Ryanair is certainly the darling of LCC carriers and, to a certain degree, they even kind of outshine Southwest Airlines.  Lots of people look at the US market and wonder about having a Ryanair-style carrier here.  Skybus Airlines (read more about them HERE) was supposed to be the one but tanked miserably and by every appearance, the only people who didn’t expect them to fail miserably was their executive staff.

 

Could such a carrier exist here?  Sure they could.  In fact, I think it already does in the form of Allegiant Airlines (find out more about them HERE.)  Allegiant is all about flying routes point to point using secondary or even tertiary airports and providing extreme low cost prices which are augmented by fees galore.  And they make a considerable profit doing so.

 

What does it really take to be a Low Cost Carrier in the United States?  First, let’s really define what that is.  Interestingly enough, US Airways uses LCC as its trading identifier on the stock markets.  Is it a LCC carrier?  Not by any definition.  jetBlue and Virgin America both style themselves as LCC carriers but, let’s face it, while they offer great value, neither are a Ryanair style LCC.

 

Southwest Airlines and Airtran Airlines are probably both the best examples of true low cost carriers operating nationally here in the United States.  Allegiant certainly is but they’re still focused much more on the leisure markets and many of the routes they serve compete with quite literally no one. 

 

Skybus failed for a few reasons.  First, they picked a hub that defied rational thought in Columbus, Ohio.  As you can imagine, there isn’t a whole lot of traffic trying to leave or get there.  Hubs don’t work well for LCC carriers.   Focus cities do but not hubs.   If you want to make money as any kind of airline, you had best be offering flights between two places people want to go. 

 

Second, you have to pick between offering frequency and relative value or absolute lowest cost and infrequent service.  You can’t be all things to all people.   Skybus kind of offered high frequency and absolute lowest cost and hoped it would stimulate new traffic.  The problem is, there is only so many people who want to fly between Columbus, Ohio and Greensboro, NC.   You really can’t do that route once or twice a day every day of the week.  Not at any price.  Not with large, mainline aircraft anyway. 

 

Third, just because you can fly to a secondary or tertiary airport doesn’t mean people will go to that airport to use your airline at any price.  Case in point, Bellingham, WA and Skybus again.   Bellingham, Washington is a long way away from most anyone in the Seattle-Tacoma area.   It’s 90 miles from downtown Seattle, 122 miles from Tacoma and it is a tortuous drive in traffic for anyone in that metro area.  Bellingham is convenient to, say, Vancouver, British Columbia but that means crossing a border.   In the case of the SEA-TAC area, you need to be flying from their main airport.   And the lesson is that you have to look long and hard at each area you’re serving. 

 

LCC carriers have succeeded in flying from secondary, smaller airports such as Love Field (Dallas) and Midway Airport (Chicago) and even Long Beach (LA area) because those airports remain highly accessible to a large number of people.  And as both Southwest and Airtran will tell you, sometimes if you want to enter a market, you have to bite the bullet and fly where people want to go.   I take note that since Airtran has decided to defend itself against Allegiant, even Allegiant figured out it needed to change airports in the Orlando area to remain competitive. 

 

Choose your fees and advertising carefully.  The United States is a different place than Europe.  Advertising that is racy or in bad taste doesn’t go well here under the best of circumstances.  It doesn’t matter if you think it should or not.  It just happens to be that way and a new airline is going to change the moral outlook of this country.   Oh, yes, Spirit Airlines has gotten away with it now and then but they remain a minor player and it has possibly turned off as many people as its turned on. 

 

An a la carte fee system (a la Ryanair) is something that this country is completely unfamiliar with when it comes to airlines.  Now, that is changing and it will likely change more but it is an evolutionary thing, not revolutionary and some fees are going to make customers feel burned no matter what.   Skybus’ Ryanair-like approach to charging a fee for even looking in their direction was offensive to customers here in the US particularly when, at that time, no one else had even really dabbled in it.

 

While I do think more a la carte offerings will and should be instituted among airlines, it will be done differently here.  Luggage fees have generated a massive amount of resentment with customers and while they have generated significant additional revenue for major airlines, it has also caused many customers to more carefully consider their options.  Southwest has bucked that luggage fee trend and the results are showing. 

 

There is place for an airline that charges for checked luggage, beverages, meals, blankets and airport check-in.  But the amounts of those fees still have to have some value.  Particularly when legacy airlines already have those fees as well.  Charge more for checked baggage than American Airlines and you run the real risk of turning people off.   We’re really not a true a la carte culture here.

 

Be careful of your publicity.  Ryanair’s CEO, Michael O’Leary, gets away with outrageous statements and even expressing a certain outright hostility to his own customers.   That works in Europe and, in particular, within the UK and Ireland.  Those are cultures who know how to take such statements with a bit more of a wink and a smile.  Here in the United States, it’s a flat turn off.  Our culture is based more on politeness and friendliness.  Bark at your customers or even insult them and they will walk elsewhere. 

 

Tomorrow, Part 2 of this post.

Filed under: Airline Service by ajax