Where Have All the Low-Cost Airlines Gone?
"Starting an airline is a sexy thing for people who have money, but not for people who want to make money," Seaney says. "I'm positive there are half a dozen start-up airline business plans out there waiting for $70-a-barrel oil."
Even if gas prices were to drop tomorrow, new discount airlines would have to contend with limited bank lending and a consolidating industry. That, Hobica says, makes it all the much harder for smaller airlines to compete.
The future of low-cost carriers
For discount carriers to survive, they will likely need to find new and creative ways to broaden their supplemental businesses.
"They will need to try to upsell other products like rental cars, hotels, vacations, cruises, credit cards, anything travel-related," Hobica says. And of course, Hobica says they will continue to lean on ancillary fees, much to the chagrin of many customers.Beyond that, the future of low-cost carriers could ultimately come down to advances in jet engine technology. If gas prices continue to go up without an affordable fuel-efficient jet, discount airlines may no longer be able to manage their costs. "What they really need," Seaney says, "is a magical jet engine that runs on oxygen." If only. >To submit a news tip, email: firstname.lastname@example.org. Follow TheStreet on Twitter and become a fan on Facebook.
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