Dead simple!
They say Ostriches don't really bury their heads in the sand. That is probably true, but Pilots certainly do, and for their fledglings it almost seems to be a survival technique!
It is really simple. Low cost means stripping out any unnecessary expense thats add to the minus column, and adding any potential source of realisable revenue that adds to the plus column.
Airlines like most other businesses have capital aquisition costs and finance costs. Then they have the costs of running those capital assets. Labour costs, maintenance, fuel, licensing, airport and administrative charges, advertising and so on. On an annual ongoing basis, three of the biggest variable costs are Fuel, Labour and Maintenance.
Fuel is difficult, in that the price is largely controlled by international cartels and manipulated by traders. Although it is a commodity, it is one that is subject to rapid price volatility and is difficult to budget in the medium to long term. Certainly it is not a cost that the airline can exert any real influence on.
Maintenance is somewhat less volatile, in that competitive tendering can provide the airline with some degree of control on the expense. It is however constrained by regulatory oversight, which should (in theory) prevent it trading off costs for risk in this area.
Labour is a whole different ball game. Taking pilots as one major cost centre, there are still the effects of market forces in play. In other words if there are not enough pilots of the calibre you require, queueing up at your door, then you need to attract the available supply by increasing the price you will pay them for their talent. On the other hand if there are simply too many queueing up at the door, good economic sense would suggest you reduce the price until the supply matches your demand, and falls in line with the average market price.
The problem with pilots is that they are also a regulated commodity. They are constantly trained and licensed professionals who need to have the levels of experience necessary to ensure they can operate your expensive capital assets safely and efficiently. To this end they can only trade cost for risk to a limited degree because it is a regulated industry. The drive towards lower costs raised the early question, "why do we need two expensive drivers at the front?" Why not wipe out 40% of the cost by simply unscrewing the right hand seat and tossing it in the skip? (Dumpster.) After all, the manufacturers have sold these high tech assets with expensive new technologies that they announced with great fanfare would make flying simpler, safer and more efficient. The flight engineer was replaced with microchips, chunky buttons and pretty TV displays. The pilots were happy to bore all and sundry with tales of "look Ma' no hands!" as they extolled the virtues of map displays, magenta lines and a myriad of computer displays that had supposedly somehow migrated from NASA space shuttle programmes. Everything is safer, easier and happier. So why do you need two of them, where is the much lauded cost saving?
The manufacturers and regulators both turned pale at the thought of the seat being ripped out, as that wasn't really the intended purpose in the design and evolution process, so they said no! The airlines then looked again at this cost, and said then, "what requirements do we need for the occupants of these seats?" The manufacturer in essence said, two licensed pilots who had the ability to read the instruction leaflet (manuals,) thereby assuming most of the subsequent (post sales) operational risk liability.
The regulator agreed, with the long standing proviso that however they achieved this, there shouldn't be two "inexperienced" pilots operating adjacent seats at the same time, beyond that provided they had the absolute basic paperwork, they couldn't really care less!
So the pioneers and disciples of low cost, rubbed their hands with glee. The job "Airline pilot" had an almost global Kudos and glamour that would have aspirational youngsters (and not so youngsters) queueing up around the block. This would instantly change the market price by massively expanding supply, far in excess of any likely demand, and "voila" instant cost saving. The regulator was off their back so long as they had experience in the left seat, as far as the target was concerned, 25% progress.
However the success of this policy change was even better than they could have imagined. So long were the queues of people lining up to take advantage of this new reduction in experience requirements, that the price droppped so much, that it actually reversed from a cost (loss) into a revenue (profit)! People somehow chose to shut their eyes to the new reality, and seemed to believe that once strapped into the right hand seat , the airlines would have a complete change of heart and say "no, no we really want to pay you the old wages and benefits of the experienced pilots we used to entice into these roles." So convinced were many, that they paid six figure sums to buy their way in to these positions, seemingly oblivious to the fact that even if they were succesful, it would take an inordinate amount of time to recover the investment. A whole industry of training establishments and new methodology sprang up on the back of this created demand.
Of course the problem with this new industry and its new practices is the same as with anything new. That is it gets old eventually (often quite quickly,) and in turn gets more demanding and expensive. Now that clearly makes it unwelcome and defeats the object of the exercise. This only works if you target the keen, inexperienced and ambitious with deep pockets. To keep the cost advantage, the airlines must keep this market churning over with the same demographic. Experienced First officers will only have higher cost expectations, be less satisfied, and provide no revenue opportunities in pursuit of their ambition, sorry no vacancies!
So what of the left seat? Well funny you should mention that, because that is what they are looking at now. So far they have been shielded from demand by the general economic oversupply. In addition legislative changes added anything up to 10 years to the normal retirement age. Pension changes caused many experienced Captains / Pilots to take a longer term view of their careers than had historically been the case. This has all served to provide a breathing space for the airlines to re-group their efforts into how they address the cost base of this particular seat.
If you look at what is taking shape in this industry, you can see a pent up supply of better experienced pilots desperate to continue or return to a job in which they have a significant and often critical investment. There are type ratings to be sold, conversion courses to be sold, even line training to be sold. The rewards have already been largely reduced (lower salary levels, reduced expenses, intensive rostering, decimated pension arrangements). Yet despite this, the supply is overwhelming.
So there you have it. It didn't start last week, it has been happening progressively and relentlessly for the last 15 years. Certainly in the last 10 years it has accelerated as economic and global events fuelled its progress. It has become the "X-Factor" with talented, average, and untalented people queueing up for a shot at something they don't fully understand, but nevertheless believe they want. The queue isn't getting any shorter. Pay your money and take your choice.