Image: Virgin Blue
Rick Rycroft  /  AP file
In 2000, Richard Branson's Virgin Group founded Australia's second best low-cost carrier. The airline now has a fleet of 53 Boeing 737s and was voted the 2007 Best National and Best Regional Airline at the Australian Federation of Travel Agents' National Travel Industry Awards for Excellence. Virgin Blue will launch an international airline, V Australia, for flights between Australia and the U.S. in late 2008.
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updated 8/14/2007 3:40:36 PM ET 2007-08-14T19:40:36

Unless you count the trail mix, you can't get a free meal on a domestic flight with a major carrier anymore. A bottle of water will cost you, and forget about a movie.

Why the skimpy offerings?

Cost-conscious mainstream airlines are trimming the fat, otherwise known as amenities, to provide the lowest fares possible. But as the flagships slim down, the category of low-cost carriers is rapidly beefing up, giving passengers the option of flying both comfortably and affordably.

Low-cost carriers tend to keep their prices down by flying out of fringe airports, relying on online booking and providing just the necessary level of onboard services. Many stock their fleets with one type of aircraft to minimize the amount of training for crews. As part of the discount category, the airlines also can operate without union agreements and employment contracts that often trouble legacy carriers.

A growing category
Starting out in 1971 as a small carrier in Texas with only three jets, Southwest Airlines is credited with giving birth to the low-cost-carrier phenomenon. Its founding mission was to fly passengers to short-haul destinations, on time and for the lowest fare possible. Nearly 36 years later, countless carriers have copied the philosophy.

Global flight information company OAG released a 2006 report identifying 40 low-cost carriers in Europe alone. It also revealed that Ryanair, a low-cost heavyweight based in Ireland, was carrying more passengers per month than British Airways.

And the number of passengers interested in booking with low-cost names is on the rise. The low-cost sector accounted for 16 percent, or 416,000, of the 2.6 million flights scheduled for July 2007, according to OAG's Quarterly Airline Traffic Statistics. Last month, 309.7 million seats were offered worldwide, of which 20 percent, or 61.9 million, were on low-cost carriers. In July 2006, low-cost seats made up only 16 percent of the 289.8 million airline seats on offer.

"There seem to be new low-cost [carriers] appearing every week," says Edward Plaisted, CEO of Skytrax, a London-based air transport research company. Simply being low-cost doesn't guarantee success, however. "Each year that goes by you see anywhere from four to eight new low-costs that can't keep the business model running and disappear after 12 months."

The best of the best
For its annual survey of the best low-cost airlines in the world, Skytrax examined commercial and front-line factors, surveying the accessibility and quality of Web sites—crucial for carriers that rely on online booking—and, perhaps most important, the clarity of prices and fares.

Because standards vary around the world and there are so many low-cost carriers, Skytrax named a global top three—Jetstar Airways, Air Berlin and easyJet—and broke down the remaining results by region. Southwest Airlines, the carrier that started it all, ranked second in North America, falling behind JetBlue.

To assess what people are getting for their money, Skytrax also took into account consumer surveys. While some low-cost carriers offer complimentary entertainment like satellite television and snacks, as on Austrian-based NIKI, many grant passengers only a seat, a reading light and a smile.

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The low-cost category remains the most competitive in Europe but is growing fastest in Asia, if for no other reason than that it has the biggest market. At the other end of the spectrum, South America and the Middle East emerged with only two top carriers each in the rankings, rather than three. Both regions have several other carriers, but they were deemed too small for inclusion.

New options
As the low-cost sector continues to heat up, so do the options in terms of seating and routes. While many traditional carriers offer one class, Jetstar offers a StarClass premium cabin, while Oasis Hong Kong gives passengers a choice between Business and Economy.

The introduction of classes in low-cost travel is the result of carriers taking on longer-haul flights. While flights under two hours are most profitable, as more travelers look to fly farther afield, these airlines want a piece of the action. Oasis Hong Kong already flies from Hong Kong to London and may offer flights to the U.S. shortly.

So if you can travel substantial distances for paltry prices aboard a low-cost carrier, why opt for a big name airline?

"[People] might choose them because of the miles or because the major carrier can come pretty close to matching the low-cost carrier in price," says Tom Michelson, vice president of operations for Airtreks, a team of travel consultants and experts that provide multistop international air travel service and technology. "Given the choice between the two, the traveler might want to go with the known entity."

But with low-cost carriers such as JetBlue providing complimentary, 24-channel, live satellite TV on every seat back, the unknown is looking better every day.

© 2012 Forbes.com

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