Low-Cost Carrier (LCC) Market Scenario
Global Low-Cost Carrier (LCC) market is projected to reach USD 247.36 billion by 2025, expanding at a CAGR of 8.62% between 2019 and 2025. LCCs are carriers which, through a variety of operational processes, have achieved a cost advantage over full-service carriers (FSCs). These LCC airlines translate cost savings into lower, more affordable fares for air travelers.
The Global LCC Market has witnessed high growth in the recent years owing to increasing preference for LCCs over FSCs in the developing countries. Moreover, high aircraft utilization, internet booking, use of secondary airports, lower wage scales, minimum cabin crew, lower rates of unionization among employees, one class of seating, and short ground turn-around times are some factors driving the growth of the market.
However, setting up an airline anywhere in the world is a significant challenge due to high start-up costs, competition, and the significant risks involved. Extensive analysis must be undertaken by prospective carriers to determine the viability to enter into a market.
Increasing demand for LCCs in developing countries due to the surge of domestic air travelers is driving the growth of the market.
- Increasing Number of Air Travelers: Globally, air passenger traffic has been increasing at a significant rate of 3.5% over the past couple of years. Factors such as decreasing airfares, increasing disposable incomes, especially in developing countries, and higher living standards have influenced this growth.
- Growing Global Travel and Tourism Industry
- Volatile Crude Oil Price
- High Operational Cost and Low Profitability
By Aircraft Type
- Narrow-Body: Although the narrow-body aircraft has a lesser capacity than the wide-body aircraft, they are larger in number. Some major narrow-body aircraft are Airbus A318, A319, A320, and A321; Boeing B727s and B737s. These planes generally fly over short routes and are, thus, suited to cater to budget travelers.
- Wide-Body: Major wide-body aircraft include Airbus A300, A310, A330, A340, A350, and A380 and Boeing B-747, B-767, B-777, and B-787. These aircraft are in high demand, primarily for long-haul routes with higher traffic, usually connecting international destinations.
- Domestic: The segment dominated the Low-Cost Carrier (LCC) Market
in 2018. The increasing number of domestic air travelers is expected to drive the growth of the segment.
- International: The segment is expected to witness higher growth during the forecast period from 2019 to 2025. This is due to increase in number LCCs for medium-haul international flights is driving the growth of the segment.
By Distribution Channel
- Online: The segment is expected to witness the highest growth during the forecast period. This is due to the high usage of the online marketplace for flight bookings, which has increased over the last few years is driving the growth of the market.
- Travel agency: The segment is expected to witness a steady decrease in CAGR during the forecast period. This is due to the decreasing preference by the customers for flight bookings at travel agencies globally.
- North America: North America dominates the Low-Cost Carrier (LCC) market. This trend is projected to continue during the forecast period due the presence of prominent LCC airlines such as JetBlue Airways Corporation, Southwest Airlines Co., Spirit Airlines, Inc., and WestJet Airlines Ltd.
- Europe: The steadily rising passenger traffic over time is expected to drive the growth of the European market in the review period. It is anticipated that 50% of all seats in the region will be low cost by 2027.
- Asia-Pacific: The Low-Cost Carrier (LCC) market in this region is projected to expand at the highest CAGR during the forecast period. Increasing air passenger traffic in countries such as China, India, Malaysia, and Indonesia are encouraging the LCC airline operators to increase their investments in this region. In 2018, LCCs accounted for 29% seat capacity in the region as compared to 14% in 2008.
- Middle East & Africa: The increased air travel and rising tourism is driving the market growth in the Middle East & African region. Low-cost seats in the Middle East have risen from 5.52 million departing seats in 2009 to 41.91 million in 2018 showing an exceptional growth rate of 659% in the last 10 years.
- Latin America: There has been an increase in air passenger traffic in the region from the last few years, which is expected to drive the market growth. LCCs have grown to represent 65% of seats for domestic traffic within Brazil and Mexico over the past decade, 2009-2018.
- AirAsia Berhad (Malaysia)
- EasyJet Airline Company Limited (UK)
- IndiGo (India)
- JetBlue Airways Corporation (US)
- Norwegian Air Shuttle ASA (Norway)
- Ryanair DAC (Ireland)
- Southwest Airlines Co. (US)
- SpiceJet Limited (India)
- Spirit Airlines, Inc. (US)
- WestJet Airlines Ltd (Canada)
Frequently Asked Questions (FAQ) :
Low Cost Carrier (LCC) market can expand at 8.62% CAGR by 2025.
By 2025, the Low Cost Carrier (LCC) market value can reach USD 247.36 Million by 2025.
EasyJet Airline Company Limited (UK), AirAsia Berhad (Malaysia), and IndiGo (India) are some renowned names in the Low Cost Carrier (LCC) market.
The rise in need for robust supply chain can promote the Low Cost Carrier (LCC) market.
High cost of crude oil can restrains the Low Cost Carrier (LCC) market expansion.