page_title: Low-cost carrier
section_title: Limit personnel costs
hierarchical_section_title: Low-cost carrier / Business model / Common practices / Limit personnel costs
caption_attribution_description: also visible: PK-AXS Airbus A320-216 (cn 2885) Indonesia AirAsia. Denpasar / Bali - Ngurah Rai International (DPS / WADD) Indonesia, August 24, 2012.
context_page_description: A low-cost carrier or low-cost airline is an airline that is operated with an especially high emphasis on minimizing operating costs and without some of the traditional services and amenities provided in the fare, resulting in lower fares and fewer comforts. To make up for revenue lost in decreased ticket prices, the airline may charge extra fees – such as for carry-on baggage. As of April 2020, the world's largest low-cost carrier is Southwest Airlines, which operates primarily in the United States, as well as in some surrounding areas.
  The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors. While the term is often applied to any carrier with low ticket prices and limited services, regardless of their operating models, low-cost carriers should not be confused with regional airlines that operate short flights without service, or with full-service airlines offering some reduced fares.
  Some airlines actively advertise themselves as low-cost, budget, or discount airlines while maintaining products usually associated with traditional mainline carrier's services—which can increase operational complexity.
context_section_description: Low-cost carriers intend to be low-cost, so in many cases employees work multiple roles. At some airlines flight attendants also work as gate agents or assume other roles, thereby limiting personnel costs. Southwest Airlines is well known for using fuel hedging programs to reduce its overall fuel costs. Check-in at the gate of luggage requires fees, as it requires addition to the weight calculation and last-minute baggage handling.
  Online check-in is becoming common, again in the interest of avoiding personnel costs.
  Where permissible, some airlines have a disinclination to handle Special Service passengers, for instance by placing a higher age limit on unaccompanied minors than full-service carriers. Often these airlines don't offer connecting tickets, since the airline will have to pay for ground crew to transfer luggage. A customer may create a connection manually by purchasing two separate tickets, but these are considered separate contracts, and the passenger bears the risk if a delayed inbound flight causes a missed connection.
  When most countries had national monopolies, crews could negotiate pay raises and good pension benefits (something that costs money for the airlines only in the long term). During this period, most passengers were business travelers who paid high fares that covered these costs. After deregulation, which led to lower fares, many airlines remained bound to these salary agreements and pensions, whereas new low-cost carriers employed new staff with lower salaries, especially for cabin crew, keeping personnel costs low and allowing for competitive fares. In some cases airlines have gone bankrupt (e.g., Alitalia, Sabena, and Swissair), and new airlines replaced them.
  Traditional carriers followed the low-cost carriers by enabling web check-in, encouraging machine check-in at the airport, and generally reducing ground personnel cost. Ryanair is unique because it primarily operates at secondary airports without any competition, so it can easily negotiate large cost reductions and deals with the airport owners.
  The number of crew members follow international conventions that require one flight attendant per 50 passenger seats and two pilots. No carrier can save money by reducing flight crew, but they can reduce ground crew.
  Carriers like Ryanair hire pilots through third-party agencies based in low-tax countries without benefits for sick pay, pensions or health insurance. Traditional carriers have also started to try this, including starting their own low-tax agencies. These agencies can easily find less experienced co-pilots and cabin crew, as the profession is popular, but there are problems for low-cost carriers to recruit and keep captains who have to be experienced.
caption: An Airbus A320-200 of AirAsia and a Boeing 737-900ER of Lion Air at Ngurah Rai Airport. Both carriers are among the largest budget airlines in Southeast Asia.
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