Low-Cost Carrier

Low-Cost Carrier

Low-Cost Carriers refers to no-frill and economical air travel services offered both for domestic as well as international travel. These types of services are offered by the airlines across the globe naming Indigo, Air Asia, Ryanair, Southwest Airlines, JetBlue, Spirit, etc., which target majorly on economy range of travelers looking for convenient air travel.

The Low-Cost Carrier Market is expected to grow at a steady CAGR of around 12.73% owing to the growing focus on enhanced number of air travelers traveling internationally for tourism as well as rise in the domestic air travel infrastructure in many of the developing countries. Furthermore, rising interest of the travelers to opt for economical air fare for shorter distances is another prominent factor that has proven to be conducive for the market growth of low-cost carriers. With the advent of COVID-19 pandemic in 2020, many of the airlines across the globe faced major challenges to recover their operational cost due to lowered air travel. This was substituted by the focus on offering low-cost services for air travel where they can avail add-on services on demand, thereby increasing the target customer base.

In line with this, many of the low-cost carriers across the globe have announced to increase their fleet of aircraft in order to cater to the rising demand from the surge in economical travelers. For instance, in 2023, InterGlobe Aviation Limited (Indigo) announced to purchase 500 Airbus 320 jets for expanding its operations which will be delivered between 2023-2035 . Additionally, various government policies across the globe have also promoted the adoption of Low-Cost Carriers as they are more suitable to improve the domestic air travel infrastructure in the countries.

• Based on the aircraft type, the market is segmented into narrow body, wide body and other aircraft. Of these, narrow body aircraft have held a sizeable market share across the globe. The ease of operating narrow body aircraft in smaller runways as well as lower cost making them more apt for domestic travel have supported the higher adoption of narrow body aircraft. Additionally, narrow body aircraft only have one aisle due to which they have lesser seating capacity which reduces the cost of operating these jets in case there is lesser demand for air travel. However, the wide body jets are more profitable and have larger accommodation as compared to others these are high cost in operations as well as are less profitable when the seating capacity is not fully utilized. Other jets such as regional jets as well as turboprop engine aircraft have lower application in commercial space.
• The Global Low-Cost Carrier market is segmented as domestic and international in terms of destination. Considering the risen in international travel post COVID-19 pandemic as well as resurge in the economic activities many of the airlines have projected their focus towards low-cost long travel services. According to the UNCTAD the demand for international travel in the years 2021, 2022 and 2023 as compared to 2019 was 64%, 84%, and 92%, recovered. This shows that many of the travelers are readily traveling internationally for various reasons as study, tourism, employment, etc. Additionally, according to the UNCTAD the yearly growth in the international tourist is anticipated to be 3% to 4% which shows a healthy demand for international travel in the coming years. Considering the factors and high revenue generation through longer international travel the segment is projected to hold its major
• For a better understanding of the market adoption of Low-Cost Carrier, the market is analyzed based on its worldwide presence in countries such as North America (The U.S., Canada, and the Rest of North America), Europe (Germany, The U.K., France, Italy, Rest of Europe), Asia-Pacific (China, Japan, India, Rest of Asia-Pacific), Rest of World. Asia Pacific is emerging as one of the fastest-growing markets for low-cost carrier services. The APAC region has witnessed remarkable economic growth over the years, leading to a surge in air travel due to the expanding middle class. As a result, there is a growing demand for air travel both in domestic and international travel. Furthermore, many of the countries in the APAC region as China, India, South Korea have made extensive investments in the upliftment of air travel infrastructure by building airports in tier 2 and tier 3 cities. These countries have established themselves as leading producers of automobiles, both for domestic consumption and international exports. Moreover, urbanization is happening at an unprecedented pace in the APAC region, especially in countries like China and India. As more people migrate to cities, there is an increased need for quick transportation. This urban lifestyle shift plays a significant role in driving the demand for Low-Cost Carriers as there is unprecedented growth in city traffic, thereby boosting the Low-Cost Carrier market.
• Some of the major players operating in the market include Ryanair, Southwest Airlines, Air Asia, Indigo, Scoot, Virgin Australia, Wizz Air, Spirit Airlines, JetBlue Airlines, Flydubai, and Allegiant Travel Co.