjected to discomfort for a few hours. However, for a daily commute, it's annoying to get shipped around "like cattle" every day.

matthewking2• 17 years ago

How about rickety old planes that make all sorts of dodgy noises on take off? That's my experience of one of the cheap airlines in particular. Is there any information out there to show the average age of their planes? if they are different then that's a major factor that should be in the comparison.

seanos• 17 years ago

I don't know about the others, but Ryanair has the youngest aircraft fleet in the world. I'm guessing the others will have fairly new planes too because they are cheaper to run.

hjnghgbi2• 17 years ago

And you get a very nice discount if you go to Boeing when the rest of the industry is in a downturn an order 500 737s. Even better if like Ryan you do it while also talking about buying Airbuses instead.

look_lookatme4• 17 years ago

Heh, pretty much every 737 I've been in, regardless of carrier, feels and sounds rickety on takeoff. I just remind myself that the family of plane I'm in has had only ~200 accidents in approximately ~300 million hours of flight.

That's a seriously good safety record.

patrickg-zill• 17 years ago

You mean Northwest Airlines in the USA, which has the oldest fleet of any carrier? They are a "regular" airline. In a study a few years back their fleet had an average age of 18.1 years.

http://news.minnesota.publicradio.org/features/2005/02/21_ap...

How would you like to be in your 30s and flying on a plane older than you are?

sdfx• 17 years ago

Average fares are hard to compare. For one, LCCs and regular airlines are using different airports and at least the LCCs in europe are only covering certain high traffic routes. I would love to know where they got their numbers from and whether they include any additional fees (airport, luggage etc.).

darshan• 17 years ago

From the footer: Data based on information by ELFAA "Variations in Airport Charges", Jan Skeels - Secretary General, Aviation Industry Group - 2nd Annual Managing Airline Operating Costs Conference, Dublin 7 December 2005

Also see http://bib.irb.hr/datoteka/260325.ICTS_06_vidovic.pdf , which uses the same source (among others) and goes into greater detail than the image.

Also note that "Cheaper airports / landing fees" was calculated in the image to amount to 6% of the savings of LFAs. Only covering certain high traffic routes is a good point, and doesn't seem to be mentioned.

bemmu2• 17 years ago

In case you also wondered what the "station costs" are, it means "costs associated with providing ground staff, check-in staff, equipment, business lounges, office space and related facilities at each of the airports served by an airline". From http://www.amazon.com/gp/product/0415346150

bemmu2• 17 years ago

If you are interested in learning more about Ryanair, check out the book Michael O'Leary - A Life in Full Flight. One fun story from that book is when Ryanair started competing with the "official" airline Aer Lingus, who basically thought all airport equipment belonged to them and were annoyed by the new upstart, to settle their differences they had a soccer match between the employees! However since they weren't really familiar yet with all of Ryanair's employees, Ryanair imported some pro outside players and won the match and thus their approval to share some of the equipment.

scscsc5• 17 years ago

I have never used the so-called low cost airlines. However I have problems fitting my knees even in high cost economy class. I would imagine there is a business opportunity for airlines which are willing to cut costs in every way other than safety and passenger space (i.e. we don't need those lounges).

look_lookatme4• 17 years ago

" I would imagine there is a business opportunity for airlines which are willing to cut costs in every way other than safety and passenger space"

Are you implying the current crop of low cost carriers are somehow "unsafe"? You would be very wrong (at least in the US).

Also, such a carrier exists. It's called Jet Blue.

bendotc2• 17 years ago

"Discount air carrier Southwest Airlines flew thousands of passengers on aircraft that federal inspectors said were 'unsafe' as recently as [March 2007]."

http://www.cnn.com/2008/US/03/06/southwest.planes/index.html

scscsc5• 17 years ago

No, I am not implying that.

tptacek3• 17 years ago

This is exactly the business model Midwest Express/Midwest Airlines pursued; a single-class cabin, 2x2 with first class-style seats. There was typically a $50-$150 premium on Midwest seats.

evgen• 17 years ago

Don't forget the freshly baked chocolate chip cookies :)

fauigerzigerk3• 17 years ago

Something I find astonishing is that the passenger/employee ratio of no-frills airlines is more than 10 times that of traditional airlines, yet all the labour related savings together seem to make up a relatively small part of overall savings. Any explanation for that?

arihelgason• 17 years ago

My guess is that it's because labour is not a very large % of overall costs.

A similar example is the car industry. Car manufacturing plants are often located in high wage countries, simply because labour does not represent a large % of the overall cost of producing a car.

mediaman• 17 years ago

Labor is actually a substantial part of airlines' expenses.

Southwest's most recent SEC filing indicates that its 35,000 employees represent 32% of its total operating costs, or about $3.4bn. These employees served about 101.9 million passengers. [1] That's about 2,911 passengers per employee, or $33 of labor cost per passenger.

A traditional airline such as American Air, with 70,900 employees, has labor costs of $5.9bn, serving just 98 million passengers [2], which is 1,382 passengers per employee or $60 labor cost per passenger. So costs per passenger are almost 2X.

That makes me question the data in this chart. The only two data points related to labor are crew costs (3% of savings) and administration (2%). But actual labor costs appear to be a much more substantial part of the savings.

[1] http://www.sec.gov/Archives/edgar/data/92380/000119312509015...

[2] http://www.sec.gov/Archives/edgar/data/4515/0000004515090000...

mjs• 17 years ago

They fly much shorter routes. I guess the number you really want to know is the number of staff per passenger kilometer, but the graphic doesn't say...

Other flaws:

* Misspells Aer Lingus.

* Claims low cost airlines have turnarounds of "up to 25 min" instead of "as little as 25 min."

* The 43% cost advantage is unclear (that's the cost advantage per passenger kilometer, or what?) and circles are not a good way to convey amount (is the radius important, or the diameter?).

fauigerzigerk3• 17 years ago

Yes you're absolutely right. Staff per passenger kilometer is the missing piece of information. Very good point.

sfphotoarts• 17 years ago

I really don't care how (un)comfortable I am when I fly for two hours. I walk off the plane and don't give it another thought. You are paying for the A to B ness of the utility, if you want comfort then stay home with the bigscreen and sofa :) Seriously though, for anyone that sits on a commuter bus/train/subway every morning a quick trip in a cramped plane is really nothing.

Why cheap airlines are so cheap

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