To be clear, that question in the title doesn’t at all reflect my beliefs, but that is a ridiculous explanation that is being thrown around.
Continue reading: Why Did Spirit Fail While Ryanair Thrives? Are Americans Rich & Europeans Poor?
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IMO, two of the biggest reasons are:
a. the class of people who fly ultra low-cost carriers in the United States is simply repugnant. By and large, they are people I wouldn't want to be around for 60 seconds, much less an entire flight. There are people playing loud videos and music on the flight, constant loud talking and fistfights at the gate and on board.
b. ULCC in the UK and EU and required by law to provide UK/EU 261 protections to passengers. You will not be left stranded and forced to find your own way home like you quite often are in the United States during IROPs.
Easyjet DOES fly to CDG, BER, and some major airports but your point works for Ryanair.
Labor costs or probably the single biggest factor
@ James k -- There's definitely some overlap (I'm not suggesting there's none). But to use BER as an example, it's not an airport where Lufthansa has any point-to-point presence. So even though it's a major airport, it's one where legacy competition is of limited concern.
@ Queen Esther -- Regarding your first point, that's certainly what people perceive, and it's the carrier's reputation. But I also think this is an area where Spirit has unfairly suffered, being the butt of jokes.
I've taken several flights on Spirit, and on the flights I've taken, the crowd has been perfectly pleasant. Yes, what you describe happens a very small percentage of the time, but that hardly makes up a majority of the carrier's customer base.
Yes, followed by government subsidies Ryanair is receiving by serving crappy local airports a long way from the city center. They not only do this to save cost, often they receive subsidies by local government. By EU regulation the subsidies need to be limited to a certain time and that's the momemt Ryanair closes the station.
He is partially correct.
Americans are willing to pay more.
But not because Americans are wealthier.
But because these narcissist would take on debt to pay for a lifestyle they couldn't afford. Just look at all the response on people who are willing to pay more just to avoid LCC. Europeans who couldn't afford suck it up rather than taking on more debt.
American likes to pay for nicer things even if they couldn't afford it. Maybe it's because some are too dumb to realize they couldn't afford such a lifestyle.
#RealHouswivesOfUSA
#WhoAreBrokeButFliesFirstClass
@Ben
It's exactly that, just a perception.
But it's so infamous, people who would pay a premium just to avoid LCC.
So many people who would avoid Spirit and pay more. Ironically many of these people never actually flown Spirit even once.
While only some minority of frequently flyers who got their loyalty abused by legacies turns to the Big Front Seat mega deals and enjoyed it while it lasts.
Ben says: Much of Delta’s profits come from its loyalty program.
Thanks Ben for writing that. As we all know except for one of your readers DL’s standing as the number 1 U.S. carrier in terms of profits is not because of transporting people or because of its products but because of making money from its partnership with AMEX leveraging its Skymiles program. Other airlines outside of the U.S. actually need to work harder to turn a profit by offering much better hard and soft products. Are U.S. airlines just an extension of the banks and credit card companies nowadays?
Yes, because EasyJet is not an ULCC! It’s a LCC (like, e.g., Vueling) with a different business model. Ryanair and Wizz are the main ULCCs in Europe.
Labour costs are unquestionably the main factor. Particularly for Ryanair's Eastern European bases. This is why even the Euro legacy airlines (particularly BA and IAG) have better margins than their US competition.
Also, LCCs don't have the same bad reputation in Europe as Spirit. It's very normal and accepted to be flying Ryanair/EasyJet, probably because our legacy airlines aren't much better.
Perhaps a better comparison is with EasyJet - they make a big thing of operating to primary airports (largest hubs including LGW, MXP, AMS, GVA etc) and have much less of a cost advantage than Ryanair. But they still seem to be doing just fine and can command a fare premium compared to Ryanair.
I think another thing working against Spirit was the Pratt & Whitney fiasco on their A320neo fleet. EasyJet/Ryanair use CFM engines.
No argument with the analysis. But don't be so quick to blow off the idea that Americans are competitively wealthy. US per capita GDP is $93k. UK is $57k -- lower than any of the 50 states individually.
There's obviously a lot more then this that goes into lifestyle and perceptions of wealth/poverty. But "I feel like times are tough, so Americans aren't richer than Europeans" isn't convincing.
