The low cost carriers are able to provide the cheap air tickets because of their business model centered on short-haul flights with single class travel option without much of in-flight frills and complete focus on efficiency of operations. But, as these move on the expansion trail, opening the new markets and flying on ever more sectors, these LCCs keep on attaining maturity of operations in the new markets very fast. So, after a period of time, when these are well established and the pace of expansion is also reduced since there are less and less number of sectors which remain profitable for flight operations, the LCCs have a tendency to move towards charging higher prices.
The cheap flights which were once offered by the LCCs cease to exist slowly. Add to it the competition that the airline faces and the soaring prices of the inputs (say, the fuel prices) and the prospects of providing the cheap air tickets is reduced further. Some of the situations which arise due to this price rise are:
- Provides the ground for the entry of more LCCs since the increase in prices dents the levels of customer satisfaction.
- Challenges the full service carriers on the short haul segment and since the price differential between the LCC travel and Economy Class travel of full service carrier is reduced, people might find travelling on full service carriers as better value propositions.
- Once the LCC begin the price higher and the other players make entry, they have the ready market to capture by using the innovative airline product packaging with the offers and discounts.
- As the scope of expansion shrinks, the LCC move on medium range cheap flights, for which they have to improve their services and add to their basket of in-flight offerings. This means making changes to their basic model of functioning.