Pere Suau-Sanchez, from the Centre for Air Transport Management at the UK's Cranfield University, says the recent economic crisis has acted as a catalyst for upheaval.Low-cost airlines have tweaked some elements of their business model in order to encroach on markets that've so far been the preserve of legacy carriers."We have seen how in Europe low-cost airlines such as Ryanair have dropped routes to low-margin secondary cities and started to fly to major airports in an attempt to move upmarket," Suau-Sanchez says."At the same time, cost-cutting businesses, particularly small and medium sized firms, have eagerly embraced low-cost air travel."One by one, many of the dogmas of the low-cost airline industry have been cast aside.What the industry is witnessing is a significant shift in the business model of some low-cost airliners, to the point that many in the industry talk already of a new type of airline.Enter the "hybrid" carrier: halfway between the pure no-frills low-cost carrier and the traditional full service airline.Chasing the business traveler

For example, many low-cost airlines have gone through a re-bundling exercise.Instead of buying services one by one, passengers can now opt for branded fare packages, each including a range of services -- better seats, larger baggage allowance and lounge access -- that are more typical of full-service carriers, but still quite competitively priced.With business customers in mind, low-cost airlines have also begun selling tickets through the global distribution systems (GDS), that are used by many corporate buyers.Some budget carriers have even launched their own loyalty programs.All this has, obviously, put extra pressure on traditional airlines, that depend on short-haul operations to feed their usually more profitable long-haul routes.
In the face of this challenge full-service airlines have adopted different strategies.Some large airline groups launched their own low-cost subsidiaries to compete head-on with low-cost airlines.This is what Air France-KLM has done with Transavia and Lufthansa with Germanwings and Eurowings.They've also been busy further segmenting passengers well beyond the classical business-economy class divide.We're not talking just of the introduction of a premium economy product, but of a multi-tiered branded fare structure within economy class itself.