Cheap flights are worthless

It’s no longer rocket science to find cheap tickets and fly around the world for less than $1000. On every continent there’s fierce competition between low-cost airlines and since a couple of years there are also low-cost long hail airlines. They’ve copied the business model of these low-cost airlines (point-to-point flights) but fly between continents. An example of such an airline is Norwegian, which offers flights between Amsterdam and New York for only €131 / $143.

Or take Scoot, a low-cost airline from Singapore, which will take you from Athens to Singapore for €159 / $173.

Cebu Pacific flies you from Dubai to Manila for €88 / $96.

Another one? With Air Asia X you can fly between Honolulu and Osaka for €170 / $186.

In short: nowadays you can travel extremely cheaply from A to B, even if A and B are thousands of miles apart.

Value and price

There’s a big difference between the price and the value of airfare. I’ve describe this distinction in my book about flying cheap, but that book is in Dutch, so here we go.

There’s a huge gap emerging between what different airlines offer their travelers in economy class.

Capturing the consumer surplus

To understand that gap, we must go back to why low-cost airlines exist. The reason is very simple: there was a market of price-conscious (holiday) travelers who could be seduced with low fares. It didn’t seem to matter that the fares were so low because the service level was significantly lower than normal. Moreover, not all service on board was relevant to everyone: that free newspaper, a cheerful caring stewardess, that dry slice of bread on your two-hour flight, not having to pay to check in a bag at well-staffed check-in counters did not appeal to the people much. This is why Irish low-cost carrier Ryanair now is one of the most profitable airlines.

Competition

Airlines that have existed for decades suddenly experienced fierce competition from these low-cost airlines. Because the average person had no idea that a flight between Amsterdam and London with British Airways was very different than a flight with EasyJet (even if you land at a completely different airport), those long-standing so-called legacy carriers suddenly seemed to be in heavy weather. Their solution was also to strip their own product. But that had the opposite effect: legacy carriers were still expected to offer some service: a small snack on board, a slightly larger seat and that free newspaper. And when all that was deleted, the turnips were done. An airline such as British Airways was even rated worse by their customers than Ryanair was. Why? Because at Ryanair people expected to get zero service (and having to pay for all extras). They did not at British Airways.

Calculated misery

That paying for extras is called calculated misery by Tim Wu. And this will only work if the basic product is very very basic. Horribly basic actually. Then suddenly half the plane wants to pay extra to have priority boarding (and still queue up). If basic is so bad, people want to pay extra for a front seat and a seat next to your travel partner.

Three types of economy class

There are now three types of economy class. The first group is the group made famous by Ryanair: you can book extremely cheap fares, but depart at terrible hours from an old military airport and arrive at least an hour and a half from the city where you actually wanted to arrive. The plane is completely stuffed with the smallest seats and you can only take a small backpack as hand luggage. The staff is exploited and is therefore not too cheerful. And if you do not print your ticket, you have to pay a few bucks. In short: a dreadful experience, but you already prepared for it, so you didn’t really mind.

The second group of economy class is a kind of an intermediate group. This group consists of legacy carriers that want to compete with low-cost airlines. The cheapest economy class tickets here are called economy basic or something with a similar meaning and you are no longer allowed to check in a suitcase for free or even carry hand luggage. You pay half a monthly salary for a bottle of water on board.

The third group consists economy class on airlines that still do what they have always done. And by maintaining this (and competing between low-cost airlines and legacy carriers that they want to copy), I think they’re going to survive. These are airlines where you can just check in a suitcase, select a seat yourself, where you can ask a friendly stewardess for a cup of water during a flight (and they will bring it to you) and where you can even save some points with your flight.

Worthless, but cheap

The four examples from the beginning of this piece all belong to the first group: you can fly cheaply from A to B, but do not expect anything at all: no checkin luggage, no regular sized hand luggage, no food, no drinks, no points, no service, no pleasure. Worthless, but cheap.

With the exception of Ryanair and Vueling, I will not immediately advise against low-cost airlines, as long as you know what you get in return. My preference in economy class always goes to full service airlines. For convenience you can blindly book a cheap ticket with Emirates, Etihad, Qatar Airways, Singapore Airlines, Garuda Indonesia and Cathay Pacific. With these, coincidentally all Asian, companies you’re always in the right place. The rest? Usually not so much, or not at all.

And if you want to know where I found the advantageous rates from the examples above, ask me on Twitter.