Agreed and the airport structure in the US is very different. A niche player might be able to make a living off serving under utilized airports and maybe some routes from those small airports into larger airports. At best the US3 might throw a couple of CR7s a day on those routes.
But once the ULCCs try to compete on scale it does not work. I believe that Frontier might have another year before it's in Chapter 11, particularly if jet fuel prices remain elevated.
Spirit's customer base doesn't do much Frontier unless Frontier can get higher fares out of them without quashing demand. Spirit was not able to do so.
Europeans are poorer overall in terms purely of income / GDP per capita, but as always, the truth is more complex. The person around the bottom quartile in the UK or France arguably has a much better life than the person around the same percentile in the US. In contrast the top 5% in the US has a better life than their equivalent in Europe. (I would also argue the person in e.g. Switzerland has a better life than the equivalent American across every income group!)
The poverty of the bottom quintile in the US as their customer base is one of the three problems Spirit faced, in addition to i) competing with the three legacy airlines who cross-subsidise via loyalty programs and ii) US geography just being much less conducive to LCCs - the distances are too large.
GDP per capita is misleading sometimes. If you have to pay $100 per person for a **** meal in a US chain restaurant, are you really twice as wealthy as someone in France who pays $50 for the same meal? You certainly added twice as much to GDP, but I’m not so sure.
See also, e.g., the US healthcare system which spends twice the GDP per capita of Europe (let alone the difference in absolute terms) to achieve almost universally worse outcomes.
I've idly wondered why I've completely refused to fly on Spirit in the US but have been willing to fly Ryanair and Easyjet in Europe. I think the reason is mostly reputation: Spirit has a terrible reputation, whether it's deserved or not. The cost savings evaporate when you include the add-ons that make the experience more acceptable. That's also true of Ryanair, but for whatever reason, Ryanair doesn't really have a worse reputation than, say, Lufthansa. The few times I've flown a European LCC, it's exactly for the reason Ben points out: they flew nonstop exactly the route I wanted, and the schedule worked out. I paid the same as I would have on a legacy carrier, for a similar experience, but without having to connect. What's not to like?
Also, I found that Ryanair is very efficient with its check-in and boarding processes. They have turning planes on time down to a science. Of course things can go wrong, but I've had far more problems with connecting flights getting messed up (and my bags getting lost and delayed) on legacy carriers in Europe than on nonstop LCC flights.
European carriers also treat passengers better, in-part, because they have better worker and consumer protections, too. Ryanair is the example of how an airline can operate profitably within those regulations. We should have an equivalent of EU-261 in the US. While it will not save everyone or everything (and should be further improved and streamlined), it often helps with recovery.
Another point - fuel is much more expensive in Europe and labor laws are also more strict. Despite that the LCCs seem to manage profitability.
Interesting take but it would have been important to point out Spirit's margins from 2010-2019. Spirit became a bad airline within the past 6 years. They were the darling of the industry in 2014. You can thank them for the big 3 introducing basic fares.
@ John -- Yes, fuel is more expensive, but regarding labor laws, I'd say that's only sort of true. If you follow the spirit of labor laws that's definitely true, but Ryanair has managed to find a lot of "opportunities," and I'd say it has weaker labor protections than almost all airlines in the US.
You're 100% correct. The Spirit meltdown videos on YT are epic and anyone that has a few more dollars will not want to be around that crowd.
@ Alonzo -- But what I wrote also reflects the change in margins. That's the thing, almost a decade ago, Spirit had a MASSIVE advantage over the legacies in terms of cost per air seat mile. That has largely been eroded. In 2016, Spirit had a cost per air seat mile of just over seven cents, and less than a decade later, that has gone up to roughly 12 cents. The increase hasn't been as drastic at legacy carriers.
I really love the "so we get better airlines" part of the tweet, ignoring the fact that the US is known for having the crappiest airlines outside of Africa.
Ryanair is fine. Their policies are strict and you get what you pay for, but their operational reliability is excellent, and the system generally works as intended. There's no real reason for Ryanair to have a bad reputation as they deliver exactly what they promise most of the time. Something that can't be said about Lufthansa for example.
GDP per capita is usually the wrong measure.
GDP is weird anyway — if vandals smash all the windows in my house and I pay to have them replaced, that’s counted as an increase in GDP and therefore is considered good.
