Abstract

Low cost airlines, born more than 20 years ago in the US, have experienced in the last years a fresh start in UK and, more recently, in other European countries. This paper reviews the main characteristics and perspectives of the low cost segment of the airline industry. The original business model adopts a "light" and original organizational form, with a 40-60% reduction in unit costs with respect to the traditional carriers, allowing an aggressive and rich pricing strategy. The low cost airlines have recorded an impressive increase in market shares and, once established, are able to induce the traditional carriers to reduce their fares as well. A relevant market potential exists for low cost airlines in many European countries, including Italy.