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Low Cost Carrier Market Size, Share & COVID-19 Impact Analysis, By Aircraft Type (Narrow Body, Wide Body, and Others), By Destination (Domestic and International), By Haul (Long Haul and Short Haul), and Regional Forecast, 2024-2032

Last Updated: May 27, 2024 | Format: PDF | Report ID: FBI108420

 

KEY MARKET INSIGHTS

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The global low cost carrier market size was valued at USD 270.42 billion in 2023 and is projected to grow from USD 316.97 billion in 2024 to USD 1054.19 billion by 2032, exhibiting a CAGR of 16.2% over the forecast period.

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A low-cost airline is an airline that does not offer the traditional services usually included in the ticket price, thus offering lower fares but less comfort. Low-cost airlines have a lower operating cost structure than other airlines. These companies offer discounted tickets to passengers but compensate for the loss by charging extra for food, priority boarding, seat assignment, and baggage.  In addition, many low-cost airlines have only one aircraft type in their fleet, reducing the required crew training. For price reasons, some aircrafts land at small airports in crowded cities rather than the busiest ones.


Low-cost airlines have grown exponentially globally in recent years due to increased economic activities, ease of travel, growth of the tourism industry, rapid urban commoditization, changing lifestyles, and consumer preferences for low-cost and non-aviation services. Similarly, due to an increase in last-minute bookings and uncertainty surrounding international travel, low cost carriers (LCC) offers customers more flexibility in canceling and changing their trips. Such factors are anticipated to contribute to the low cost carrier market growth during the forecast period. However, during the COVID-19 pandemic, the market growth decreased by 35.20% in 2020 compared to 2019. According to ACI, post-COVID-19, passenger trips decreased by about 59% compared to 2019.


Low Cost Carrier Market Trends


Airlines Adopting Point-to-Point Model is the Latest Trend in the Market


Point-to-point networks connect directly to a set of locations without disrupting service, even if the route is not direct. The star network connects each location through a single intermediate site called the hub.  The point-to-point business model in the airline industry refers to a system where airlines fly passengers directly between specific city pairs without intermediary stops or hubs. The point-to-point models aim to reduce travel time, increase convenience, and often result in more competitive pricing due to lower operational costs.


Low cost airlines are adopting this model owing to various factors such as efficiency, cost savings, simplified operations, direct demand, fare structure, quick turnaround, and others. Furthermore, this model allows airlines to serve a broader range of destinations. While other carriers might concentrate their services around major hubs, LCCs can connect secondary and regional airports, tapping into other markets.  Another aspect of this model is the ease of scheduling networks or routes based on seasonal demand or emerging trends without adjusting their fleets. Such factors are the reason for the high adoption rate amongst airlines and is an emerging trend.


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Low Cost Carrier Market Growth Factors


Low Maintenance Costs Associated with Aircrafts Drives Market Growth


The low maintenance cost associated with aircraft operated by low cost carriers plays a significant role in driving the market growth. Modern aircrafts used by LCCs are designed for quick turnaround times. This means they spend less time on the ground between flights, resulting in higher aircraft utilization and revenue generation. Reduced downtime also means low maintenance cost of the aircrafts and increased operational use.


LCC typically operates many standard aircraft types, allowing them to negotiate favorable terms with aircraft manufacturers and maintenance providers. In May 2023, Malaysia's MYAirline signed an auxiliary power supply (APU) maintenance contract with Honeywell for its fleet of 22 Airbus A320s. Honeywell will help MYAirline reduce flight delays and cancellations through annual maintenance cost planning and predictive trend-tracking programs.


In September 2022, GA Telesis Engine Services (GATES), a global jet engine maintenance supplier, and Lion Air entered into a long-term engine maintenance agreement. Lion Air, the largest airline in Indonesia and the second-largest low-cost airline in Southeast Asia, has signed an agreement to supply its fleet of Boeing 737NG aircraft.  


