Low-cost carrier

The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors. The term is often applied to any carrier with low ticket prices and limited services regardless of their operating models. Low-cost carriers should not be confused with regional airlines that operate short-haul flights without service, or with full-service airlines offering some reduced fares.

Some airlines advertise themselves as low-cost while maintaining products usually associated with traditional mainline carriers' services. These products include preferred or assigned seating, catering, differentiated premium cabins, satellite or ground-based Wi-Fi internet, and in-flight audio and video entertainment. The term ultra-low-cost carrier (ULCC) has been used, particularly in North America and Europe, to refer to carriers that do not provide these services and amenities.

Business model

The low-cost carrier business model practices vary widely. Some practices are more common in certain regions, while others are generally universal. The common theme among all low-cost carriers is the reduction of cost and reduced overall fares compared to legacy carriers.

Traditional airlines have also reduced their cost using several of these practices.

Common practices

Aircraft

While some low-cost carriers choose to operate more than one type of aircraft and configure their aircraft with more than one passenger class, most operate aircraft configured in a single class, as well as utilizing just a single aircraft type. In this way, cabin and ground crew only have to be trained to work on one type of aircraft. This is also beneficial from a maintenance standpoint as spare parts and mechanics will only be dedicated to one type of aircraft. These airlines tend to operate short-haul flights that suit the range of narrow-body (single aisle) planes. Since the mid-2020s, there has also been a rise in demand for long-range low-cost flights and the availability of next-generation aircraft (such as the Airbus A321neoLR and A321XLR) that make long-haul routes more feasible for low-cost carriers.

In 2013, ch-aviation published a study about the fleet strategy of low-cost carriers. They stated that major LCCs that order aircraft in large numbers get large discounts for doing so, and due to this they can sell their aircraft just a few years after delivery at a price high enough to keep their operating costs relatively low.

Aircraft often operate with a minimum set of equipment, further reducing costs of acquisition and maintenance, as well as keeping the weight of the aircraft lower and thus saving fuel. Some low-cost airlines have seats that do not recline to reduce aircraft weight and lower maintenance costs, and some airlines also remove features like rear seat pockets and other cabin items to reduce operating expenses. Often, no in-flight entertainment systems are made available, though many US low-cost carriers do offer satellite television or radio in-flight. It is also becoming a popular approach to install LCD monitors onto the aircraft and broadcast advertisements on them, coupled with the traditional route–altitude–speed information. Some allow priority boarding for an extra fee instead of reserved seating, and some allow reserving a seat in an emergency exit row (for longer leg room) at an extra cost.

Bases

Like the major carriers, many low-cost carriers develop one or more bases to maximize destination coverage and defend their market. Many do not operate traditional hubs, but rather focus cities.

Simplicity

Airlines often offer a simpler fare scheme, such as selling only one-way tickets. Typically fares increase as the plane fills up, which rewards early reservations. In Europe (and early in Southwest's history) luggage is not transferred from one flight to another, even if both flights are with the same airline. This saves costs and is thought to encourage passengers to take direct flights. Tickets are not sold with transfers, so the airline can avoid responsibility for passengers' connections in the event of a delay. Low-cost carriers often have a sparse schedule with one flight per day and route, so it would be hard to find an alternative for a missed connection. Modern US-based low-cost carriers generally transfer baggage for continuing flights, as well as transferring baggage to other airlines. Many airlines opt to have passengers board via stairs, since jetways generally cost more to lease.

Often, low-cost carriers fly to smaller, less congested secondary airports and/or fly to airports during off-peak hours to avoid air traffic delays and take advantage of lower landing fees. This is why Ryanair flies to Gatwick Airport, Luton Airport, and Stansted Airport in the London area and how easyJet can fly to Paris-Charles de Gaulle, and Amsterdam Airport Schiphol. In London's case, however, low-cost carriers would not be able to use Heathrow as the airport is running at near capacity, so there is no room to build a base. The airlines tend to offload, service and re-load the aircraft (turnaround) in shorter time periods and do not wait for late passengers, allowing maximum utilization of aircraft.

Non-flight revenue

Low-cost carriers generate ancillary revenue from a variety of activities, such as à la carte features and commission-based products. Some airlines may charge a fee for a pillow or blanket or for carry-on baggage. In Europe, it is common for each and every convenience and service to have an additional charge.

Limit personnel costs

To keep costs down, low-cost carriers will, in many cases, have employees work multiple roles. At some airlines, flight attendants also work as gate agents or assume other roles, thereby limiting personnel costs. Southwest Airlines is well known for using fuel hedging programs to reduce its overall fuel costs. Check-in at the gate of luggage requires fees, as it requires addition to the weight calculation and last-minute baggage handling.

Online check-in is becoming common, again in the interest of avoiding personnel costs.

Where permissible, some airlines have a disinclination to handle Special Service passengers, for instance by placing a higher age limit on unaccompanied minors than full-service carriers. Often these airlines do not offer connecting tickets, since the airline will have to pay for ground crew to transfer luggage. A customer may create a connection manually by purchasing two separate tickets, but these are considered separate contracts, and the passenger bears the risk if a delayed inbound flight causes a missed connection.

