After reading so many replies on this issue. I feel that I need to speak out to correct some misconception of some posters here.
From a marketing perspective, consumers are always looking for cheaper price, at least in surveys and papers. That is true to a degree. But purchasing airline ticket is not like buying a bus ticket, or buying a Burberry or Coach handbags. You need to understand why consumers choose cheap fares as the prime choice for purchase.
So, a lesson on consumers. Consumers tend to believe companies will act on surveys. So in their mind, if they say on the survey that the product is too expensive and they want it cheaper, companies will take notice and maybe cut the price to respond. They believe if there are enough people saying they want cheaper price, the business will have no choice but to reduce the price.
That is very simple to understand, no?
So now when you receive the latest version of surveys from hotels and airlines, the new format ask consumers to rank 5-7 pre-selected criteria in different scenarios. For example, they will list a route where the airline compete with other airlines, and ask consumer to rank how they will make the purchase decision. Then they will ask consumer to rank again by change this route to a fictional route where this airline is competing with a well known LCC. In the end they will ask consumers which airlines FFP they belong to and what level they are. In the end it is not the price that matters, but the perception of value that matters. Marketing 101. It is always the VALUE, not price.
The switch from simple survey have evolved to a complexity survey that pay more attention to consumer behaviour. Why?
Because today's travellers are far more savvy than the old timers. Today's traveller have phones at hand to search for deals all the time. They read the bloggers (or rather, watch the v-loggers) and follow influencers to know the airlines and competitors before they even plan a trip. 10 years ago, an average travellers do not know the difference between legacy and LCC. Today, a 10 years old school kids know Ryanair sucks and you only pay £10.
That create a problem for airlines. Because they have a survey clearly says consumers want cheaper price, if they react to the survey, they loose the VALUE composition. If they don't, they have a problem of cost. So what bean counters do? They use the survey as example to do what they like to do: cost cutting. Although in every marketing class they have on their way to management, that it is VALUE that consumer seeking the most, not the price.
If you look at BA's history, it has done following to counter the likes of easyjet and ryanair:
1, Slash the price and bulk up capacity to drive competition out: failed (although successful against some other airlines like Lakers).
2, Replicate their business model by forming a new airline to drive competition out: failed.
3, Lower your own standard to their levels (replicate their business model in-house): on-going, still no success yet.
Lufthansa is unfortunately doing the same and following the same mistake BA did. And IAG is repeating the mistakes all the time by forming LEVEL. I wish all good luck with the legacy airlines on the on-going battle to lower yourself to the ground. My personal feeling is legacy airlines might be winning a cost-cutting war, but they are loosing the long term games. IMO they are playing a dangerous game that will fundamentally destroy their current hub-to-spoke model. But the airlines managers know best. We know little. Citing a famous oriental philosophy that we should all living in harmony. It means both legacy and LCC airlines should exist side by side with their own characteristics and specials. All legacy airlines turns to be LCC is not living in harmony. The balance is broke.
I don't think many consumers who ticked Cheapest Price in their survey answer wanted this to happen. They simply meant everyone wanted to pay less for the same thing, not paying less for less. i.e. they thought to get a discount for a Prada, not paying less to get a Michael Kors.