Do budget airlines actually save you money?

We have had many questions from readers and friends about budget airlines. The influx of new routes by Norwegian Air and WOW Air to the US are a new phenomenon which is taking the airline industry by storm and slashing Transatlantic fares.

What do we think about low cost carriers? WE LOVE 'EM!

To better understand how budget airlines can charge such low fares, enjoy this video.

For those who didn’t watch, it explains that low cost carriers are able to charge low prices by flying newer, more fuel efficient planes, flying one type of aircraft which lowers their maintenance costs, flying into smaller airports which lowers their landing costs, charging for (literally) everything additional to the flight itself, and hiring fewer staff to get the same job done.

If you are trying to save money on flights (which can be the biggest cost in any holiday), and you don't have points to fly on a full service airline, consider a low cost carrier.

They do save you money if you know what you are expecting going into the flight.

1. Budget airlines give you a choice of what you want to purchase

The big complaint that we hear about low cost carriers is how they charge you for everything. “Fare” enough (Pun intended)! If you have ever flown on Ryanair, you will know that from the start of your flight to the end of the flight you will be offered nearly everything under the sun to purchase including lottery tickets, cigarettes, and cologne. But that $8 flight from London to Rome was so worth it!!

Budget airlines give you the ticket from point A to B and then allow you the choice of choosing add-ons. This ancillary revenue is a huge part of their profits. See the table below showing the ancillary revenue as a percentage of total revenue.

With a full service airline, you are paying for a meal, entertainment, a seat selection, and checked baggage. How many times have you got off a long-haul flight and commented to someone that the meal you just ate was amazing? If you opt to eat before getting on your flight, then you can purchase a ticket without a meal and simply board and head to sleep. That meal is included in the fare of the full service airline and it is not very good anyway!! How many times have you flown on a long-haul flight and checked a bag because it was free, while you would have just normally taken a carry on bag?

We love the freedom to choose what we want- and at the end of the day measure it against a full service airline and see if it does save you money.

2. More competition lowers rates

In an research paper called "Public Benefits and Private Successes: The Southwest Effect", Drs. Beckenstein and Campbell assert that when Southwest starts a new route in the US, fares for all carriers dropped by at least 15% in 56 markets, at least 10% in 74 markets and only in 12 markets did the rates go up.

According to this Time Magazine article, data from Kayak.com shows that in 2017, fares between Europe and the US have dropped at least 20% year on year. They go on to say "The flight search app Hopper reports similar data, with average European airfare prices down 18% for the summer of 2017, following a decrease of about 14% between summer 2015 and 2016."

Even if you are not flying on a budget airline, they lower fares all around in the long run and are good for everyone. In a response to Transatlantic budget airline competition, the full service airlines have had to drop their rates or lose market share.

Peter about to board Ryanair from London Stansted to Girona Airport, August 2014

Peter about to board Ryanair from London Stansted to Girona Airport, August 2014

3. Opens up new, underserved routes

If you live in a smaller, regional city and want to fly long distance, chances are that you will need to fly through a major airline hub. The joke in the Southeast US is “To get to heaven or hell, you have to connect through Atlanta!!”

Look at some of the Transatlantic routes compiled by Airfare watchdog for Summer 2018. Because these airlines are not heavily dependent on business travelers between two points, and they fly newer planes that are much more fuel efficient, they can fly into the cheaper airports and all of a sudden, open up new routes that save you time!

All of the below are DIRECT flights with a budget airline from a North American city to Europe! And yes, if you are wondering- it might be worth it to get yourself to one of these cities to get a cheap flight across the pond.

Anchorage: Frankfurt/Condor; Keflavik/Icelandair.

Austin: Frankfurt/Condor; London (Gatwick)/Norwegian.

Boston: Barcelona/Level; Frankfurt/Condor; Keflavik/WOW; London (Gatwick)/Norwegian; London (Stansted)/Primera; Manchester/Thomas Cook; Paris (DeGaulle)/Norwegian.

Baltimore-Washington: Frankfurt/Condor; Keflavik/WOWIcelandair.

Calgary: Frankfurt/Condor; London (Gatwick)/Air Transat

Chicago (O'Hare): Keflavik/WOWIcelandair; London (Gatwick)/Norwegian.

Cincinnati: Keflavik/WOW.

