How come cheap airlines are so cheap?

Ignoring of course the airport taxes, online booking charges, automatically opted in insurance and carbon offset schemes and the baggage supplements I've bet we've all wondered how low cost airlines can charge such low prices. Well, courtesy of Sakari Pitkänen and a few tweets and retweets from Steve, Donald Strachan and Heather Poole the following diagram provides an interesting insight into HOW they can charge what they do and it's well worth a read. 

You can view the full size version of this chart on Flickr, by clicking here. Otherwise, please consider sharing it with your contacts.