For a few dollars less

While the concept of low cost airlines has just taken off in India, in the west it is now a mature industry and exploring the history of low cost aviation could hold some valuable lessons.
After all, who wouldn''t like a dollop of hindsight thrown in with foresight?
Southwest Airlines is quite simply the big daddy of all low cost airline companies. It has been profitable for 31 consecutive years, no mean feat considering that several major American airlines have been running up huge losses in recent years and US Airways actually filed for bankruptcy in 2002.
Interestingly, it is in troubled times that LCAs actually do better.
In May 2002, amidst some of the worst times that the airline industry has seen, domestic travel in the US on large carriers was down about 10 per cent while almost all LCAs showed an increase in traffic.
Today, LCAs account for 32 per cent of all air travel in the US, and reports suggest this will rise to 40 per cent by 2006.
Southwest''s strategy is simple: if you get passengers to their destinations on time, at the lowest possible fares, and make sure they have a good time doing it, people will fly your airline.
You''d expect LCAs to be crowded and uncomfortable considering they''ve earned epithets like cattle cars.
In fact, Southwest has been a regular recipient of awards for customer satisfaction and at one time swept awards for Best On-Time Record, Best Baggage Handling, and Fewest Customer Complaints five years in a row.
Europe too has seen the advent of LCAs since the skies were deregulated, the biggest among them being RyanAir and Easyjet, operating out of Dublin and London respectively.
They tried to replicate the Southwest blueprint and have been reasonably successful. RyanAir was the only company in Europe to make profits in the bloodbath year of 2001-02.
LCAs have really taken off in Europe and are growing at more than 30 per cent year on year.
Things don''t always have to come to a head between low cost and incumbent airlines. Air Asia, the first Asian LCA launched in Malaysia in late 2001, has been a notable success — it is expected to return profits of $16 million on revenues of $120 million this year.
Despite this, Malaysia Airlines has actually seen an increase in the number of passengers per year.
Clearly, the success or failure of the low cost model isn''t just about price. For every LCA that has been a success, there have been ten that have folded up.
Rather, success depends on reading the market right and coming up with an offering that makes sense for passengers while controlling costs and garnering adequate revenues.