Budget Airline Operators Not Only Break Even but Also Turn in a Profit— Here’s How.

stuartmiles/Depositphotos: Budget airline workers make decent money

The budget flights that don’t serve meals or drinks, and come with no frills whatsoever have reconceptualized air travel.

Traveling is an essential service that was super-expensive just a few years ago. We now live in an age where airlines have cheaper and faster offerings for us. This begs the question, how do low-cost airlines make money?

There are many flights to picturesque destinations such as Rome and Paris for less than $50. You would incur the same cost if you were to take a train to central London from anywhere inside the UK!

Ryanair, the Irish company that revolutionized the concept of cheap flights, made a yearly revenue of over $1 billion in 2015. It speaks volumes of how these companies have made this model work.

How Do They Make It Happen?

If we were to break down the cost of running a plane, it would look like this. Ticket sales generate $7,700, of which $7000 is spent on outgoing purchases, thereby letting them pocket the rest as profits.

Besides this, the airport imposes charges which are to be borne by the passengers. When it comes to such fees, Stansted and Luton are the cheapest airports. Budget operators would prefer flying to such destinations as a cost-cutting for more economic viability.

dragunov/Depositphotos: The expenses are less than the earnings, they can have profit

Similarly, with aircraft, the Boeing 737 is the most preferred one since it can accommodate 150 travelers and does not pose any limitations when it comes to maintenance.

atosan/Depositphotos: No business classes in budget airplanes

Since there is no concept of business class, these airlines can squeeze in more seats as compared to other operators. Besides, most of the planes in the fleet are owned by them in arrangements with finance corporations.

More Cost-Cutting in Wages and Advertising

Not a lot can be done with the team’s salaries and other perks since a standard wage is set for all qualified professionals in this industry.  But when it comes to the cabin crew, they certainly make less as compared to a premium airline.

ifeelstock/Depositphotos: Limited staff members to serve the on board passengers 

Furthermore, companies like Easyjet do not find the need for many staff members on board as they do not have the concept of first-class passengers on their flights. An important aspect is the fact that they don’t serve meals to everyone.

Fuel is an important factor that can make or break the situation. The only problem is the constant changes in policies and massive price fluctuation, especially during crises like currency crashes and pandemics. This will play a pivotal role in determining the overall profits.

For any airline, advertising, and the entire process of getting their name out there, is a major cash-burn. With low-cost airlines coming into the picture, newspaper ads, billboards, and transit publicity are getting more preference as compared to the big-budget options.

They are certainly cheaper than a TV ad, which costs upwards of $100K for a 30-second slot! Lastly, phone and internet bookings are a savior for budget operators.

These airlines cut costs in all possible ways; after all, as consumers, we are expecting the best deal from them! Despite that, they offer the same level of safety and quality of service while managing to earn decent profits out of it.