Low cost airlines market

While the largest low cost carrier market is Europe, the leading low cost carrier both in terms of the number of seats offered and revenue generated is the U.S. carrier Southwest Airlines

Low cost airlines are passenger airlines, which offer travelling service tickets at relatively cheaper rate compared to other airlines (full service or traditional airline). Low cost airlines are also known as no frills airlines, prizefighters, low-cost carriers (LCC), discount airlines, and budget airlines. Some of the popular low cost airlines include Ryanair and EasyJet.

Low cost carriers are different from full service carriers in how they are able to offer passengers lower ticket prices, primarily through two mechanisms. The first is to charge additional fees for services usually included by full service providers, such as checked luggage and in-flight food and beverages. Second, low cost carriers often (although not always) operate from secondary airports, which generally are cheaper for airlines to use.

Low cost carriers have rapidly expanded their share of the global air travel market over the last decade or so; in 2020, low-cost carriers accounted for 35 percent of the world’s total seat capacity.

The feasibility of the operation of low cost airlines is attributed to its low cost model. This low cost model may include some of the following characteristics low pricing strategy, simple pricing structure, involves online & direct ticket booking (eliminating extra ground staff & vendors), preference to secondary airport, point-to-point network, single class seating arrangement, ticket fare may not include extra services (food & beverage), intensive aircraft usage, short turnaround time, dense seating arrangements, secondary revenue source (advertisement, onboard selling), and other.

Low cost airlines market growth exponentially worldwide over the past few years, is owing to rise in economic activity, ease of travel, travel & tourism industry, urbanization, changes in lifestyle, consumers preference for low cost service along with non-stops, and frequent service, increase in purchasing power of middle class households especially in the developing regions, and high internet penetration coupled with e-literacy. However, factors such as volatile crude oil price and increase in terrorism & crime rate, political uncertainty, & natural calamities hinder the market growth. Conversely, sustainable airport governance, operational & financial improvement is anticipated to leverage the growth of the market. Nevertheless, factors such as high investment & operational cost but low profitability is anticipated to be a major challenge of the low cost airlines industry.

The global low cost airlines market is segmented based on purpose, destination, and distribution channel. By purpose, the market is divided into leisure travel, VFR, business travel, and others. By destination, it is bifurcated into domestic and international. Based on distribution channel, the market is classified into online, travel agency, and others.

Low cost airlines market by destination

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Low cost airlines market by purpose

The low cost airlines market share by purpose of travel is dominated by the leisure travelers, followed by visiting friends & relatives (VFR).

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Most of the times, the business travelers do not prefer to travel in LCC as the payment is completed by the company. However, over time the market is significantly expanding over the business travel market. The companies are notably accepting LCCs as business travel is a huge cost centers.

Business Travel segment would witness the fastest growth, registering a CAGR of 17.3% during the forecast.

Low cost airlines market by distribution channel

The low cost airlines by distribution channel is segmented into online, travel agency, and others (such as spot booking). High penetration online sale aids in the development of low cost model of LCC. High application of online mode of sale has helped control the work force and also remove the middle man charges.

Low Cost AirIines Market Online segment would dominate the market and witness the fastest growth, registering a CAGR of 15.4% during the forecast period.

The global low cost airIines market is analyzed across North America (U.S., Canada, and Mexico), Europe (UK, Italy, Spain, Germany, France, Latvia, and rest of Europe), Asia-Pacific (Philippines, Indonesia, Thailand, Singapore, Malaysia, Vietnam, China, India, and rest of Asia-Pacific), and LAMEA (Latin America, Africa, and Middle East). The global market is dominated by the Europe region. However, Asia-Pacific is anticipated to witness the highest growth rate during the low cost airlines market forecast. The penetration of low cost airlines is not equal in all region. The penetration is high in North America & Europe and LAMEA has the least. Asia-Pacific would witness the fastest growth, registering a CAGR of 16.8% during the forecast period.

Major companies profiled in the report include Airasia Inc., Virgin America, Norwegian Air Shuttle As, easyJet plc, Jetstar Airways Pty Ltd., WestJet Airlines Ltd., Indigo, LLC, Azul Linhas Areas Brasileiras S.A. (Azul Brazilian Airlines), Ryanair Holdings plc, and Air Arabia PJSC.

 

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