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summary
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Europe’s low-cost airlines are lowering ticket prices due to competition from high-speed rail services.
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The EU’s strong pro-competitive practices are forcing low-cost airlines to keep ticket prices close to the lowest.
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While U.S. labor laws limit airlines’ cost-cutting measures, Europe’s lax labor laws allow for lower prices.
The airlines that have mastered the art of low-cost travel are undoubtedly the European low-cost giants like EasyJet and Ryanair. In the US, low-cost airlines may reduce ticket prices by 20% to 30%, while in Europe, full-service network airline tickets can be up to a quarter cheaper than traditional tickets. .
This is painfully true even on transcontinental routes, so much so that even budget-conscious students can afford to fly from city to city on these airlines on a regular basis. Europe doesn’t have as many destinations as the United States, and its passengers aren’t as affluent.
But the fares are still painfully higher than those across the Atlantic. For residents of Lisbon, Portugal, looking for a fun weekend skiing in the Swiss Alps, flights to Geneva, a city close to many of Europe’s best ski resorts, can be purchased for as little as $35 round trip. easyjet.
Frontier Airlines has the cheapest round-trip ticket on this route between Houston and Denver, which is an excellent stopover to most resorts in Colorado, at $130. In this article, we look at the five main reasons why low-cost airlines have low fares in Europe.
1 alternative transportation
Main cause: high-speed rail
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European high-speed rail miles: |
4,464 miles |
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Miles of high-speed rail in the United States: |
375 miles |
Microeconomic principles define one of the main reasons why European low-cost airlines offer low prices, which can be attributed to the laws governing competitive markets. In the United States, if you want to travel between two major cities in a timely manner, your only option is to fly, except for a few large cities along Amtrak’s high-speed Acela service in the Northeast. According to Scientific American, large-scale high-speed rail construction efforts in the United States have repeatedly failed.
Photo: Markus Mainka | Shutterstock
However, in Europe, low-cost airlines are in fierce competition with high-speed rail services, and on many routes they can reduce total travel time and potentially provide a more comfortable passenger experience than flying. Such intense competition has forced ultra-low-cost airlines to lower prices on many short-haul routes so that customers choose less convenient planes. Rail is one of the main reasons why low-cost airlines are less competitive on regional routes within Europe, with airlines like Ryanair reducing their domestic capacity by excluding markets where rail cannot operate. That’s one of the main reasons we’re limiting it.
2 Strong pro-competitive practices
We can thank the European Commission a lot for this.
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Number of European airlines: |
195 |
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Number of low-cost airlines in the US: |
98 |
The European Union has long taken a strong stance against mergers, maintaining fierce competition between different airlines, which has sometimes disappointed existing legacy carriers. Nevertheless, competition continues to drive up ticket prices in favor of passengers, forcing low-cost airlines to price their tickets near the lowest prices, according to the Financial Times. Reporting.
Photo: Markus Mainka | Shutterstock
However, in the United States, regulators have traditionally approved airline mergers quickly, leading to today’s highly integrated environment. According to Department of Transportation statistics, just four airlines control nearly 70% of the U.S. market, which indicates that each airline has a high level of power over ticket pricing. is showing.
3 friendly labor laws
Many low-cost airlines are officially registered in countries such as Ireland
The main effects this has on ticket prices are:
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US labor laws are followed by all airlines operating in the country
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Due to the fragmentation of the EU, airlines are now free to register from any country.
The European Union is made up of a number of different countries, all of which operate in a single aviation market. This means that airlines based in EU member states are welcome to fly to and from other member states, or between other member states.
Photo: Kamil Petran | Shutterstock
When it comes to labor laws, this allows airlines to register in the country of their choice, usually one with fairly lenient requirements. According to the Irish Times, low-cost airlines such as Ryanair and Norwegian choose to register subsidiaries in Ireland for this very purpose, making it convenient due to Ireland’s lenient corporate tax policy. The company will choose a holding company.
Why do low-cost airlines offer weekly service?
Many airlines only fly to certain destinations once a week.
In the United States, all airlines are required to operate according to similarly strict US labor standards. Because of this, airlines are unable to significantly reduce flight attendant costs like Europe’s ultra-low-cost carriers.
Four Fees are high in America
Fees can account for nearly 20% of a passenger’s ticket
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Notable charges: |
amount: |
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Security charges for September 11th: |
$5.60 |
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Flight segment tax: |
5 dollars |
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APHIS passenger charges: |
$3.96 |
In the United States, airline tickets are taxed by four different groups, and these numbers can add up significantly. The Federal Aviation Administration (FAA), Environmental Protection Agency (EPA), Department of Homeland Security (DHS), and local airports all charge various fees and surcharges that can add up to significant amounts.
Photo: Carlos Yudica | Shutterstock
Airlines for America recently analyzed the fees on a $326 ticket and found that they amounted to more than $73, or an absurd 22% of the fare. In Europe, the absence of these fees allows low-cost airlines to keep prices low.
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Five Geography and infrastructure advantages
Spatial configuration and history are on the consumer’s side
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high density city
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Strong network of secondary airports
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efficient public transport
Europe’s geography works to its customers’ advantage, as cities are generally located close to each other, requiring shorter flights and ease of aircraft operations. As the Washington Post points out, Europe is dotted with secondary airports that are remnants of World War II.
Photo: London Stansted Airport
While cities like London may have six or more airports, most major cities in the United States have only one major airport. With more facilities to choose from, low-cost carriers have enormous market power and are able to negotiate lower operating costs, such as landing and takeoff costs.
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Additionally, the airport is efficiently connected to European city centers by buses and other transport options. However, the United States lacks airport infrastructure and high-speed mass transit capacity.
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