Over the past two decades, the development of low-cost airlines across the globe has been extensive, with the networks of budget airlines expanding rapidly across Europe (where they are much more extensive in terms of domestic networks than legacy carriers), the United States (where the world’s largest low-cost carrier, 
Southwest Airlines
, is based), Asia, Australia, and South America. These budget airlines have drastically changed the nature of the travel experience, offering passengers a massive reduction in airfare in exchange for a no-frills attached experience.
For passengers looking to fly to leisure destinations that around less than five hours away, budget airlines have introduced new competition to these markets by dropping fares and forcing legacy carriers to lower prices as a response. In this context, the true winner is the consumer, which sees a significant reduction in their costs to go on vacation. As a result, budget airlines have often been called a catalyst for bringing travel to the masses.
Low-cost flying is nothing new in the United States, with the nation’s first low-cost carrier, Pacific Southwest Airlines, taking to the skies for the first time in 1949, according to an analysis from Aerotime. The first major airline to begin setting the standard for low-cost travel would be Southwest Airlines, which began flying in the 1970s.
We have discussed quite extensively at Simple Flying both the structural challenges faced by low-cost carriers in the United States as opposed to those in Europe as well as why legacy airlines in the United States are often given more competitive power in the market. One other interesting difference between these two markets is that the United States lacks the presence of one specific kind of low-cost carrier, a long-haul budget airline.
What exactly is a long-haul low-cost carrier?
Traditionally, low-cost airlines have operated short to medium-haul aircraft capable of flying up to around five or six hours. For some of the shortest transoceanic long-haul routes, such as Boston to London, the range of modern narrowbodies like the A320neo and the 737 MAX are capable of operating these flights.
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The carrier has developed a unique model.
However, long-haul low-cost airlines have attempted to bring the budget airline model to long-haul international routes, using widebody aircraft to fly across oceans and between continents. Today, there are dozens of long-haul budget airlines around the globe, most of which were founded within the past twenty years. Examples of such airlines that exist today:
- Norse Atlantic Airways
- LEVEL
- AirAsiaX
- Cebu Pacific
- TUI
- Jetstar
- Zipair Tokyo
These airlines are among some of the most unique operators in the market today, attempting to succeed in a space where carriers have traditionally failed. Overwhelmingly, low-cost airlines can thrive by reducing operational costs to the point that they can offer passengers significantly reduced ticket prices. However, on long-haul routes, attempting to reduce costs becomes more and more difficult.
As a result, many long-haul low-cost airlines have failed over the years, including some high-profile carriers like Norwegian Air Shuttle and Wow Air. While there have been more than a handful of long-haul low-cost carriers based out of Europe over the years, there is yet to be a true long-haul low-cost airline based out of the United States. Let’s take a deeper look at the market conditions which have led this to occur.
Low-cost airlines in the United States face structural challenges
Low-cost airlines in the United States face many structural challenges, which have harmed their ability to offer the rock-bottom prices on offer from European low-cost airlines. Therefore, budget airline tickets in the United States might bring the passenger’s ticket price down by 15-25%, while a flight on Ryanair could be a literal fraction of an Air France or British Airways ticket.
Photo: Markus Mainka | Shutterstock
In the United States, fees are higher, both on individual tickets through the form of taxes imposed by the government and on airline operations. In Europe, Ryanair can significantly reduce its landing costs by negotiating with tertiary airports like London Stansted (STN) or Paris Beauvais (BVA), where they can use their massive status as leverage to negotiate lower fees.
These problems are exacerbated by long-haul low-cost carries
For long-haul budget airlines, reducing costs as much as possible is critical as the margins are even smaller than those for typical budget airlines. The largest individual cost borne by airlines is fuel, which is required for each flight. For airlines flying further, fuel becomes an even larger portion of a flight’s overall operational cost.
Photo: Ryan Fletcher | Shutterstock
Fuel is one of the only costs that budget airlines have virtually no control over, as the price of jet fuel is controlled by free market dynamics and thus remains a variable that carriers cannot control. As a result, long-haul low-cost carriers must carefully operate on razor-thin margins to turn a profit operating these long-haul flights at semi-reasonable prices.
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So what’s the bottom line?
At the end of the day, being a long-haul budget airline is extremely hard, and the few carriers that have tried are required to tread very carefully. For the most part, some European airlines with structural cost advantages over US airlines have attempted to succeed with this model, but none based out of the United States have been so bold.
Photo: Ronen Fefer | Shutterstock
JetBlue, which was once a low-cost airline but today operates more as a hybrid carrier, does operate transatlantic flights to a few destinations. However, the carrier drives profits from these routes mostly from its premium business-class cabin, disqualifying these services from being deemed true long-haul low-cost flights.