Difference between full service air

companies and low cost companies

Student: Matei George Popescu

Facultatea de Inginerie Aerospatiala, UPB

Abstract: This paper looks at some differences between the two types of air companies that
exist on the aerospace market. It targets several points where they diverge such as in flight
services, services on the groud and cost and realize a comparison between them.
Key words: premium airlines, low cost, aircraft, airport, safety, flight.

1. Introduction

With low-cost airlines improving their offerings and legacy carriers cutting out
extras, what are the real differences between them for business travellers?
As you know, there is a huge competition between these types of airlines so I
intended to develop the main comparisons that influence their policies to attract
passengers and their recipe of success on the market they have chosen to develop
their business.
One of the biggest recent changes in aviation has been the rise of low-cost
carriers; budget carriers characterized by lower fares and fewer frills than those
offered by superlative legacy carriers. More often than not, travellers booking with
low-cost carriers forfeit the quintessential luxuries they experience with full service
airlines such as complimentary meals, loyalty programs and the option of tiered
seating classes.
I created a case study which was conducted on a sample of 40 persons from
the University of Politehnica Bucharest, mainly, but some other people from
different universities, even from different countries who usually travel. The purpose
was to determine their preference, concerning the main factors that determine
aerospace industry market.
 As you can
see, the majority
shows that they use airplane, when it comes to travel between countries, even
though a third of them are more than 70 km away from an airport.

2. The ground services of legacy airlines compared to low cost

2.1. Airports
Well, one of the most important aspects i should talk about is the airports
where the companies take off and land. There are two kinds of airports who serve a
city: main and secondary. One major divergence is that we find several planes of
legacy-companies on the main and big airports, while the ones owned by the low
cost companies are on the secondary and a bit smaller. At first sight, thats does not
a problem at all. But, as you might know, these secondary airports are 50 to 90
kilometers away from the city and arent served by buses or subways as well as the
important ones. Examples of this are Hahn, Weeze and Girona which low cost
companies advertise them as Frankfurt, Dusseldorf and Barcelona destinations.

The
questionnaire suggests that 61 percent of the respondents are aware of the airport
destination, so this might be a pro for legacy airlines which use, frequently, the
main airport.

2.2. Terminals
Equally important is the fact that there is a difference in airports terminals as
well, between the two types of air companies. Regarding legacy companies, they
are always found on the main terminal. When it comes to low cost ones, they are
usually on the secondary terminals. This is relevant, because secondary terminal
offer worse services, few shops and almost all the time they seem to have a lack of
jet ways, so the passengers must take the buses to get on board. An example could
be the fact that on Frankfurt Airport, the biggest airport in Germany, the national air
company, Lufthansa, has its own main terminal where we can serve coffee, tea,
sweets or, even, read the most recent information we find in their free magazines
and newspapers.

2.3. Team on the ground

The team on the ground plays an important role, as well. By that I mean high
quality employees. There is a distinction bounded by the prestige in the policy of air
companies. While the legacy ones are centered on passengers needs, the other
ones are trying to reduce the crew, as much as possible in order to reduce their
budget. They inserted some limitations in passengers possibilities such as desk
check-ins and they are trying to overtax any human interactions between the
people who are flying with them and the people who are supposed to ease the
whole process. I think thats a con for the low cost companies, but their need for
lowering the budget is understandable.

3. In-flight services

3.1. Comfort flight

As you know, there are some elements that make our flight more enjoyable.
These are just some of them: catering, seat reservation, priority boarding, more leg
room space, extra luggage). Many of major airline companies offer all these services
freely, as included in the price of the ticket. On the other hand, the low cost
companies extra-tax them and the price of the ticket isnt as low as it might seem.
For example, Tarom offers catering, seat reservation with online check-in 30 days
before the takeoff and a 23 kg luggage for free. Wizz Air is offering these services as
well, but the tax is about 50 euros, but there are other low cost companies which
can charge more for these elementary services.

An
interesting fact
is that the majority prefers Extra Luggage rather than Catering and besides the
services presented in the survey, there are no others options they have noticed as
relevant during the flight.

3.2. Safety
The safety is yet an important fact, when we are talking about a flight.
Concerning the two types of air companies, I didnt actually find any difference at
all, because the rules are very strict when it comes to passengers safety in air.
Thats a pro for both, but especially for the low cost ones, as you might guess.
Maybe, there is a small difference, because it is known that low cost companies use
less amount of fuel on
their aircraft than their
competitors. As
the survey shows,
80.5% considers safety
as essential and only
2 respondents
considers it
irrelevant.

4. Cost

A very intriguing question is how the low cost companies offer prices that are
so competitive with the other companies, even though their services are worse.
All starts with their economic policy on a targeted market. They offer services
depending on passengers needs when it comes to the period of year or any other
services that arent strictly necessary. They manage to obtain profit by analyzing
continuously the market and there are aspects that Ive recently spoken with you.
Well, a survey conducted on passengers of Easy Jet company showed that people
with age under 24 prefer flying with a low-cost airline. When they were asked the
reason why they fly, the researchers discovered that 78% visit their families and
friends and 16% use airplanes for educational purposes. So they dont have a strict
schedule they have to follow. An airport at a 40km away distance wouldnt be a
problem for them. So I asked myself why low cost companies prefer other airports,
but not the main one. The reason is pretty simple. International Airport Henri
Coanda and International Airport Mihail Kogalniceanu are the two airports Im going
to consider. For example, a takeoff and a landing with a Boeing 737 on main
Bucharest airport is about 3000 euros, during the night, if the passengers load is
about 90%, while the same operations, in the same conditions on Constanta airport
worth approximately 800 euros, less than a third. Its pretty understandable their
preference for smaller airports.
 Moreover there is another element that can be decisive for low cost
companies. They offer different fares, related to aircraft load, period of year, length
before departure and so on. A concrete example is the fares offered by Ryan Air for
the same destination Athens but on different periods of year. In April, the starting
price for a ticket from Bucharest to Crete one way, economic class, with a hand
luggage of 8 kg is somewhere between 20 to 30 euros, while in august, a more
attractive month for Greece, is approximately 70 euros in the same conditions. Its
obvious that the statistics showed that its more likely for tourists to buy tickets in
august rather than in April so that influenced the price of airplanes tickets.
As this article must show a comparison, I mention that a regular flight with
Tarom, but not in the same conditions mentioned earlier, costs around 120 euros, so
it becomes a passengers will whether they choose a low cost or a premium airline.

As the survey was made on young people, below 25 years old, you can see
that they prefer to fly with low cost airlines more than premium airlines, because
their needs are more appropriate to be fulfilled by the low cost ones.
5. Conclusions.
As the industry and the consumer both continue to evolve, so do the airlines.
Throughout history, airlines of all types and sizes have come, grown, evolved,
changed and gone. Once mighty legacy airlines like Tarom have gone under and
others like Ryan Air have become part of the lineage of todays airlines through
mergers. The only constant is that regardless of your budget and destination, there
will almost always be an airline built to cater to you.
The policy that low cost airline adopted put legacy in a cautious position,
forcing them to compete with rivals on unfavorable and unfair terms, because they
always try to attract passengers and, unfortunately for them, one of the most
important factor that decides passengers preference is the ticket price. I cannot say
which is a better option; i leave it as a choice even though the last question of the
survey signals that premium airlines lost the competition and they have to redesign
their strategy.