The global low-cost carrier market size was estimated at USD 200.18 billion in 2022 and it is predicted to be worth around USD 949.97 billion by 2032, poised to grow at a CAGR of 16.85% during the forecast period from 2023 to 2032. Asia Pacific low-cost carrier market size was valued at USD 145.7 billion in 2022.
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The low-cost carrier market is one of the leading segments in the global airline industry, the market revolves around offering cost-effective air traveling options. Low-cost carriers offer affordable traveling experiences, especially for short-distance travel. Such carriers also employ various cost-saving strategies to maintain affordability. These may include operating a single aircraft type to simplify maintenance or using secondary airports with lower fees and maximizing aircraft utilization through quick turnaround timings. Low-cost carriers (LCCs) have revolutionized the aviation industry by upending the status quo of the legacy flag carriers and revolutionizing the way that passengers are served.
Additionally, a lot of low-cost airlines only have one kind of aircraft in their fleet, which lessens the training needed for the crew. Some of them even land at minor airports in crowded cities rather than the busiest ones for affordability purposes. Market liberalization and the expansion of low-cost carriers have coexisted.
Market Growth:
The low-cost carrier market is experiencing significant growth due to the increasing popularity of short-haul flights and the rising demand for domestic flights. The sustainable solution offered by low-cost carriers is observed as a growth factor for the market as sustainability concerns are growing across the globe. Airlines are concentrating on enhancing aircraft sustainability by lowering carbon emissions, utilizing sustainable aviation fuel, and using carbon capture technology. This is because sustainability is becoming a big concern. Additionally, growing analytics implementation to manage fixed assets, expanding asset management solution integration, and rising mobility solutions are the aspects that have been predictably predicted to positively impact the business of the global low-cost carrier market.
The low-cost carrier has opened broader options for the airline industry across the globe, it allows multiple services for passengers traveling for business purposes and even it has offered an opportunity for tourism businesses to grow. Such well-known advantages of low-cost carriers highlight the market’s growth for the upcoming period.
| Report Coverage | Details |
| Market Size in 2023 | USD 233.91 Billion |
| Market Size by 2032 | USD 949.97 Billion |
| Growth Rate from 2023 to 2032 | CAGR of 16.85% |
| Largest Market | Asia-Pacific |
| Base Year | 2022 |
| Forecast Period | 2023 to 2032 |
| Segments Covered | By Aircraft Type, By Distribution Channel, By Operations, and By Application |
| Regions Covered | North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa |
Drivers:
Rising demand for affordable air travel services
Passengers/tourists are observed to avoid air traveling options due to the hefty prices of tickets and taxes applied for the services. Airlines that offer low-cost carriers happen to establish a basic fare for the ticket that is cheap. These carriers even enable the passengers to choose their tickets according to the budget for reaching their destination. For instance, Frontier Airlines assesses extra fees for priority boarding, selecting your seat, and bag checking. Regular incentives are also provided by low-cost carriers.
The low-cost carriers often rely on the direct sales of tickets, this offers cost-effective distribution channels for the airline companies by making the traveling option affordable. Moreover, the cost-conscious approach, utilization of secondary airports, high load factors, and simplified services and operations collectively make the journey with low-cost carriers affordable. Thus, the rising demand for affordable air travel is observed to propel the growth of the market during the forecast period.
Restraints:
Lack of refund policies
The lack of refund policies with low-cost carrier services is observed to act as a major restraint for the market’s growth. The airlines that offer low-cost carrier services frequently refuse to issue refunds. As a result, tourists are advised to plan their flights in advance and stick to them. Rescheduling might result in additional costs. When purchasing a low-cost plane ticket, the added costs might pile up. Baggage check fees, seat position fees, and processing costs are all possibly added to it, which sometimes may boost the overall price of the ticket. Such services often have stricter refund or cancellation policies as compared to traditional airline services that may offer a complete refund in case of cancellation. Low-cost carriers typically operate with a strong emphasis on cost control and operational efficiency. Offering flexible refund policies can increase administrative costs which may lead to revenue loss.
Opportunities:
Increased collaboration between airlines
Cheaper airfares have increased demand for low-cost carrier services, which has boosted market competitiveness since more airlines are now vying for travelers. The low-cost carrier business model has also made it possible for carriers who had no incentive or desire to pursue new prospects to fly routes that had never before been serviced. Multiple business activities such as collaboration, partnerships and acquisitions are done to promote such businesses. Airlines now provide service to more locations as a result, enabling passengers to travel to more locations. Several major airline companies are focused on offering collaborative strategies to operate low-cost carrier services, this element is observed to open lucrative opportunities for the market’s growth.
The narrow body segment dominated the market with the highest market share in 2022. The segment will continue its dominance due to the lower fare prices. The short-haul low-cost carrier operates on a maximum of four-hour routes. The low-cost carrier is preferably used for short routes rather than longer routes. Low-cost carriers mostly focused on the short-haul segment due to the higher profitability than the long-haul segment.
The wide body segment is anticipated to experience significant growth during the forecast period. The long-haul carriers contain more than 200 passengers at a time. They provide all the facilities to their passengers. The long-haul carrier includes the most popular aircraft like the Boeing 777 variant, a larger version of the 787, another larger version of the 767, the Airbus A330 variant, the Airbus A350 variants, Airbus A340 variants, Airbus A380, and the iconic Boeing 747.
The individual segment dominated the market with the highest revenue share in 2022. The growth of the segment is attributed to the increasing use of low-cost carrier aircraft for tourism purposes. The larger amount of the population is looking for an affordable and quick source of transportation, this element is observed to promote the growth of the individual segment.
The commercial segment is expected to dominate the market with the highest share during the forecast period. The growth of the segment is attributed to the increasing commercialization across the world. Low-cost carriers offer many benefits with regard to the commercial traveler resulting in greater demand for the segment.
Asia Pacific dominated the market with the largest market share in 2022, the market in Asia Pacific is expected to maintain its position during the forecast period. The growth of the market is attributed to the increased population in the region. The increasing population mainly increased in middle-class and upper-middle-class populations is expected to drive the growth of the market in the region. The shift in lifestyle preferences and traveling habits would also be likely to fuel the growth of the aviation market. Increasing government initiatives for affordable air travel services mainly in countries such as China and India are predicted to highlight the market’s growth in Asia Pacific.
North America is expected to increase its market share during the forecast period. The growth of the region is attributed to the increasing disposable income of the consumers in these regions. The United States carries 30% of the global domestic airline market. The growth of the low-cost carrier is due to its lower fare prices. The rising domestic flights for commercial and personal purposes along with the competitive nature of the overall aviation industry in the region promote the growth of the market.
Segments Covered in the Report:
By Aircraft Type
By Distribution Channel
By Operations
By Application
By Geography
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