Comfort for some in our no-frills addiction

Passengers may grumble about the service but the lure of low fares means budget carriers will continue to expand at the expense of the old guard.

HAVE you wondered whether no-frills airlines are a fad? If one day we'll decide we've had enough of having to pay to take our baggage, and paying for meals, entertainment and basic comforts such as pillows and blankets?

Could the market go full circle and bring a return to the services and inclusions on flights we once took for granted?

If that day is coming, it's a long way off. Low-cost carriers, or those that offer few or no frills, continue to grow at a rapid rate, servicing both domestic and international routes.

And while they are expanding total market size by making travel more affordable, much of their growth has come at the expense of the "legacy carriers" - traditional, full-service airlines.

We might like to complain about having to pay for a coffee or to check in a bag, yet the lure of cheap fares wins time and again.

Federal government statistics show low-cost carriers AirAsia X, Indonesia AirAsia, Jetstar, Pacific Blue, Polynesian Blue and Tiger Airways now account for almost 20 per cent of international traffic in and out of Australia. Qantas remains the biggest player but its market share has fallen, dipping below 20 per cent. Qantas's low-cost offshoot, Jetstar, now accounts for slightly more than 8 per cent of the international market, ahead of Air New Zealand and Emirates and snapping at the heels of Singapore Airlines.

AirAsia X, a no-frills airline from Malaysia, remains a small player but has almost closed the gap on the well-established Malaysia Airlines, despite failing to win approval to operate flights from Sydney Airport.

AirAsia X has temporarily turned its focus elsewhere, boosting its capacity from Melbourne and Perth airports, but its chief executive, Azran Osman-Rani, says the airline remains "very much committed" to operating out of Sydney.

"We're eternal optimists and will go through anything and everything to overcome any obstacles to fly to Sydney," he says. "If we're given the green light we can mobilise very quickly to launch a service."

If AirAsia X is successful in gaining rights for Sydney, it will introduce NSW travellers to the true definition of "no-frills", with passengers paying extra for everything from meals and entertainment to checked-in baggage and choosing a seat.

Malaysia Airlines would certainly feel some pain, with AirAsia X able to provide a much cheaper alternative for passengers travelling from Sydney to Kuala Lumpur and beyond. AirAsia X recently advertised one-way fares from Australia to Kuala Lumpur priced from $56. It was also voted best low-cost carrier in the 2010 Skytrax World Airline Awards, which represent the votes of nearly 18 million airline passengers. Tiger Airways recently announced its Australian operations had reached break-even point - in just the airline's third year of operation here. This indication of viability will quieten detractors who have questioned the sustainability of airlines offering such low fares. (Tiger regularly advertises one-way fares for less than $30 and says 80 per cent of passengers fly for less than $100 - although passengers pay for all extras, including a new $10 check-in fee in some cases.)

Tiger's Australian growth comes despite Roy Morgan Research showing it has the lowest passenger satisfaction rating of any domestic carrier in Australia. The research found 51 per cent of Tiger passengers were satisfied with the airline, compared with 67 per cent for Jetstar and about 80 per cent for Qantas and Virgin Blue.

"Although Jetstar and Tiger Airways both lag behind in terms of customer satisfaction, it has not prevented them growing their share of the domestic market," says the international director of tourism, travel and leisure for Roy Morgan Research, Jane Ianniello.

An aviation consultant with CAPA Consulting, Ian Thomas, says there is "no doubt" low-cost carriers will continue to grow at the expense of full-service airlines.

"The majority of the growth through the global financial crisis was from the low-cost carriers and that will continue for some time," Thomas says.

"On long-haul routes in particular, people are always looking for the best prices.

"Internationally, we'll see an increase ... in the AirAsia X-type model. That's going to put a lot of pressure on the traditional legacy carriers like Qantas."

Do the sums

Low-cost carriers are almost impossible to beat for value on international flights. However, it pays to do the sums on domestic journeys, where the price difference is often minimal.

A family of four planning to travel from Melbourne to Perth crunched the numbers and realised by the time they bought meals, drinks and entertainment for the four-hour flight, the "cheap" Jetstar flights on offer would work out to be more expensive than full-service Qantas offerings.