Flying for Peanuts: The Rise of Low-Cost Carriers in the Airline Industry

By Whitelegg, Drew | The Journal of Transport History, September 2005 | Go to article overview

Flying for Peanuts: The Rise of Low-Cost Carriers in the Airline Industry


Whitelegg, Drew, The Journal of Transport History


Flying for peanuts: the rise of low-cost carriers in the airline industry Simon Calder, No Frills: the Truth behind the Low-cost Revolution in the Skies, Virgin Books, London (2002), 290 pp., £16.95.

Barbara Cassani, with Kenny Kemp, Go: an Airline Adventure, Time Warner, London (2003), 320 pp., £12.99.

Thomas C. Lawton, Cleared for Take-off: Structure and Strategy in the Low Fare Aviation Business, Ashgate, Aldershot (2002), 236 pp., £46.50.

Lamar Muse, Southwest Passage: the Inside Story of Southwest Airlines' Formative Years, Eakin Press, Austin TX (2002), 262pp., $12.95.

James Wynbrandt, Flying High: How JetBlue Founder and CEO David Neeleman beats the Competition, Wiley, Hoboken NY (2004), 306 pp., $24.95.

The 11 September 2001 attacks on New York and Washington DC accelerated a restructuring of the airline industry, whose net losers have been large flag carriers and whose net winners - so far, at least - the low-cost carriers. Economic prosperity was polarised: as the largest airline in the world, United Airlines, entered bankruptcy, low-cost JetBlue expanded; as the Belgian national carrier Sabena crashed, Ryanair aggressively redrew the aviation map of Europe. Airline analysts and executives now point to the low-cost model as the path of the future, and a plethora of books on the topic highlights an interested market among both academic and popular readers. These books offer an explanation for anyone wanting to understand how it is possible to fly from London to Genoa and back for under £10. In the process they document the industry's development, providing context for a story that has been running for a good deal longer than the last ten years.

Attempts to provide cheap air tickets date back to the second World War, according to Simon Calder, travel correspondent of the British daily, The Independent. With new holiday entitlement, workers returning from the war brought with them a thirst for foreign travel, a fact picked up by Vladimir Raitz, who began charter flights between Gatwick airport and Corsica in 1950. Over the next thirty years, charters became the inexpensive link between the tourist-generating markets of northern Europe and the Mediterranean sun. They were, according to Calder, the original lowcost carriers.

Two important links existed between charters and low-cost counterparts. First, both operated in the ambiguous spaces of an otherwise highly regulated system. Southwest Airlines, for instance, initially avoided the onerous federal route-bidding process by operating solely within Texas. Irish carrier Ryanair began flying domestic routes within Britain two years before full cabotage rights were established as part of the liberalisation of Western Europe's airline network. A dialectic operated between low-cost carriers and the protective regulatory structure of Europe and North America. Airlines such as Southwest and Ryanair, like Freddie Laker beforehand, pushed the regulatory limits as far as possible and in doing so demonstrated the case for their removal. As Lamar Muse, Southwest's first CEO and president, documents, his airline was one of the major supporters of deregulation in the United States. Low-cost flyers rushed to fill the gap as the regulatory walls came down in the 1980s, although few of them actually survived.

The second link is that charters exposed a vast latent demand for cheap travel among sections of the population that would otherwise not fly. In their respective titles, both Thomas Lawton and Lamar Muse emphasise that cheap airlines did not poach passengers from bigger, established rivals: they created a new market. In the process, they provided a formidable argument for the deregulators: flag carriers did not need protecting from low-cost upstarts; indeed, in terms of expanding air travel to as many people as possible, the upstarts were doing a public service.

Unsurprisingly, Southwest looms over the pages of all these books. …

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