Rising Air Passenger Travel Owing to Reduced Fares to Drive Market Growth


The affordability of low cost carriers attracts a wide range of travelers. Reduced fares make air travel accessible to various air passenger classes. Air travel has gained popularity as the industry offers more flights and lower fares after deregulation. Fares are now the main competitive factor of airlines. Increased efficiency, better utilization of LCC fleets, and reduced costs allow them to offer significant discounts on airfares.


Most customers want to reach their destination quickly and inexpensively and will waive inflight food and entertainment to save money. This desire to save money also extends to business travelers as companies increasingly focus on reducing travel bills. Widespread adoption of ticketless travel and internet-based delivery has benefited LCCs. This reduces the need for complex and expensive ticketing systems traditional airlines use to manage their complex fare structures. The cost per available seat in kilometers is USD 6.16 for a full-service carrier, and that of LCC is USD 3.07. Such factors contribute to the rise in air passenger demand and drive the LCC market.


RESTRAINING FACTORS


Thin Profit Margin Owing to Intense Competition to Hinder Market Growth


Low-cost airlines rely heavily on secondary revenue to make a profit. Cheap airfares are sometimes non-profitable for the airline. Due to this, airlines are exploring options to monetize ancillary sources, including revenue from checked baggage, in-flight snacks, and pre-sale seats. Many airlines, such as GoAir, Jet Airways, Air Sahara, Kingfisher Airlines, and others, file for bankruptcy due to the high overhead expense. Other factors that result in thin profit margins are limited networks, high infrastructure costs, high fuel costs, restrictive air service agreements (ASAs), and others.


Moreover, there is high competition in this market for fares, on-time arrivals and departures, service offered, routes covered, and others. Many airline operators incur losses to give discounted fares and services to retain a competitive edge in the market. Such factors are a major restraining factor for the market growth.


Low Cost Carrier Market Segmentation Analysis


By Aircraft Type Analysis


Wide Body Segment Dominates the Market Owing to the Increased Fleet Size by LCC Operators 


By aircraft type, the market is segmented into narrow body, wide body, and others. The wide body segment is the dominating and fastest-growing segment during the forecast period. The segment's growth is due to the fleet expansion done by LCC operators. Center for Aviation and Official Airline Guide (OAG) showed that LCCs across the globe were operating just 133 wide body aircraft as of July 1, 2023.


The narrow body segment is anticipated to grow significantly during the forecast period. Technical advancements in narrow body have increased their capabilities for flying longer distances, such as Boeing B737 and Airbus A320. Such factors drive the growth of the segment during the forecast period.


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By Destination Analysis 


International Segment Dominates the Market Owing to the Rising Number of Routes  


Based on destination, the market is divided into domestic and international. The international segment dominates this market owing to the growing number of international routes from airline operators to expand their business. In July 2023, FlyArystan, Kazakhstan's leading low cost airline, expanded its international operations with flight routes to China. For the first time, the LCC will connect Kazakhstan's capital, Astana, with Urumqi in China's Xinjiang region.        


Domestic is anticipated to be the fastest-growing segment due to increased air passenger travel in LCC due to reduced airfare, standard aircrafts, point-to-point routes, and others. Business travelers can switch to traditional airlines and premium cabins for more affordable alternatives for domestic destinations, allowing low-cost carriers to remain entrenched in the travel market amid increased tourism across countries such as the U.S., U.K., India, and others. For instance,



  • In January 2024, Indigo announced six new domestic routes; the airline will be operating direct flights from Ahmedabad to Rajkot, Ahmedabad to Aurangabad, Bhopal to Lucknow, and Indore to Varanasi. The airline has also announced direct flights between Kolkata-Srinagar and Kolkata-Jammu from April 10, 2024 and April 21, 2024.


By Haul Analysis


Long Haul Segment Dominated the Market Owing to Low Priced Business Models


By haul, the market is bifurcated into long haul and short haul. The long haul segment dominated the market in 2023. Long haul destinations are highly attractive amongst air travelers owing to the low price range and single-route flights. With the rise in demand, various LCC operators are increasing long haul routes. Owing to this, the segment is also anticipated to be the fastest-growing during the forecast period.


