the rise of the low cost airlines

Filed in archive Venture Capital on April 27, 2004

The Ecomomist also sheds light on the rise of the low-cost carriers - lower entry barriers.

"Another factor behind the rush of start-ups is the availability of off-the-shelf software that runs the internet-based bookings systems crucial to a low-cost carrier. The software also handles the demand-management system that jacks up prices as a flight fills up. A budget carrier will typically multiply some fares tenfold in the run-up to a holiday such as Easter."

"Perhaps the most basic push behind the flock of new little airlines is the availability of a simple and proven business model---though exactly how many carriers can profitably use it may soon become clearer. Most of the new carriers are low-cost airlines based on the model developed in America by Southwest Airlines and copied first in Europe by Ryanair and easyJet. Asia---where the leader is AsianAir---and eastern Europe are the latest places to get the budget airline bug, with half a dozen start-ups each in recent months."

The low-cost airline model is much too crowded as so many entrepreneurs have realized their dream to have their own airline...it is easy to predict that consolidation is close.