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Do travellers still want to fly budget airlines?



“This year, there was a pivot to international [travel] from domestic,” says Becker. Full-service airlines had a better quarter because they have “more long-haul international seats to sell and participate in”. And for those who did fly within the country, Becker adds that travellers were looking for accommodations budget carriers don’t provide – major carriers did better in large part because they have more premium seats available.

“If you don’t cater to premium, if you can’t bank on loyalty and if you don’t fly internationally, this year’s third quarter is likely to disappoint,” Jamie Baker, a JPMorgan Chase analyst, wrote in an August report.

Business travel was also down, which reduced budget carriers’ passenger volumes. Southwest, specifically, has put much effort into targeting business travellers, and struggled to fill seats as business travel demand waned in the era of Zoom and tight corporate spending.

Many budget airlines depend on lower fares to siphon price-conscious flyers from full-service carriers. But these major airlines have also been lowering fares recently to compete with low-cost carriers, who usually have a pricing advantage. The September Consumer Price Index report from the US Bureau of Labor Statistics (BLS) shows the average airline fare across carriers has fallen 13% year-over-year.

Generally, say experts, the people travelling during an inflation economy prefer to fly major, full-service carriers. That’s in part because they’re largely higher earners who aren’t feeling the financial squeeze as much, and are willing to pay for the amenities budget carriers charge for, like checked baggage and seat selection. 

“Low-cost and legacy airlines are very different types of airlines, and the budget airlines appeal to a very different type of customer,” says Henry Harteveldt, a travel industry and airline analyst.No surprise, the typical customer for a budget airline earns far less than the person who’s flying Delta. According to the research we did in April, the average household income of a budget airline flier is approximately $78,000, and for someone who flew on American, Delta, etc., it was well north of $100,000,” he says.

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