Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 2:44 am

Southwest Airlines started no-frills, low-fare flights in 1971, and by 1973 started making profits. It never looked back -- it's made a profit every year since.

It showed itself to be a good business model, and was copied by other airlines in the U.S. after deregulation.

But why did it take so long for the no-frills, low-fare, fun-and-games model to catch on elsewhere? Canada went through its own deregulation in the mid-'80s, yet it took a full decade for a Southwest equivalent, Westjet, to take to the skies. Neither Britain nor Australia nor New Zealand got their equivalents until about the same time.

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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 2:48 am

You have a point. I think that it might be because Southwest was so ahead of their time that others took a while to get the concept figured out, and working. That is just my theory though.
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 3:11 am

Deregulation had a big part to play in Canada, you could not have WJ or SG existing without deregulation, and at the time in the 80's we still had two majore players in the market CPair and Air Canada, both offered competitive fares at the time to most places in Canada. But I think that in other parts of the world air travel was seen in a different light. For example in Europe you can go anywhere by train, almost as fast as you can by airplane and at much lower costs. The rail road is such a major player in europe that low fair airlines were not needed for short point to point service. Only in the last few years did you see a major jump in the number of inter-european flights and thats when low cost airlines begain to boom, because people travel needs are slowly becoming faster then what the train can provide.
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 3:16 am

Deregulation, most Airlines outside the US were owned or heavily subsidized by they local Governments.
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 4:15 am

In Europe, Southwest could not survive. Why? Simple, trains. I'll use France as an example. France only has two major airlines, Air France and Air Lib (formerly Air Liberte, formerly AOM). Aside from the longer routes from Paris to southern coast (Nice, Marseilles, etc.), neither French airline has a large domestic network. The TGV bullet train simply offers too much competition. Low fare airlines make all their money from tourists and vacation goers. Example: WN offers tons of cheap fares to Florida, Las Vegas, etc. Most vacation goers in Europe take trains because they are much cheaper and more feasible. In the USA, taking a train from the Northeast to Florida would take forever. However in France, it's only a few hours by train from Paris to Nice.
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 4:30 am

Not to argue, Cba, but look at the surprise success of Ryanair, easyJet, etc. Already 1/4 of airline pax in the UK are flying with the discount airlines and the trend is catching on in Continental Europe.

True, Europe has a better train system that the US, but many of the fast trains are expensive, almost as costly as full-fare airlines. The discount airlines are cheaper than the trains in most cases. It was also said that auto travel was easier in Europe, since many of the highways have no speed limits allowing for faster travel; however, impossible traffic jams and expensive fuel (unleaded is over $4.00 a gallon in Holland at the moment) make auto travel less appealing.

Europe may be late, but low-fare airlines are going to expand in Europe in a big-way. KLM and LH are both developing low-fare subsidiaries, as is BMI.

NZ and Australia will also see low-cost service, NZ already has Freedom Air operating on trans-tasman routes and is looking at opening up a domestic low-fare carrier. Virgin Blue is operating in Australia, and QF is opening up Austalian Airlines, a low-fare long-haul carrier to operate routes where QF mainline has difficulty making a profit due to low-yeilds.
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 5:22 am

The answer to your question is very simple and is applicable beyond aviation.

In the US, they have always liked the concept of budget prices. It is in their psyche.

In the rest of the world, they like service and are willing to pay for it.

What we are seeing now is the Walmartization of the world. The export of the American "budget" concept. It's an equalization process. Standards, and prices, are reduced to the lowest common denominator.
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 6:07 am

Polaris, I have to take issue- in part- with your characterization.

Southwest could never have existed in the US, in its present form, before airline deregulation; the only way that they were able to start up when they did was that they flew (at that time) only within the state of Texas, and thus fell outside the route authority of the now-defunct CAB (Civil Aeronautics Board). Flights between different states were doled out by the government, with only limited number of airlines allowed to serve each pair.

It was only after airline deregulation that WN was able to serve interstate markets and (with the unique incubator of the state of Texas, outside federal jurisdiction, but large enough to support growing air traffic) Southwest was by that time large enough, with a well-proven enough operating concept, that they were able to expand with great success.

Southwest succeeds because it has high standards- where it matters. Having traveled all over the country, and some internationally, I can tell you that the standard of service which Southwest provides- service that matters- is one rarely matched by any carrier, at any price. They are reliable, have safety standards which are the highest, and they treat their passengers with respect. Southwest has grown on the repeat business of business travelers who revel in the high-frequency and reliable performance WN provides; not the cheap-fare "backpacker" traveler.

The European ailrline market is now seeing some of the same effects, but (as noted above) much of the role filled by WN here (especially in its earlier days) is well-filled by Europe's exceptional rail infrastructure.

To suggest that WN's success stems from a "lowering" of standards is silly; very few business travelers I know (the ones who cherish getting home to the family) would choose to fly a "full-service" airline, if Southwest could get them home sooner, with greater certainty, and at a less-confiscatory fare.
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 6:15 am

It's ridiculous so say that lo-cost operators didn't strat up in europe because of competition from trains. Try getting Liverpool to Barcelone in 2 hours by train, the journey would probably take 24 hours and involve travelling across London and Paris by metro/underground and would probably end up costing about the equivalent of US$500. Compare this to an easyJet flight from LPL to BCN whioch takes 2 hours and usually can be done for under US$100.
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 6:20 am

No-frills are successful in the UK and Eire because we are islands!
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RE: Why So Long For No-frills To Catch On Outside U.S.

Mon Jun 17, 2002 8:31 am

In Europe, Southwest could not survive. Why? Simple, trains.

Interesting indeed. Southwest must have seen this threat themselves when Texas passed a law to fund a DAL-HOU-SAT "Texas Triangle TGV" in the early 1990's. The high-speed train financing was thwarted, in part due to the lobbying of Southwest.

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