The short haul segment is projected to show significant growth during the study period. The rise in corporate travel with scheduled routes and low prices is a major factor in the segment's growth.


REGIONAL INSIGHTS


Geographically, the market is divided into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.


Asia Pacific Low Cost Carrier Market Size, 2023 (USD Billion)

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Asia Pacific held the largest market share in 2023. The region was valued at USD 104.73 billion in the year 2023.  The regional growth is due to the improved low cost carrier network to promote untapped routes and intra-regional travel. In May 2023, Indigo announced new direct flights between several cities in India and the Middle East. Newly introduced routes include Bengaluru-Dubai, Kochi-Bahrain, Lucknow-Dammam from June 1st, 2023, and Ahmedabad-Jeddah from August 11th, 2023.


Europe holds the second-largest market share in this market. The rise in share is due to the presence of various low cost airline operators in the region. For instance, Ryanair, Wizz Air, Eurowings, EasyJet Switzerland, and others.  Ryanair is the largest low cost airline in Europe and second largest in the world. Such factors contributed to the rise in regional growth during the study period.


The North American market held a significant market share in 2023. The growth is attributed to the rise in demand for low cost carriers in the country. The region has a large number of low cost carriers and these carriers have large fleet and travel destinations. For instance,  the Southwest major low cost carrier in the U.S. currently serves over 100 destinations in 42 states and multiple Central American destinations and has a fleet of 821 Boeing 737 narrow body aircraft.


The Middle East & Africa is anticipated to witness moderate market growth during the forecast period. The growth in the market is due to the significant growth in number of air passengers in the region. In addition, the increasing investment by airline operators to deliver enhanced in-flight experiences to passengers is driving the market growth.


Latin America is projected to show moderate growth during the forecast period. The rise in LCC across the region is due to increased investment activities to boost air travel and enhance aviation capabilities. In June 2023, Brazilian carriers Gol and Azul signed an agreement with creditors to reduce debt and financial obligations to a more manageable level. The dominant players in the sector have embarked on business consolidation and forging new avenues, with investors pouring in billions of dollars to support the recovery.


List of Key Companies in Low Cost Carrier Market


Leading Players Focus on Expansion of LCC Fleets to Meet the Rising Demand of Air Travelers  


The global market of low cost carriers is relatively consolidated with key players, such as Air Asia (India), Ryanair (Ireland), Indigo (India), Scoot (Singapore), Southwest Airlines (U.S.), and others, who focus on market expansion activities by using low cost carrier fleets. Low cost airlines adhere to a high degree of uniformity and standardization. For example, all the aircrafts in Ryanair's fleet are Boeing 737s. Additionally, key players are focused on expanding the LCC fleet as it is cost-efficient and negotiable. In August 2023, Flynas, Saudi Arabia’s low cost carrier, launched new airline routes for its expansion.


LIST OF KEY COMPANIES PROFILED:



  • Air Asia (India)

  • Ryanair (Ireland)

  • Indigo (India)

  • Scoot (Singapore)

  • Southwest Airlines (U.S.)

  • Eurowings (Germany)

  • flydubai (UAE)

  • Virgin Australia (Australia)

  • JetBlue Airlines (U.S.)

  • Wizz Air (Hungary)

  • Spirit Airlines (U.S.)


KEY INDUSTRY DEVELOPMENTS:



  • June 2023 A Ukrainian low-cost airline, SkyUp Airlines LLC, plans to operate charter flights to the U.S. with a fleet of single-aisle Boeing 737s after the U.S. Department of Transportation granted the airline a license to operate foreign air freight with a new simplified process.

  • May 2023 – Singapore Airlines' Scoot has completed an agreement to use Embraer's E190-E2 to expand its fleet as the low-cost carrier seeks to strengthen its presence in Southeast Asia.

  • May 2023 – Boeing and Ryanair have announced an agreement for the low-cost airlines, with an order for up to 300 Boeing 737 Max 10s. The contract is worth USD 40 billion, on the condition that Ryanair will order 150 planes.

