History
While tour and package operators have been offering lower-priced, lower frilled traveling for a large part of modern airline history, not until during the post Vietnam War era did this business model really escalate and take off. Through various ticket consolidators, charter airlines, and innovators in lower frills flying, such as Channel Airways, and Court Line, the traveling public had been conditioned to want to travel to new and increasingly further away and exotic locations on vacation, rather than short-haul trips to nearby beach resorts.
The first low-cost airline was Southwest Airlines which started flying in 1971.
The first airline offering no-frills transatlantic service was Freddie Laker's Laker Airways, which operated its famous "Skytrain" service between London and New York City during the late 1970s. The service was suspended after Laker's competitors, British Airways and Pan Am, were able to price Skytrain out of the market.
In the United States, airline carriers such as America West Airlines which commenced operations after 1978, soon realized a cost of available seat mile advantage in relation to the traditional and established, legacy airlines such as Trans World Airlines and American Airlines. Often this CASM advantage has been attributed, solely to the lower labor costs of the newly hired and lower pay grade workers of new start up carriers, such as People Express Airlines, ValuJet, Midway Airlines, and their like. However, these lower costs, can also be attributed to the less complex aircraft fleets, and less complex route networks these new carriers began operations with, as well as the vastly less costly and freshly trained labor force.
To combat the new round of low cost and start up entrants into the very competitive and deregulated United States airline industry, the mainline major carriers and network legacy carriers strategically developed no frills divisions within the main airlines brand and corporate structures. Among these were MetroJet and Continental Lite. These so-called airlines within an airline however, proved to be very short lived, for the most part and a financial burden which were quickly disposed off when economic rationalization or competitive pressures subsided.
Read more about this topic: Low-cost Carrier
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