Why have the “no frills” airlines gained such a high profile – and what does their success mean for aviation unions?
Ingo Marowsky reports

The first “budget” flights took off from Dallas in the US in 1971 with the launch of Southwest airlines and its ground-breaking offer of lowest possible fares. Yet the low cost sector did not become an industry phenomenon in Europe until increased liberalisation in 1997 allowed newcomers to compete directly with the established European airlines, selling seats at 50 per cent of their prices.

The Irish company Ryanair, first of the no-frills airlines in Europe, had emerged unscathed from the Gulf War in 1991 and was already going strong. In 1995 it was joined in the market by Easyjet, which began by operating two aircraft out of a prefabricated building outside Luton airport in the UK. It is now the biggest European discount carrier.

After 1997 the floodgates opened and budget airlines began springing up all over the world, carving out for themselves a growing slice of the global industry. Even after the 11 September terrorist attacks on New York in 2001 they continued to grow while network airlines faced bankruptcy and crisis.

Budget airlines: facts and figures Low-cost airlines are set to take 30% of the global short-haul market within the next decade, according to aviation analysts. Southwest Airlines is valued at US$15 billion – more than the total share value of the six biggest US carriers put together. Lower labour costs account for only about 5% of the 40% cost advantage that low cost carriers have compared to their network counterparts. According to the ITF’s survey of affiliates, 70% of unions reported union recognition in at least some low cost operators. Network carriers are showing growing interest in transforming at least some of their routes into low cost operations.

Today scores of budget airlines are operating worldwide, and some forecasts suggest in the next decade they will account for 30 per cent of the short-haul civil aviation market.
How have they done it, and what are the implications for civil aviation workers of such a dramatic change in the landscape of their industry?

There are striking differences in business approaches between full-service carriers and low cost airlines. Most budget airlines operate simple point-to-point flights, and are free of the complex network scheduling arrangements engaged in by full service carriers. Low cost companies opt for uniform aircraft fleets and engines instead of a diverse fleet. They use each aircraft more intensively and rely heavily on the internet as a sales tool. Most operate with their own aircraft rather than leasing from other companies, but do not employ in-house ground staff, preferring to outsource passenger and cargo handling.

Clearly these approaches are generating economies for the budget sector, and so too are their labour strategies. A huge majority of no frills carriers offer lower terms and conditions compared to those of the equivalent major scheduled airlines (showing a difference of between five and 40 per cent). Only a minority offer conditions comparable to those at the respective major scheduled airlines.