Ditto Air Berlin in Europe.

I think it's a question of the market evolving and airlines finding their niche
therein. Speaking about Europe, as that's what I'm familiar with...

Long before the days of LCCs, there were charters. And the charter operators filled seats on the cheap, by selling them as 'flight-only'. These were very basic operations, to/from secondary airport, often at ridiculous hours of the day, pay bar, but a generally free (awful) cooked meal service. To book these flights, you'd have to look for adverts in travel supplements and in 'bucket shops' - travel agencies specialising in this deal. There'd quite often be an insurance rip-off to accompany these tickets, deemed compulsory by the operator, with only a handful of exceptions.

Then some people realised that there was an untapped market here. People are willing to put up with secondary airports, bad timing, cramped conditions and pay-on-board for very cheap fares. Add in some cheap-to-buy and cheap-to-run aircraft, do the sums and... Hmm, not quite there. OK, make sure you have relatively cheap staff, a point-to-point model, relatively little contingency support and rapid turnarounds. Aha! There's your business model!

And it mushroomed, practically overnight. Particularly when they tapped into the regional market. Not only cheaper, but faster, by-passing the previously mandatory hub! Filling cheap seats where the airlines so far could only fill props or RJs, as only business travellers could afford the route.

So, the FSCs look on and think, hmm, how do I compete? Well, two things: match on price, or compete on product.

Matching on price is difficult. You will always have a higher cost base with larger hubs, more senior staff, transfer operations... But then, you're also handling lucrative intercontinental flights and premium cabins, so there is room for some slack.

So, some FSCs tried to match on price. Difficult. They ended up cutting back on some frills, such as free food service. They ended up cutting cabin crew and service levels. They ended up cutting the air miles awarded.

Some tried to market a premium product, wooing business travellers who could justify the extra expense. People are willing to pay some extra for some things, it seems. The fares still had to drop, though, and some cost-cutting put in place, as people are only willing to pay so much extra for these things!

And, of course, a whole spectrum between the two.

But then, some LCCs came along and saw another niche: what if we launched a product aimed at the quality end of the market, but with the lower cost base of an LCC? Witness JetBlue, Air Berlin and more!

This jostling will keep on. In the UK, the LCCs appear to have won the regional battle against BA, the main FSC, as it turned BA CitiExpress into BA Connect, which it is now selling to the regional superpower FlyBE (who on earth would have thought you could make money from EXT-NWI?)

On the other hand, you see some cost-cutting reversed as people tire of the lower standards on LCCs (reliability cutting into business time, for example). Look at OS putting free food back on, or LH removing a third of its short-haul business seats after a disastrous trial of 3+3.

It will keep moving, but the level will become more clear. What will be interesting to see is how long-haul LCC travel will pan out (both the premium, C-only ones and the cheapies). What will also be interesting to see, as more regional routes go over to LCCs, is how passengers will put up with short to long-haul connections on point-to-point itineraries as this becomes more common.