The low-cost carrier model, also called a budget or discount airline model, is a business model in which an airline is operated with an emphasis on minimizing operating costs, sacrificing some traditional airline comforts in exchange for cheaper fares. To make up for the resulting drop in ticket revenue, a low-cost carrier commonly charges extra fees for services such as carry-on baggage. The term originated within the airline industry to describe carriers with a lower operating cost structure than their competitors and is now often applied more loosely to any airline with low fares and limited service, regardless of its underlying operating model, though it should be distinguished from a regional airline flying short-haul routes without such service or a full-service airline offering some reduced fares.
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Legacy carrier describes an airline older, full-service business model, defined by the industry press in direct contrast to the newer low-cost carrier model that has taken market share from it.
Southwest Airlines, built around a single aircraft type, no-frills service and quick turnarounds, is the textbook real-world example of the low-cost carrier model in the United States airline industry.
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