The low-cost carrier (LCC) business model has grown tremendously over the past two decades. Successful LCC pioneers include Southwest Airlines in the United States and Ryanair in Europe. The LCC model focuses on business and operational practices that drive down airline costs. Typical cost-saving practices include operating at secondary airports, flying a single airplane type, increasing airplane utilization, relying on direct sales, offering a single-class product, avoiding frequent-flyer programs, and keeping labor costs low. Such tactics helped LCCs reduce unit cost by 20 percent to 40 percent compared with network carriers. Their lower cost structure allows LCCs to reduce fares, which significantly stimulates traffic. Thus, the LCC model has proved successful throughout the world and has driven the growth of air travel.
Recently, many LCCs have diverged from traditional LCC tactics. Customer expectations, regional variations, and competition have forced LCCs to adapt to new challenges. In today's market, it is not difficult to find an LCC flying multiple airplane types, operating at primary airports, or offering frequent-flier programs. Other variations include using global distribution systems, offering more frills to passengers, or even flying medium- to long-haul routes. Despite these developments, the LCC model and LCC profitability continue to grow.