Ireland’s GDP per capita has gone through the roof — but it’s largely artificial, a result of the low corporate tax regime for multinationals who therefore funnel money through Ireland. The population doesn’t see much benefit.
If you look at the median income, you’d have a much better indicator of the wealth (or poverty) of the people. Though even that’s tricky: different approaches to, eg, healthcare spending make it hard to compare like with like between countries.
Its the same in Canada.
Looking at GDP has become a favorite past time of the loser conservatives clinging on to slogans and rhetoric without any plan of their own.
Their base is too dumb to understand what GDP does and does not measure anyway.
"Are Americans Rich & Europeans Poor?"
Yes, but that has nothing to do with Spirit's failure 🙂
*whose business model is selling supersonic when he doesn’t have an engine yet…
Another difference is hotel costs. I can easily find beachfront hotels in Spain or Greece for $100/night in summer. In the USA you’d be looking at $500/night. This stimulates demand for travel in Europe.
in terms of income per job, perhaps. but the us as a whole has far more problem.
So I guess that means that Frontier, Breeze and Allegiant will meet the same demise as Spirit as they too do not have robust credit card programs to help balance out cost per an air seat mile.
Americans are also less inclined to favor low-cost carriers because domestic flights tend to be much longer than in Europe.
In Europe, many popular routes are under two hours, so passengers are more willing to accept fewer amenities in exchange for lower fares. In the U.S., flights often last four to six hours or more, making comfort and included services, like seat selection and baggage, more important.
As flight time increases, the cost of discomfort rises, which makes full-service airlines more appealing despite higher prices.
When it comes to stimulating the demand, work/life balance is probably the most important element. Europeans have enough free time to travel and most use it. In my social circle (mostly middle class people in their 30s) it's almost impossible to find anyone who would take 4-5 private trips per year. In the US this is less common. One of the effects is that Europeans tend to spend less per trip because they take more trips, while US Americans who may only take one trip in many years often spend the same amount of money but all at once, hence spending far more per trip.
I would add a nuance -- the US majors have stronger hubs because there's a lot of "everywhere to everywhere" demand in the US. There are some people who want to fly Savannah, GA to Boise, ID because they have family there or whatever, and there are lots of easy one-stop options to do so. There are proportionally far fewer people wanting to fly between some mid-sized city in Portugal and some mid-sized city in Sweden because language/cultural/national differences mean there's just way less reason for people to be going between those places.
So the big European hubs can get you there if needed, but they're mostly focused on feeding major cities and long-haul service, and the LCCs serve major leisure destinations and whatever random bits of city-to-city demand do exist. And without some of those small city-to-small city routes helping support short haul service at the major hubs, it's harder for the European majors to control the short haul market.
ding ding ding
Americans dont have vacation time.
Flying once or twice a year spending $500 on a luxurious Delta Y ticket to Boise vs taking 10 long weekends and 5 weeks off on Ryanair doesnt make the latter richer.
Ryanair is absolutely fine.
There is no incentive flying BA, LH, AF or whatnot over them.
Same restrictions, same seat pitch, and connections for 3x the price.
So how do we get to the same labor costs in the US should bet the question we should be asking over ad over. Why are we not bringing in foreign crews ad removing cabotage rules
We do it in many other areas of the US economy. There’s nothing special about the airline industry when the Europeans have the same safety record
EasyJet as I recall has always modeled itself a bit more like Southwest Airlines, so more LCC than ULCC.
Its all relative tho. A bag of lays costs $9 compared to $3 in the uk. A bottle of mineral water in the US (actual mineral water, not that re-labelled tap water junk like dasanai) is $5 vs $2. In the US, the typical cost of medical insurance is 10% of their income or face bankrupcy if they get ill, food standards are low in the US, theres not really any concept of social care etc. Plus the beer is terrible 🙂
Plus percapita GDP actually means nothing when its heavily skewed. The average income in the US is more like $63k whereas the uk is $43k.
Maybe, but I think Breeze and Allegiant have models that largely avoid competing with the bigger airlines. I think I might worry more about Frontier given their core operations at major legacy hubs like Philadelphia and Denver.
That’s a good point- arguably traveling within the US and Canada is more like traveling across Europe as a whole rather than any individual European country.
