The Plane Truth about Flying Cheap Low-cost airlines are dramatically improving the way we get from here to there. So what's the catch?
By Donna Rosato

(MONEY Magazine) – A discount airline revolution is under way, bringing cheap fares, simple pricing and some surprising perks to millions of air travelers across the United States. Haven't flown a low-fare carrier yet? You probably will soon. Once operating only in limited markets and out-of-the-way airports, low-cost airlines like JetBlue and Frontier are rapidly spreading their wings, adding new routes and lowering prices to hundreds of cities around the U.S. and in Canada, the Caribbean and Mexico. In fact, the line between low-fare carriers and their traditional counterparts is blurring in many respects, making low-fare carriers an increasingly routine option for both leisure and business travelers. Discount airlines already fly a quarter of all domestic airline passengers (up from 16% four years ago) and will carry up to 40% of U.S. fliers by 2006, according to industry analysts.

Yet in the face of this happy development, it's natural to wonder if there's a catch. What, exactly, are we giving up for cheaper air travel? Are discounters as safe as traditional airlines? Will you be getting anything to eat? And what about frequent-flier miles? We take on these questions below. But the short answer is, yes, there are compromises with discounters--but they're relatively few and minor. And there are unexpected advantages.

Because you increasingly have more than one low-fare option, we'll also distinguish between the discount carriers, which come in a variety of sizes and flavors. So read on for our insider's guide to cheap fares.

How they do it

-- You probably wonder how discount airlines can sell tickets at one-third to one-half the price of traditional airlines--especially given their financial success relative to the rest of the red-ink-spilling industry. The basic answer is simple: Their overhead is much lower. Expenses for low-cost carriers average just 7.3¢ a mile compared with 11.7¢ for traditional airlines, according to the Department of Transportation (see the table on page 86 for more details).

How do they keep costs so low? No, you don't haul your own luggage onto the tarmac. In fact, most of the savings are invisible to fliers. For one thing, discounters tend to have newer planes, which are more fuel efficient and require less maintenance. They also operate fewer kinds of planes, which means smaller spare-parts inventories and less flight-crew training. AirTran, for example, flies only Boeing 717s with an average age of three years; Northwest's 445-plane fleet consists of seven jet models with an average age of 18 years.

Traditional airlines are trying to follow suit--by retiring older planes, for instance--but their efficiency lags in several areas. They operate large hub-and-spoke networks, so their planes often have to wait for connecting passengers and thus don't get as much use as most discounter planes. Southwest, meanwhile, is famous for getting its planes unloaded, cleaned and reloaded in 25 minutes. That "turn time," the fastest in the industry, enables Southwest planes to fly an average of 11 hours a day (vs. an average of nine at the majors). A few discounters do operate hubs, such as AirTran's in Atlanta. But AirTran has found efficiencies elsewhere: By ripping out the galleys on its planes, it created more room for revenue-generating seats, and because it doesn't serve hot food, its cleanup time is shorter.

Many people seem to think discount airlines have a cost advantage because their employees aren't unionized. In fact, most of them are. The difference is that their work rules are more liberal than those governing traditional airlines, whose union contracts date back to the days before deregulation initiated price wars. That's why, for example, AirTran, JetBlue and Southwest can "crosstrain" their workers, so pilots can load bags and flight attendants can clean planes. Most employees of low-cost carriers don't earn as much as their counterparts at major carriers; those that do work more hours for that pay. The result is lower labor costs: 2.3¢ per seat per mile compared with 3.5¢ at the majors.

Low fare isn't less safe

-- Though public confidence in low-cost airlines was shaken by the 1996 ValuJet crash that killed 110 people, the truth is that discounters are as safe as traditional carriers. In fact, an analysis of Federal Aviation Administration accident and incident data for the past four years shows only a marginal difference between low-cost and traditional airlines. This isn't really surprising: Every commercial airline must meet the same safety standards. Federal regulations require rigorous training exercises for pilots twice a year. Flight attendants also go through safety exams and annual retraining. Some discounters outsource maintenance, but so do some majors--and in any case there's no evidence that outsourcing undermines safety.

Overall, airline travel is an extremely safe mode of transportation and, thanks to improvements in technology, is getting safer. An airline passenger stands a 1-in-8-million chance of dying in a crash, according to an MIT study. You'd have to fly every day for about 22,000 years for the odds to turn against your arriving safely at your destination.

What price simplicity?

-- The airline industry is notorious for its convoluted pricing policies and complicated rules and restrictions. Discount airlines have wisely done away with much of that. For example, while traditional airlines seem to charge as many different prices as there are seats on a plane, discounters' fare structures are consistent and straightforward: There are typically a half-dozen fares to and from each city, compared with 50 to 60 for traditional carriers. Discounters don't require a Saturday-night stay or 21-day advance purchase for you to get the lowest fare on a given flight. Some even put a cap on their highest fares. (Frontier, Southwest and Ted charge no more than $299 per leg, though in practice most of their fares are a lot less.)

Of course, simpler isn't always better. Most major airlines have agreements with other carriers so you don't have to check in twice when you're connecting to a different airline, and you'll be accommodated on another carrier if your flight is canceled. Southwest and JetBlue don't have those so-called interline agreements (though most of the others do). Another downside is that discounters' schedules, though growing, are still sparse in some cities. So you could be cooling your heels at the airport in Boston if, say, you miss the afternoon flight to Long Beach, Calif. on JetBlue, which flies that route only twice a day.

And while both major airlines and most discounters offer frequent-flier programs, traditional carriers have lots of partners and perks (not to mention a host of complex rules and restrictions). Discounter programs are typically smaller and simpler and in one case--Spirit--nonexistent. Some do offer great value: You can earn a free round-trip ticket on Frontier Airlines after flying just 15,000 miles (it's 25,000 for most airlines). And America West, which transformed itself from a traditional carrier into a low-cost operation two years ago, still offers many of the perks of a traditional airline, including a competitive frequent-flier program and free upgrades to first class for elite members.

Cheap but not without frills

-- Unlike previous generations of low-fare airlines, which made passengers feel one step removed from cargo (remember Peoples Express?), many of today's discount carriers shower travelers with amenities. Those perks range from individual seatback TVs that show real-time television shows and first-run movies to first- and business-class seating. Even Southwest, the king of no-frills flying, is installing comfortable leather seats throughout its entire fleet and offers a generous 33 inches of legroom at most seats, two more than the coach standard. Little things, after all, can make all the difference.