Is the end nigh for low cost airlines?

With the announcement of yet another low cost air carrier hanging up their hat and calling in the receivers, can we look forward to a future of taking out a personal loan in order to be able to afford a flight to our favourite European destinations?

It seems that every month or so another airline goes out of business blaming external market forces such as high fuel prices for their demise. While this may be true in part, there are some who would say that, possibly, their business model makes them a victim of their own success. With such a large number of low cost airlines in existence all offering ‘flights to Spain for only £1’, the question we must ask, is ‘can the market sustain all of them?’ - after all, there are only so many passengers to go around.

Add to this the general confusion regarding their pricing structures, which seem to be designed so that the travelling public can never understand them or even the fact that no-one will ever actually travel for £1 and it makes sense that in such a cut-throat sector that not all of the airlines will survive and only the most ruthless, absolutely no-frills (i.e. lowest operating cost), will stand victorious.

This situation is obviously good news for the airlines that remain and have slashed their costs, cut staffing numbers and generally managed to weather the storm. The passenger numbers remain the same but there are now fewer airlines to choose from and it is unfortunate that these same passengers, the travellers who have kept the airlines going and have now become used to paying (relatively) small fares to visit their holiday homes or expat friends and family abroad, now find themselves scrambling for the fewer seats available and are limited to fewer and fewer departure airports.

The thirst for cheap travel is why the low cost model has become so popular but in a world heading for economic meltdown can any responsible government justifiably allow so much money to be taken out of the country? Deter travellers by increasing travel taxes seems to be the order of the day, but realistically, does that philosophy put people off escaping the rain, high prices and general doom and gloom of their home country? More likely, they will curb spending on other items in order to still have that break in the sun, with this lower consumer spending forcing many small businesses to close their doors leading to more and more people joining the ranks of the unemployed.

With less competition, it is highly likely that, even after considering the higher travel taxes, the airlines themselves may deem the low cost model to be no longer necessary to attract customers and therefore raise their own ticket prices to increase profits.

To return to the question ‘Is the end nigh for low cost airlines?’ then the answer could be, given the above mentioned scenarios, that it may not be the end of the airlines themselves, just the end of the ‘low cost’ travel option that we have enjoyed and have come to rely on.