By far the rowdiest flights I have been on were with RyanAir. Would never happen in the US. Pilots would turn back and pax would be arrested.
I don't think you understand how Europe works in this century. Ryanair's model is viable precisely because there's enough demand on many obscure routes that legacies can't serve, which in turn has a lot to do with mobility and various family/business ties around the continent.
Another entitled yank believing they are richer and better. The UK certainly isn’t poorer than multiple US states. There are poorer areas however nothing like those in the Deep South. Switzerland. Luxembourg Lichtenstein are significantly wealthier per capita and we also work hard. Ryanair thriving is proof that Europe is more successful.
Ben is right in the individual points he makes.
Scholl is also right (both about this and airport security).
Ryanair has also been incredibly successful in driving down the level of service that intra-European legacy carriers deliver in economy, and therefore normalizing their own bare bones experience. BA is the prime example of that: on intra-euro short haul all you get is a bottle of water, everything after that you'll need to pull your credit card out. Obviously way back when, you could even expect a hot meal on that same route. Why pay double/triple/quadruple to fly on BA, when you can bring your own water bottle and fly Ryanair?
Spirit et al have not been anywhere near as successful in driving down the quality of service on Legacy US carriers, and there are still those willing to pay for the (negligibly) better service.
Actually, on a per capita basis, he is correct, the average American is wealthier than the average UK citizen (same argument as the per capita GDP). That is simply because the GINI coefficient in the US is wildly higher than every other advanced economy. The gap between the wealthy and the vast majority of the citizens in the US is staggering. In average wealth, the stat that he is probably using, the US is 4th in the world. In median wealth, which is a better measure of the typical life of a citizen, they are 14th. The UK is 13th in average wealth and 8th in median wealth. So, in reality, the typical Uk citizen is nearly 50% wealthier than the typical US citizen. There are more stark comparisons, the average Belgian has roughly 40% less wealth than the average American but the typical Belgian has more than twice as much wealth as the typical American. The US is a grand place for the wealthy, but a pretty miserable place for much of their population.
Actually no, typical Americans are not richer than typical Europeans. There are, however, fabulously rich Americans who bring the average up. The typical American is actually poorer than the typical European.
I agree that this was an entitled and generally rude comment as he delivered it. The reality though is he is not far off. Farnorthtrader is right - and much of this came out in the often cited study that even Mississippi alone has a better GDP per person than the UK. Of course, there can be a lot of deeper dives into this, far above my pay grade, that analyze disparities in wealth, health care, etc etc etc. When you break it down I don't think the overall difference in American vs European wealth is all that varied. However, I think that the European lower and middle class enjoys a much better quality of life in comparison to their American counterparts. Better health care, better education opportunities, and so forth.
I'm an economist who works in aviation. Scholl's explanation is not entirely false; it is a relevant reason, though not the top reason. I would place cost discipline and maybe network dynamics and airport competition higher.
But the claim that the "vast majority of Americans struggle with affordability" is false. Americans have higher disposable incomes than their European counterparts, even if you adjust for cost of living differences, and real median household incomes in the US are higher than they've ever been. (Recall that medians incomes are not dragged up by inequality, unlike the means.) It's simply true that the typical American has more cash in his or her paycheque than the typical European does.
Moreover, the fact that the US is relatively unequal actually bolsters Scholl's point. There's a reason the vast majority of UA's 772ERs are 202Y and 789s are 188Y while AF's are 267Y are 228Y respectively, why AF (and AC) squeeze 450 seats or more on some 77Ws when AA barely puts 300, and why inter-Europe flights have little extra legroom seating coupled with a fake business class: there are not as many wealthy Europeans as there are wealthy Americans.
Less premium revenue makes it harder to use basic economy(/"light"/"hand baggage only") as effectively to price discriminate and kill ULCCs, as US carriers did. (One way this plays out is in route selection; there are routes that European mainline carriers can't operate that US carriers possibly could.)
The raw population density is like 3x EU vs. US. It just adds a degree of difficulty for transport in US.
It does not take too many people who are worth over $100 billion to skew the averages. To paraphrase one of the keen American observers of how the other half live, when your house is mobile and your car is not and you are waiting/sleeping in your car, the one with the wood panel on the side, for the restaurant to open for the early bird special and you cannot get medication for your chronic illnesses - yes America is a grand place for the 5% in the upper crust but not so good for the bottom 30 or so percent and the other 65% are mortgaged up and get by on two weeks vacation a year so they splurge for a few days before it is back to the grind. In Europe people can afford to travel from Stockholm to Paris for a weekend and the flight times are so short that the absence of a pre take off cocktail is not a hardship.
