The end of the budget airline?

The list of bankrupt airlines is growing by the week, but the biggest casualty of the oil squeeze in the airline industry could be the cheap fare and the holiday plans of a generation weaned on affordable air travel. A decade of low ticket prices has fuelled the Tallinn stag do and made Ryanair an unlikely linchpin in the market for continental second homes. It has also led to a 200% growth in UK regional airports. But airline executives warn that fares have to rise.


This raises serious questions over the business models of two of the most financially robust carriers in the world: Ryanair and easyJet. The dominant players in the European budget airline market rely on low fares to pack their aircraft, wringing profits out of passengers by charging for add-ons such as luggage check-in and hotel bookings.

British Airways, Air France-KLM and Australia’s Qantas are hoping to trade their way out of trouble by raising fares, but that approach is anathema to Ryanair and easyJet. According to analysts at the investment bank Credit Suisse, they have to take action.

Guardian