Is there really any difference any more between the legacy and the low cost airlines?
Updated: Nov 12, 2021
The history of the Aviation Industry starts most probably from the Chicago Convention at 1944. During the conference were agreed most of the common rules and habits for the international aviation. Those rules exist still and they are the basis for the aviation laws globally.
Based on those rules agreed at 1944, also the business practices of aviation reflected the market understanding of that time. The countries restricted the aviation business opportunities quite heavily and therefore it was quite common that there was most likely one legacy carrier in each country and it was at least partially owned by the government. The monopolies were very common. Obviously this raised the ticket prices. Air travel wasn´t something that everybody could do, it was luxurious and glamorous.
The markets started to open up in 1978 when the Airline Deregulation Act was approved in the United States. This removed the regulation regarding business topics like fares, routes or market entry for new airlines. Other countries followed this development soon.
The industry that had been controlled mainly by monopolies started to see new entrants coming to the market. These new airlines were typically providing less services than the legacy carriers but on the other hand the tickets were also cheaper. Air travel was slowly starting to transform from a luxurious and glamorous service to a normal commodity that everybody could afford.
I´ve read lots of articles, papers and analysis that are stating the characteristics of a legacy carrier and on the other hand the characteristics of a low cost carrier. Yes, sure. It is quite common that legacy carriers have better services, they have first, business and economy classes at flights, they have lounges, they have loyalty programmes, they have flight connections, they have transfer services, etc. The list is long. But how can you say that some features belong to the legacy carriers and some features to the low cost carriers?
Airline industry is today probably one of the most competed industries in the world. It´s also probably one of the most hurt industries in the world because of the Covid-19. Therefore every airline, regardless of the legacy or the low cost status, drives very hard towards cost savings.
If you fly with a legacy carrier in an economy class and if you fly the same flight with a low cost carrier, how does the service you get differ from each other? Very few legacy carriers still offer free meals or even free drinks during the flights (some do and I praise that). You can get meals, drinks, newspapers, wifi, etc. but you have to purchase them. But the same applies to the low cost flights. You don´t have an access to the lounge in either case. In both cases there is most likely some kind of a loyalty programme existing.
Many legacy airlines are trying to get more and more ancillary revenues to compensate the lower ticket prices. This means that the services that have included in the ticket price earlier, like baggage or meals, have to be purchased now separately. This is one of the basic low cost airline methods.
I believe that the line between the legacy carriers and the low cost carriers is disappearing very fast. The line was easily seen during the first years of deregulation but the world is changing. Nowadays we just have a wide variety of airlines that have unique strategies and that apply service and operations palettes from both legacy and low cost sides. Very many legacy carriers have gone bankrupt since the deregulation; was it so that they weren´t able to adjust to the competition?
Sustainability and digitalization are providing big challenges to the aviation industry, but they are also giving excellent tools and justifications for further cost savings. This means that all the airlines have to change and improve their efficiency constantly in order to keep up with the competition. I´m sure that in the future we will see more and more services of many airlines to be very similar with each other. Is it a good or a bad thing? I´m just sure that the airline who has the most interesting strategy and the service offering will be on the side of the winners. The airline that has a true respect towards its customer, will not fail.