Some words have no legal definition, even if most consumers take a “I know it when I see it” approach.
You can call your company “low cost” or “discount” and that can mean very different things.
To someone who shops at high-end retailers, Macy's may seem like a valuable brand (although the company doesn't claim that). Or a regular Dillard's shopper might see Marshalls, Bealls, and other retailers marketing by offering low prices as low-cost or discount brands.
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When it comes to airlines, the situation becomes even more confusing. Many full-fare airlines have higher prices and charge for “extras” like checked luggage and onboard WiFi.
The lowest cost airlines: Spirit (SAVE) , Frontier, Allegiant, and similar companies – advertise themselves as low-cost, but are actually a la carte. Passengers pay little for their tickets, but pay more for everything from carry-on luggage to checked luggage and even an actual seat assignment.
Southwest Airlines (LUV) , which considers itself a discount airline, has always operated differently from its rivals at both ends of the price spectrum. The airline's fares are generally cheaper than traditional airlines like United, Delta and American, but cost more than Spirit, Frontier and Allegiant.
Additionally, Southwest included carry-on and checked bags in the ticket price, so it offers added value that way as well. Ryanair CEO Michael O'Leary, a longtime supporter of Southwest, no longer sees the company as a low-cost airline.
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Ryanair CEO makes Southwest Airlines claims
Southwest clearly defines its “purpose” on its website: “Connecting people to what's important in their lives through friendly, reliable, low-cost air travel.”
At the top of its “About Us” page, the airline also touts its “unique value.”
O'Leary doesn't see it that way.
“Southwest's average fare over the past decade has risen slowly: its average last year was $170 per seat. It is not a particularly cheap airline. Our average airfare in Europe was 44 euros ($47) per seat. “I don't think Southwest is a low-fare airline anymore,” he said. Change.
Ryanair's CEO says Southwest is causing problems for itself by not charging for checked bags. He noted that his airline saw its rate of passengers checking bags drop from 80% to 20% once it started charging for the privilege.
“And yet, on Southwest, you go through American airports and people carry five bags and check five bags. The whole process is delayed,” he said. “They say all this nonsense about 'our passengers are our guests, and you wouldn't want to charge your guests for their bags,' but why do you charge for seats if that's the case? the case? Give it all away for free.”
Southwest allows you to check two free bags per passenger.
O'Leary had a final comment about the airline he studied when he built Ryanair: “Southwest has lost the passion for low-cost, low-fare air travel.”
Data shows Ryanair's O'Leary may be right
While 2022 may have been an abnormal year as airlines and the broader economy recovered from the Covid pandemic, a study of airline revenue per seat mile by flight advisor was not favorable to Southwest.
“Although Southwest Airlines is technically the largest low-cost airline in the world, the airline's total revenue per seat mile is the highest on our list at $0.1729,” Amy Lancelotte wrote. “This isn't much more than Delta, but travelers who think Southwest offers the lowest prices are in for a surprise. This raises the question of whether Southwest should even be considered a budget airline.”
Spirit, Frontier and Allegiant, in that order, had the lowest revenue per seat mile.
A similar report from FlightSuccessconducted in May 2023, also ranked Southwest as the most expensive of the major US airlines in terms of cost per mile.
