Since the middle of the 1980s, the UK airline industry has undergone a revolution in terms of regulation and control. Prior to 1987, when British Airways (BA), the UK's national carrier, was privatised, the Government through BA controlled the development of the UK airline industry. Around the same time as BA's privatisation, the EU put in place a series of measures that would lead to the complete deregulation of European airways within the EU by 1st April 1997. It was the UK's privatisation of its national carrier before its national rivals in Europe, prior to European deregulation, that paved the way for UK airlines and the UK market to be one of the most exciting in Europe.
The first low-cost carrier in Europe was Ryanair and, although Irish, it has based most of its activities out of the UK to date. Although it was formed in the 1980s, its true development as a low-cost carrier in 1993 spearheaded a tranche of other new entrants including easyJet in 1995, Go, then a subsidiary of BA, in 1997 and buzz, a subsidiary of KLM, in 1991. The development of low-cost scheduled carriers has been a major threat to the traditional carriers offering short-haul services in Europe. Although charter airlines are relatively protected from low-cost carriers for their tour operator business, their seat-only business is under threat from low-cost airlines. However, UK charter airlines have consolidated in recent years and effected cost reductions and fares that can compete with low-cost airlines when required.
UK airlines tend to concentrate on either scheduled or charter services, although the two are not mutually exclusive. In 2000, UK airlines had 71.8 million passengers on scheduled services, including 18.4 million on domestic flights. This compares with 33.4 million passengers on non-scheduled services, including 0.2 million passengers on domestic flights.
For airlines, alliances generate passenger and cargo revenue feed from partners across a wider global network...