Long ago in the 1960s, there was no such thing as budget airline. Back then if you flew on holidays, you were very well off.
Budget airlines are a relatively new phenomenon. So how do the full service airlines deal with this.
The full service airlines know that for the time being, this is something they cannot ignore.
They hope it is a passing fad, like bubble tea or Portuguese egg tarts.
They need to show and make the airplane passenger feel the difference.
But at the same time, some want in on the budget airline action, just in case the market shifts greatly in favour of that segment. That is when a super successful child-budget airline starts to cannibalise the parent full service airline and eat it alive.
It is not difficult for them to dismantle the child-budget airline that they have set up, if later on there is no more demand for budget airlines.
Have you noticed that the bad service stories seem to be always about some child-budget airlines that have parent full service airlines.
The stand-alone budget airlines that do not evlove from parent full service airlines get less flak and provide better service.
From what we can observe, it looks like the full service airlines have thought through the problem of how to compete with the budget airlines.
Their cleverness in dealing with the competition is admirable.
The deliberate lower standard of service of their child-budget airline must be carefully calibrated. It must not be overdone. Enough to irritate and anger the budget traveller but not enough to kill him/her. Sometimes one imagines (but cannot prove) that some flight delays are on purpose.
Safety cannot be compromised. Cannot have a lot of budget airplanes crashing often.
The pricing of budget airline tickets must be such that the traveller can choose to pay just a little bit more to buy a full service airline ticket. This is ingenious pricing strategy.
So that the traveller will think it is just not worth to save just a bit of money and suffer the hassle of budget airlines.
It will be a different story if budget airline tickets are consistently and always 1/20 the price of a full service airline. Then the savings cannot be ignored. Like say, even on year-end holiday, Christmas or Chinese New Year season.
If a country is experiencing a boom and everyone is feeling super rich, few will want to fly budget airlines. It will be a serious loss of face. Think of Japan in the 1980s.
So it will also depend on whether the country is going through good times or bad.