When asked about the future of the low-fare airline industry, Vueling Airlines CEO Alex Cruz has a simple answer: “We will grow and the legacy carriers will shrink.” But that is only the short version of a more complex story.

While most low-fare carriers are continuing to grow, strategies and behavior patterns are changing, particularly in Europe. EasyJet is introducing assigned seating and has started selling its tickets through global distribution systems (GDS). Vueling, Norwegian Air Shuttle and others are actively pursuing connecting traffic, and Norwegian plans to launch long-haul flights next year.

“We are evolving the low-cost model,” said Ali Sabanci, CEO of Turkish low-fare carrier Pegasus Airlines, on the sidelines of the World Low-Cost Airlines Congress last month in London. “Only two years ago, ‘GDS’ was a swear word.”

By introducing new possibilities for the model, airlines are trying to gain access to a broader customer base. EasyJet’s drive to GDS cooperation, for instance, is aimed at attracting more business travelers. Vueling has enough frequencies at its Barcelona base to enable a large number of natural connections—passenger streams to which it would otherwise not have access.

EasyJet’s decision to introduce assigned seating also can be seen as a move to draw corporate travelers. Trials on selected routes have shown that the boarding process does not take any longer than the previous open-seating procedure, says EasyJet’s customer and revenue director, Cath Lynn. But the airline now can achieve higher yields and ancillary revenues by offering seats at the front of the aircraft to passengers buying the most expensive tickets.

Some changes also are being forced on low-fare carriers. The industry has always reduced capacity in the winter, but not to the extent it does today. Whereas previously it tended to fill seats by reducing fares, that is now often no longer a viable strategy, given the sharp rise in fuel prices. Instead, airlines park more aircraft in the winter.

Ralph Anker, who runs the network analysis website anna.aero, says Ryanair reduced capacity last winter by 38% from the preceding summer season. The reduction had been only 30% a year earlier. Other low-fare carriers cut winter capacity further as well—EasyJet lowered its capacity last winter 34% from summer levels, compared with 28% in 2010; Vueling cut capacity by 44% last winter from 40% the year before; and Norwegian dropped its offering by 28% in 2011 from 27% the previous year.

As networks grow, the low-fare airlines find themselves in more direct competition with each other. When Hungarian national carrier Malev collapsed in January, Wizz Air immediately widened its already significant presence at Budapest Airport and Ryanair opened a new base. Following the closure of BMIbaby in September, Monarch Airlines, FlyBe, Ryanair and Jet2.com picked up abandoned routes at East Midlands Airport.

One current low-fare success story is Spanish carrier Vueling, which is thriving in spite of its home market’s economic weakness. Vueling benefits greatly from industry consolidation. At its main base in Barcelona, its biggest competitor, Spanair, went bankrupt in January and ceased operations. EasyJet has announced the closing of its Madrid base and Ryanair has reduced capacity into Spain, albeit from a very high level.