  • February 2023- Air India Ltd. has signed a contract to procure jetliners with Airbus SE and Boeing.  With this contract, the company became the largest purchaser of jetliners in commercial aviation. Airbus has secured a total of 250 orders, which included 120 A320 single aisle and 40 A350s wide-bodies. The airline contracted an award of 290 aircrafts, including 190 B737 max, 20 Dreamliner 787, and 10 Boeing 777x aircrafts. The contract also provided an option to purchase an additional 50B737 max.

  • October 2022- LCC, Indigo India, has planned four new domestic routes, expanding its extensive network in India, which now includes 74 destinations. From October 30, 2023, the airline will launch 2 routes, 4 times/week between Ahmedabad (AMD) and Jammu (IXJ) and between Ranchi (IXR) and Bhubaneshwar (BBI).


An Infographic Representation of Low Cost Carrier Market

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REPORT COVERAGE


The low cost carrier market research report provides a detailed market analysis. It comprises all major aspects, such as R&D capabilities, supply chain management, competitive landscape, and optimization of the capabilities and opportunities for the LCC market. Moreover, the market report offers insights into the market dynamics analysis, global market share, and primarily highlights key industry developments. In addition to the above-mentioned factors, it mainly focuses on several factors that have contributed to the global market growth over recent years.


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Report Scope & Segmentation






















































ATTRIBUTE



DETAILS



Study Period



2019-2032



Base Year



2023



Estimated Year



2024



Forecast Period



2024-2032



Historical Period



2019-2022



Growth Rate



CAGR 16.2% from 2024 to 2032



Unit



Value (USD Billion)



Segmentation



By Aircraft Type, By Destination, By Haul, and By Geography



By Aircraft Type



  • Narrow Body

  • Wide Body

  • Others



By Destination



  • Domestic

  • International



By Haul



  • Long Haul

  • Short Haul



By Geography



  • North America (By Aircraft Type, Destination, Haul, and Country)


    • U.S. (By Aircraft Type)

    • Canada (By Aircraft Type)


  • Europe (By Aircraft Type, Destination, Haul, and Country)


    • U.K. (By Aircraft Type)

    • Germany (By Aircraft Type)

    • France (By Aircraft Type)

    • Italy (By Aircraft Type)

    • Nordic Countries (By Aircraft Type)

    • Russia (By Aircraft Type)

    • Rest of Europe (By Aircraft Type)


  • Asia Pacific (By    Aircraft Type, Destination, Haul, and Country)


    • China (By Aircraft Type)

    • India (By Aircraft Type)

    • Japan (By Aircraft Type)

    • South Korea (By Aircraft Type)

    • Australia (By Aircraft Type)

    • New Zealand (By Aircraft Type)

    • Rest of Asia Pacific (By Security Type)


  • Middle East & Africa (By    Aircraft Type, Destination, Haul, and Country)


    • UAE (By Aircraft Type)

    • Saudi Arabia (By Aircraft Type)

    • Kuwait (By Aircraft Type)

    • Israel (By Aircraft Type)

    • Rest of Middle East & Africa (By Aircraft Type)


  • Latin America (By    Aircraft Type, Destination, Haul, and Country)


    • Brazil (By Aircraft Type)

    • Argentina (By Aircraft Type)

    • Mexico (By Aircraft Type)


  • Rest of Latin America (By Aircraft Type)






Frequently Asked Questions

As per a study by Fortune Business Insights, the market size was USD 270.42 billion in 2023.

The market is likely to grow at a CAGR of 16.2% over the forecast period (2024-2032).

Wide Body segment is expected to lead the market due to the rise fleet size.

The market size in Asia Pacific stood at USD 104.73 billion in 2023.

Low maintenance cost associated with aircrafts is a major driving factor for the market growth.

Air Asia (India), Ryaniar (Ireland), Indigo (India), Scoot (Singapore), Southwest Airline (The U.S.), and others

China dominated the market of low cost carrier market in 2023.

Thin profit margin owing to intense competition is a restraining factor.

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