Air travel was quite expensive before the 1970’s. In actuality, air travel was a luxury and convenience which may only be afforded in a high cost. However the advent of deregulation changed the airline industry and made cheap flights potential. Prior to deregulation of the airline flight sector the airfare, paths, and number of airlines has been controlled and restricted. Very little competition was possible since all the airlines had the identical ticket rates. However, deregulation changed it all.
- Cheap flights
Cheaper flights were made possible because deregulation gave airlines an opportunity to lower costs and compete against other airlines for clients. As a consequence of deregulation some new airlines which specialized in supplying low-cost travel were created. The airlines lowered prices but did not minimize security. An airline that was not safe could not keep a customer base. So to be successful the airlines that specialized in reduced costs had to be efficient and safe also.
- How to lower price and maintain quality
How could an airline lower its prices and keep a high quality of security and efficiency? Some airlines have been able to answer the question by cutting prices in many areas while keeping the quality. 1 place where airlines have cut prices is in-flight meals. Rather than offering free foods the airlines provide sandwiches and snacks which are paid for by passengers. Many passengers prefer to save money by foregoing the meal. In essence the airlines which provide bargain price tickets remove the luxuries that passengers cannot afford. By reducing the expense of food the airline lowers the entire cost of operation. Along with the cost of feeding clients, an airline has many different expenses and because of this the airlines have a number of different opportunities for cost-cutting.
- The price of fuel
The airline which pays less for fuel than other carriers may also afford to lower costs and supply cheaper flights to clients. If the airline is perceptive enough to realize an increase in gas cost is imminent, the airline can contract to pay for gas in the present price. After the fuel cost increases in the future, the organization will gain by continuing to cover the fixed lower cost. Higher prices mean higher gain.
- Lower price equals more customers
The situation faced by airlines is that empty chairs mean lower profits. Airlines are lowering prices to attract customers that otherwise may not consider aviation as a viable choice. The airlines must remain competitive with other airlines as well as with other methods of transport such as trains and buses that although cheaper are a slower way of travel than air. Finally a business or business can only be successful if customers will buy the product or service which is being sold. In the airline business, the current market is based on providing cheap flights from Canada to India at a reasonable price.