After deregulation, which led to lower fares, many airlines remained bound to these salary agreements and pensions, whereas new low-cost carriers employed new staff with lower salaries, especially for cabin crew, keeping personnel costs low and allowing for competitive fares. In some cases airlines have gone bankrupt (e.g., Alitalia, Sabena, and Swissair), and new airlines replaced them.

Traditional carriers followed the low-cost carriers by enabling web check-in, encouraging machine check-in at the airport, and generally reducing ground personnel cost.

The number of crew members follow international conventions that require one flight attendant per 50 passenger seats and two pilots. However, carriers can save money by reducing the amount of ground crew.

Carriers hire pilots through third-party agencies based in low-tax countries without benefits for sick pay, pensions or health insurance. Traditional carriers have also started to try this, including starting their own low-tax agencies. These agencies can easily find less experienced co-pilots and cabin crew, as the profession is popular, but there are problems for low-cost carriers to recruit and keep captains who have to be experienced.

Principles of operation

At IATA, a LCC operation is defined as including the following characteristics, at least to some degree:

• Primarily point-to-point operations
• Short-haul routes, often between regional or secondary airports
• Strong focus on price-sensitive traffic, mostly leisure passengers
• Typically a single service class, with no (or limited) customer loyalty programmes
• Limited passenger services, with additional charges for some services (e.g., on-board catering)
• Low average fares, with a strong focus on price competition
• Different fares offered, related to aircraft load factors and length of time before departure
• A very high proportion of bookings made through the Internet
• High aircraft utilisation rates, with short turnaround between operations
• A fleet of just one or two aircraft types
• Private-sector companies
• A simple management and overhead structure with a lean strategic decision-making process

While low-cost airlines differ in service offerings, by definition they feature most of the following:

• Standardized fleet (which lowers the cost of training and maintenance)
• Absent non-essential features (reclining seats, frequent flyer programs)
• Use of secondary airports for lower landing fees and marketing support
• Avoidance of airports with high costs
• Rapid turnaround (less time on the ground, more flights per day)
• Fly at less desirable times (red-eye flights) of the day, which price sensitive tourists accept
• Online ticket sales to avoid the cost of call centres or agents
• Online check-in (fewer check-in desks), charge for desk check-in
• Baggage charges for checked bags to offset baggage handling and loading costs
• Use staff for multiple jobs (for example, check-in desk agents loading bags or cabin crew checking tickets at the gate)
• Hedge fuel costs (buying fuel in advance when cheaper)
• Charge for all services (including on-board services, reserved seating, and extra baggage)
• Do not use reserved seating (which slows down boarding), or charge extra for reserved seating or early boarding.
• Fly point-to-point (passenger transfers to other flights are not accommodated, no compensation for missed connections)
• Carry little extra fuel (reducing aircraft weight)
• Outfit plane with fuel-saving modifications, such as winglets
• Route planning before aircraft arrives at airport (saving time on the ground)
• Market destination services such as hotels and rental cars for commissions
• Cabin panels decorated with advertisements

Differentiation

Not every low-cost carrier implements all of the above points. For example, some try to differentiate themselves with allocated seating, while others operate more than one aircraft type, still others have relatively high operating costs but lower fares. JetBlue, for instance, has in-flight entertainment in every passenger seat. Other airlines are limited on what points they can implement based on local laws. For example, Irish low cost airlines cannot remove window blinds from its aircraft, as they are required by the Irish Aviation Authority. As supply increases, this sort of differentiation by brand is an important criteria for the future success of low-cost carriers, since many experts believe price competition alone is not enough, given the number of carriers.

As the number of low-cost carriers has grown, these airlines have begun to compete with one another in addition to the traditional carriers. In the US, airlines have responded by introducing variations to the model. In Europe, the emphasis has remained on reducing costs and no-frills service.

Ultra-low-cost carrier

A secondary term ultra-low-cost carrier (ULCC) has been used to differentiate some low-cost airlines whose model deviates further from that of a standard low-cost carrier, with ultra-low-cost carriers having minimal inclusions in the fare and a greater number of add-on fees.

In the US market, Allegiant Air, Avelo Airlines, Frontier Airlines, and Sun Country Airlines are considered to be ULCCs. On May 2, 2026, Spirit Airlines, the largest ULCC in America at the time, shut down amid rising fuel costs as a result of the 2026 Iran war after negotiations with the United States government for a potential bailout deal failed.

In Europe, Ryanair and Wizz Air are the most prominent ULCCs.

In Asia, AirAsia is the most prominent ULCC.

Pricing policy

The pricing policy of the low-cost carriers is usually very dynamic as befits their business model, with frequent discounts and tickets in promotion. Like other carriers, however, even if the advertised base prices are very low, charges and taxes are typically not mentioned. With some airlines, some flights are advertised as free (plus applicable taxes, fees and charges). Depending on the airline, perhaps as many (or as few) as ten percent of the seats on any flight are offered at the lowest price and are the first to sell. The prices steadily rise thereafter to a point where they can be comparable or more expensive than a flight on a full-service carrier.

Most airlines charge additional taxes and fees on their tickets. Some low-cost airlines have been known to charge fees for the seemingly ridiculous, such as levying a credit card charge if credit card is the only payment method accepted.