I think there is some truth in Americans being richer than Europeans. But it is just one of many reasons why ulccs do not succeed in the us vs EU. I think Lucky is so consumed with the points game, he sees that angle more, which is also another reason among many. If you look at the markets that connect US to the rest of the world, the US originated flights are almost always more expensive, especially in the premium cabin. The cost can be nearly half in business from eu to us than us to eu for example. But you see less of that in economy cabin. Also, as someone who lived in both us and eu, I can tell you that Europeans are poorer in terms of disposable income because of the low salary and high taxes.
One thing that I think plays a massive role is the geography. US is very large, EU (at least west eu) is small with many active cities that have a decent demand for direct routes. For airlines in the US the hub and spoke model is suitable because of the geography and demand for each route. And it is costly to fly long. In EU, the majority of the intra EU demand is direct, and it is kinda ridiculous to fly through a hub in terms of time. Let's say I want to fly to Barcelona from London, it is a waste of time to fly through Paris or Frankfurt for such a short flight. Same goes to many cities. As such there is a huge market for direct flights and the legacy airlines simply cannot fill that demand. Also many of these trips are weekenders to visit a new city etc. Ulccs do it well with low fares, which doesn't really need big bags etc.
The US has a higher volume of business travel (over 460 million business trips in 2022). In contrast, Europe's aviation market is dominated by leisure and short-haul intra-EU travel, driven by lower-cost carriers, high-speed rail competition, and shorter average distances between cities. Business travellers prefer full service airlines, partly due to corporate guidelines and partly due to better flight availability especially during schedule disruptions.
The US may have higher individual incomes, but it remains one of the most affordable places I’ve lived (although the quality of goods and services remain poor) - especially compared to Europe.
Ryanair is simply a cheap, no frills ‘cattle class’ airline, for which the proletariat pay with their hard earned currency.
In the U.S. the numerous carriers are also cheap, no frills ‘cattle class’ airlines, which are paid by the proletariat with almost anything but their hard earned currency.
At *median* income, the U.S. is more than 33% higher than the UK. At median income, the U.S. is fifth in the world, behind Luxembourg, the UAE, Norway, and Switzerland (and excluding micro-states). The UK is 14th.
And the fact that Americans are happy to live a miserable lifestyle of constant flying for their corporate overlord.
Just look at the sad flights on Sunday night of people heading out for a work week, or working on planes at 10pm.
In Europe people value their time and do not work outside of work hours.
Being originally from Ireland and seeing Ryanair explode in the 90s and early 00s, and having moved to the US 20 years ago, I think huge factors ate average flight time and willingness to be uncomfortable. The vast majority of flights within Europe are 1 to 2 hours long. Long takeoff queues and long taxis are also less common. People are willing to suck it up. Much like why we see people accept Euro Business.
In the US, a large percentage of flights are 2+ hours, and a big percentage are 3 or 4+ hours. Taking off from a clogged hub at peak hours and you will have another 30 minutes on the ground waiting to takeoff. Land somewhere like ORD and you taxi for 20 minutes. In my experience, Americans also have less tolerance for discomfort and sucking things up. Kind of like the desire for AC even in modest temperatures, ice cold drinks etc. It all plays into the bigger picture here.
While you mention US aircraft fleet decisions, you missed out Ryanair policy. Boeing 737. Full stop. -800s and, more recently, -8200s (which are MAX 8s).
Standardised cattle class seat configuration throughout. No recliners, no window blinds, no seatback screens, no safety cards - they’re a sticker on the back of each seat or on the front bulkhead.
Planes are bought new at the lowest price ruthless negotiations can obtain. Cabin crew clean the cabins at each turnaround. Jetways and boarding steps are unavailable at many airports Ryanair uses so each plane has built-in airstairs, a Boeing option since the 737 launched in 1968.
Ryanair may charge extra for everything and make EU261 claims difficult for delays and cancellations but it also has an excellent reputation for on-time departures and arrivals few of its competitors in Europe can match.