Cleveland: Keflavik/WOWIcelandair.

Dallas-Ft Worth: Keflavik/WOWIcelandair.

Denver: Keflavik/Icelandair; London (Gatwick)/Norwegian; Paris (DeGaulle)/Norwegian.

Detroit: Keflavik/WOW.

Edmonton: Keflavik/Icelandair.

Ft Lauderdale: Barcelona/Norwegian; Copenhagen/Norwegian; London (Gatwick)/Norwegian, Oslo/Norwegian; Paris (DeGaulle)/Norwegian; Stockholm/Norwegian.

Halifax: Frankfurt/Condor; Keflavik/Icelandair.

Kansas City: Keflavik/Icelandair.

Las Vegas: Frankfurt/Condor; London (Gatwick)/Norwegian; Manchester/Thomas Cook.

Los Angeles: Barcelona/NorwegianLevel; Copenhagen/Norwegian; Frankfurt/Condor; Keflavik/WOW; London (Gatwick)/Norwegian, Madrid/Norwegian; Manchester/Thomas Cook; Oslo/Norwegian; Paris (DeGaulle)/NorwegianXL Airways, Rome/Norwegian; Stockholm/Norwegian.

Minneapolis-St Paul: Frankfurt/Condor; Keflavik/Icelandair.

Montreal: Keflavik/Icelandair; London (Gatwick)/Air Transat; Paris (DeGaulle)/Air Transat.

New Orleans: Frankfurt/Condor.

New York (JFK): Amsterdam/Norwegian; Copenhagen/Norwegian; Frankfurt/Condor, Keflavik/Icelandair, London (Gatwick)/Norwegian; London (Stansted)/Primera; Madrid/Norwegian; Manchester/Thomas Cook; Oslo/Norwegian; Paris (DeGaulle)/NorwegianXL Airways; Paris (Orly)/Norwegian; Stockholm/Norwegian.

New York (Stewart): Belfast/Norwegian; Bergen/Norwegian; Dublin/Norwegian; Shannon/Norwegian.

Newark: Barcelona/Norwegian; Birmingham/Primera; Keflavik/IcelandairWOW; London (Stansted)/Primera; Paris (DeGaulle)/Primera; Paris (Orly)/Norwegian, Level; Rome/Norwegian; Stockholm/Norwegian.

Oakland: Barcelona/Norwegian, Level; Copenhagen/Norwegian; London (Gatwick)/Norwegian; Oslo/Norwegian; Paris (DeGaulle)/Norwegian; Rome/Norwegian; Stockholm/Norwegian.

Orlando (MCO): Copenhagen/Norwegian; Frankfurt/Condor; Keflavik/Icelandair; London (Gatwick)/Norwegian; Manchester/Thomas Cook; Oslo/Norwegian; Paris (DeGaulle)/Norwegian.

Philadelphia: Keflavik/Icelandair.

Pittsburgh: Frankfurt/Condor; Keflavik/WOW.

Portland (PDX): Frankfurt/Condor; Keflavik/Icelandair.

Providence: Belfast/Norwegian; Cork/Norwegian; Dublin/Norwegian; Edinburgh/Norwegian; Shannon/Norwegian.

Quebec City: Paris (DeGaulle)/Air Transat.

San Francisco: Frankfurt/Condor; Keflavik/WOWIcelandair; Manchester/Thomas Cook; Paris (DeGaulle)/XL; Paris/Orly/Frenchbee.

Seattle: Frankfurt/Condor; Keflavik/Icelandair; London (Gatwick)/Norwegian; Manchester/Thomas Cook.

St Louis: Keflavik/WOW.

Tampa: Keflavik/Icelandair.

Toronto: Frankfurt/Condor; Keflavik/Icelandair; London (Gatwick)/Air Transat; Manchester/Air Transat; Paris (DeGaulle)/Air Transat.

Vancouver: Frankfurt/Condor; Keflavik/Icelandair; London (Gatwick)/Air Transat; Manchester/Air Transat; Paris (DeGaulle)/Air Transat.

Washington (Dulles): Keflavik/Icelandair, London (Stansted)/Primera.

The big takeaway

Budget airlines lower the cost of travel all around as they impose competition on the market. They give you choice of what you want and do not want when flying

YES! They CAN save you money! YES! They probably have saved you money, even if you have never flown them!