Magazine article Marketing

No-Frills Fail to Gain Ground

Magazine article Marketing

No-Frills Fail to Gain Ground

Article excerpt

The recession has hit low-cost airlines, with passenger numbers flattening as consumers look to cut back on holidays abroad.

When budget airlines such as easyJet and Ryanair first hit the UK market, travellers couldn't believe their luck. Suddenly travel was faster and cheaper. The European weekend break to regions never before considered and their availability to those previously prohibited by their budget became a possibility.

Tourists from the UK have come to take a freedom and cheapness to air travel for granted, thanks to the no-frills short-haul airlines, and until last year, this was behind the boom in air travel as a whole.

Yet over the years some of the appeal has dwindled. The scramble to get a decent seat, the airports miles away from the cities they are badged as, hidden costs and the increasingly Draconian luggage restrictions have led to a growing disquiet among travellers.

Then last year the recession took hold: passenger numbers declined and short haul was particularly hard hit. This combined with the volatile oil price, an increase in Air Passenger Duty, growing environmental concerns, better European rail services and this year's swine flu pandemic has meant people are more reluctant to fly.

Given bargain-hunting is a national hobby, the no-frills operators should be in a better position than the full-service airlines, and this appears to be borne out by British Airways' recent problems. Less than one-fifth of adults look for full service on short-haul flights, according to TGI.

By the end of 2009, Mintel estimates that 180m passengers will have flown, and of that figure about 73% will be short-haul. Last year started well with continued growth but the second half of the year brought a fall in demand. In 2008, passengers handled at UK airports fell 2%, the first decline for more than 15 years, according to BAA. In the first half of 2009, numbers fell by 7.5% year-on-year.

ABs are the most likely demographic to have flown short-haul in the past three years, followed by C1s. More than half of the UK population has flown in this manner in the past three years, and consumers continue to see holidays as a priority when deciding what to spend their money on.

The trend for independent travel has resulted in a rise in flight-only bookings, to the detriment of chartered airlines.

Price continues to be the most crucial factor for consumers when choosing their airline. More than 55% cited it as a top priority in 2008, according to TGI data, and the fierce competition in short-haul has kept costs down for flying in Europe. While some airlines have fallen by the wayside, the biggest battle continues between market leaders Ryanair and easyJet. Despite the overriding market conditions, they have carried on adding passengers.

Ryanair continues to 'innovate' - or court controversy, depending on your viewpoint. Recent money-saving ideas touted have included charging for using its aircrafts' toilets. The Irish airline claims to be Europe's biggest; in June it posted a 13% rise in traffic year on year. However, it has cut its Stansted flights by 30% and pulled the majority of its Manchester services, citing high landing charges.

EasyJet, meanwhile, has added flights on its winter schedule to Agadir, Cyprus, Lanzarote and Tel Aviv, among others.

BA has tried to fight back against its low-cost rivals by exploiting their hidden charges. The airline launched an online calculator comparing prices including extras. While BA is still a dominant force. …

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