Low Cost Carrier Market Trends

The trajectory of the low-cost carrier (LCC) market is poised for growth, bolstered by various factors influencing air travel globally. The Asia Pacific region, in particular, is expected to play a pivotal role in market penetration, fueled by increasing air travel due to rising income levels and economic growth. Despite the challenges posed by the COVID-19 pandemic, the worldwide commercial airlines managed to generate a revenue of USD 372 million in 2021, albeit experiencing a 55.6% decrease compared to 2020. Notably, air transportation contributes significantly to tourism, thereby fostering economic growth, especially in developing countries.

The scheduled passenger numbers witnessed an increase from 4.5 billion in 2019 to 4.7 billion in 2020 worldwide, accompanied by 41.2 million departures in 2020. This positive trend in passenger figures is anticipated to influence the low-cost carrier (LCC) market positively. In 2020, the total international scheduled passenger traffic reached 9.11 billion revenue passenger-kilometers performed (RPK), with Europe holding a substantial 26.8% market share. The region's large aircraft fleets and a well-established aero structures manufacturing industry are poised to drive demand for LCC in the European market.

The Middle East and Africa (MEA) region, with its unique geographical advantage, has witnessed the expansion of the aviation industry. The strategic positioning allows carriers in the region to reach 80% of the global population within eight hours of flying time, facilitating aggregated traffic and one-stop services in carrier routes. Government investments in tourism-related infrastructure projects further contribute to the market growth in the MEA region. The presence of iconic structures, lavish amenities, and tourist-centric services acts as a magnet, attracting visitors from Europe and North America to the Middle East.

In India, airlines are strategically expanding their fleets to cater to the surging domestic passenger traffic. The International Air Transport Association (IATA) reported an impressive 18.6% annual demand growth in India's domestic market. Leading carriers, such as Jet Airways and Vistara, are making substantial aircraft purchases to meet the growing demand for air travel in the country.

China, another major player in the global aviation landscape, has experienced a 10.9% growth in overall passenger traffic in 2021 compared to the preceding year. Factors such as the national day golden week travels and ticket price reduction policies to attract 5A tourists have contributed to this surge in air passenger traffic. The Civil Aviation Administration of China's approval of new route launches to Europe and the acquisition of Airbus A350-900 aircraft by airlines further propel the growth of the low-cost carrier (LCC) market in the country.