The French use the English words because “low cost” is not easy to translate into French. The direct French translation sounds too like coup bas, which means “below the belt” – something that is unfair and rather nasty.
Even though my French is poor, I was able to scan enough of the articles to get some thoughts going. These low cost airlines have certainly increased accessibility in some of the more peripheral parts of Europe, and not least in the Baltic Sea region. However, less is known about how this increase in destinations and flights has impacted on economic development in the regions concerned. Certainly, after Poland and the Baltic States joined the EU, the availability of cheap flights was both a response to and a driver of migration to work in richer EU countries.
The business model
What is perhaps more interesting is to think about the business model that these carriers have developed, and to ask what lessons it might hold for regional development? The term “low cost” is both a marketing tool and a set of business practices. The marketing bit is to sell the idea that the airline drives down costs to a minimum – and passes that benefit on to its customers. Similarly the English term “budget” implies not just “cheap”, but also the notion that everything has been carefully costed and kept within stringent limits.
A key part of the model and the offer to customers is that everyone travels in the same class. There is no divide between “business” and “economy”. You turn up and grab what seat you can, though you can purchase the chance to get to the front of the queue for boarding. Having bought the basic ticket (the price of which increases as the seats begin to sell out), you then pay if you want any extras, such as taking luggage with you, or snacks on board. All of this simplifies and speeds up the process of turning around the aircraft, minimising costly time on the ground, while the use of stairways for boarding rather than sky bridges also keeps down costs. Airport charges are also contained by flying into cheaper airports and bargaining hard with the airport over landing fees. The internet is also central to the operation – that is the “shop” where you buy your ticket and also increasingly it is your “check-in desk”.
One of the big attractions for people like me who live near an airport but not one used as a hub by the main European airlines, is that I can often fly direct rather than having to pass through Heathrow or Schiphol, for example. The smaller airports are generally less hassle, with more predictable times for clearing security. Your luggage is less likely to get lost. Take-off and landing is less likely to be delayed by congestion, allowing flyers like Ryanair to loudly celebrate their arrivals ahead of schedule.
Transferring the model
The challenges facing many smaller towns and rural regions are familiar. Decline of traditional economic sectors such as agriculture, mining but also manufacturing is one. So is poor accessibility. Then there are the problems of out-migration, especially of the young; limited local provision of higher education; and often a weak image, even if the natural environment is attractive and there is a strong cultural legacy. How might a budget airline model tackle these concerns?
In marketing terms such places can be presented as good value for residents. Why pay the high housing costs of the cities when you can live more cheaply elsewhere? Why face the congestion of urban traffic when you can work from home or make a short trip into a small town? Of course it’s not that simple, and there are some rural housing markets where high demand for holiday homes may price out local residents on lower incomes. However, at the heart of the budget model is the idea that you only buy what you feel you need and can afford. You purchase the basics and only add to them if you want to. This would point to an incremental type of model for house building, perhaps with cheap prices for those willing to move in early, but with higher prices later in a development. One might look to similar approaches for provision of shops or entertainment facilities – cheap, basic and discounted to get people in at the start.
Internet marketing is clearly part of the package, but also use of the internet to make things work. For example, there would seem to be scope to using the net to deliver much of the higher education previously only available in urban centres. Stream lectures, access journals on-line, make friends on social networking sites without leaving your home town.
Ultimately these airlines are still about getting you from where you are to somewhere near (or maybe not that near!) where you want to be. To be able to offer this the airlines operate out of hubs and focus on direct connections. Could this geometry be replicated in surface transport? To a degree it already is, with small and medium sized towns providing the connectors. However, not everywhere is on the low cost planes’ network, and it may be that not everywhere can be served by surface connections either: generality of access may need to be traded for speed of connection between fewer places.
For more interesting stories from Cliff Hague please visit his new "World View" blog on www.CliffHague.wordpress.com Foto: Lars Plaugmann
