History lesson: What IndiGo and SpiceJet learnt from Iceland and hippies

Aritryi Das of moneycontrol has a nice piece. It is about how an Icelandic airline company called Loftleioir (pronounced Loftlader) pioneered low cost travel in the world.

One always thought it was South West/Ryain Air etc which started low cost air travel. But it started in Iceland catering to hippies :

The hippies of America were predominantly middle-class youth who lived off little money in shabby apartments. They had no savings or steady jobs, but still managed to travel east to Europe, the Middle East and even to India, where they made bell-bottoms fashionable and inspired Bollywood to produce songs such as Dum Maaro Dum.

But how did these flower children from America manage to cross the Atlantic? 

In the 1960s, high operational costs and regulations made flying – especially across the Atlantic Ocean – an expensive affair. In 1965, eight out of ten Americans had never sat on a plane. But despite their relatively empty pockets, the hippies found an airline to ferry them across to Europe and beyond. 

Enter Loftleioir (pronounced Loftlader). A tiny airline from tiny Iceland with just four aircraft, Loftleioir was only flying 5,000 passengers a year in 1953. But then genius struck.

Airfares were heavily regulated by the International Air Transport Association. Most airlines in the world were members of this body, but Loftleioir was not. It took advantage of this position and offered flights to Europe at fares that were 35 percent less than the competition, making it the world’s first low-cost airline in 1955.

Apart from cheaper fares, the airline also creatively cut costs. Their rivals flew jets while Loftleioir used older turbo-prop engines. Their rivals divided their passengers between business and economy while Loftleioir put passengers into a single class, which meant they could fit more seats (just like Air Deccan). The luggage racks were used as beds for children (unlike Air Deccan).

But service was one area where Loftleioir, unlike their modern counterparts, did not compromise. Passengers received full-course meals, along with wine, coffee and cognac. Even after running into rough weather on the financial front, the airline continued to pride itself on its service.

The airline dodged regulations by essentially operating one route from the US to Europe: New York – Reykjavík – Luxembourg (the heart of Europe). The transatlantic service started with a sole aircraft. But soon, Loftleioir was flying that route three times a week and eventually three times a day.

….

At its peak in the early 1970s, Loftleioir was flying nearly 72,000 passengers a year. An energy crisis forced Iceland’s government to merge it with another airline, eventually renaming it Icelandair. But  Loftleioir had made its mark. It spawned several other low-cost carriers across the world such as Laker Airways, Southwest and Ryanair, making low-cost travel mainstream. And then at the start of the new millennium, Captain Gopinath got India to join the club.

Superb stuff..

They even allowed Marijuana on flights as smoking was allowed in flights then!

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2 Responses to “History lesson: What IndiGo and SpiceJet learnt from Iceland and hippies”

  1. Nishant Rao Says:

    Hi,
    Well this was really some interesting stuff shared & thanks for sharing this blog. It was really interesting & informative blog for me.

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