It very much has to do with differences in purchasing power. 95% of airline revenue comes from the top 5%.
Yeah, the plebs fly, too, but only generate some load with no profit to speak of.
And the top 5% in America are a helluva lot richer than the top 5% in Europe.
Geography plays a major role here that has been ignored unless I missed it. The UK which has the most LCCs is an ISLAND. It is not at all cheap to drive your car to Paris for the weekend because you have to take a ferry or Chunnel. In the US the distance between airports (population centres) is significant so cost per mile becomes a factor. Taking airport delays into account you can certainly drive several hundred miles as quick or quicker in the US than flying and very cheaply (Europe has bad gas prices and astronomical tolls on major highways) whereas flying to Europe from the UK can be under an hour so that the cost to fly is very attractive. And Europe is so small and trains are so much better that taking a car is not necessary. And of course non-unionized labour is such a cost saving especially since the advent of the new super-charged contracts for FA and crew in the US.
There is not a chance in hell that I would fly Thomas Cook from Manchester to Sharm el Sheikh. But Manchester to France I could handle.
I wouldn’t know about Sunday night travel since regular travelling for work aside from the occasional overseas trip is not common here in Germany. When I worked in New York, I was resistant to excess work travel, which was surprising for my US colleagues.
Anyways, my point was that ULCCs perform poorly in the US since the major travel is for work related DVDs ULCCs cater to the leisure traveller.
Also I would counter against some comments that while Europeans earn less and pay more in taxes, they still have a higher disposable income since medical is free, schools and universities are free and they have social security if times get difficult. Therefore, most of their remaining income is for living, and not planning for retirement. This is also why European tourists are seen all around the world while Americans are much fewer.
You're absolutely right about Ryanair when it flies on routes not served by legacy airlines.
One issue with Ryanair is that you'll typically pay more in the end. Meaning if I book now a flight from London to Krakow, I have the option to pay £150 on BA from LHR, or pay £30 on Ryanair from STN. Let's look at what you'll actually pay. For example from where I live to LHR you'll pay around £6 for the underground, while to STN you'll pay minimum £35. For BA you can take a hand luggage without an issue, while on Ryanair you'll need to pay £60 if you arrive with a bag a drop bigger than allowed.
In other words you'll end up in many times paying more on Ryanair.
Yeah the bottom percentile American is far worse off than the bottom percentile European.
If you want to compare the US and European aviation market, which already is like apples and oranges, then I think easyJet may be a better candidate than Ryanair to compare. easyJet actually uses larger airports like CDG while presenting itself as 'low cost airline'. Ryanair is just rubbish in the sky and in many ways the opposite of Spirit. Perhaps you'd like to do a comparison of the US and (South) East Asian low cost carriers to make the picture even more interesting? Adding pears to apples and oranges?
Oh, and to all those Americans dreaming of visiting Paris and Rome on a business class ticket with credit card points: as you can see, Europeans are poor. Tech bro tells so, so it's true. You'll be met with envy and you sure won't be safe. Just use it to fly to Florida, Hawaii and Vegas instead.
Europe's average flight is far shorter than a US average flight. There's only so much you can endure bare-bone soul-crushing low cost carrier's product, and a 6 hour transcontinental flight (or even a 4-hour mid-continent one) are definitely outside of that envelope.
I prefer Ryan Air when I'm in Western Europe. The people who fly that airline are those who get on with a decent sized carry on and not an oversized monster. The seats don't recline. I love that. I fly economy from Vegas to San Antonio, Premium Economy from Maui to the West Coast, and BC from Honolulu to Japan. Air travel is just a faster bus. The longer the distance, the better the bus needs to be.
You could argue the US legacy carriers already drove down quality on their own. I remember getting a hot meal on Continental Airlines in the early 2000's flying frequently TPA-EWR, then it became a cold turkey sandwich. Now you can fly a 6 hour transcon with nothing but pretzels or a Biscoff cookie.
I knew I liked Ben already, but "tech bro God complex logic" seals the deal. Highly accurate.
I think you're applying American prejudices to areas you're not familiar with. Eg you said "language differences" would decrease interest... But unlike the states, most people in Europe can passably speak more than one language, certainly sufficiently to travel. Being close together but different drives more traffic, hence non-stops and 1-stops to so many little airports all over the continent.