Impact of the Global Low-Cost Airline Market on the Aviation Industry

March 28, 2024

Low-cost airlines are making a big impact in today’s market and have become key players in the aviation industry. In fact, the Global Low-Cost Airline Market is projected to reach $440.46 billion by 2030, indicating a continued growth and rise in demand amongst consumers seeking cost-effective options for travel. While higher priced airlines have been experiencing struggles, many companies like Ryanair, Southwest, Wizz, and EasyJet have seen notable success in both the pre- and post-pandemic world, indicating a clear future for the aviation industry.

An Overview of Low-Cost Airlines

Low-cost carriers (LCCs) are budget passenger airlines that offer reduced pricing for services and flights. And although they may not possess all of the add-on amenities of a higher priced airline, LCCs have seen rising popularity over the past few years. This is because they fill a consumer need for affordability in a market that is widely expensive and arguably overpriced. From flight tickets to freight shipping, the price standard has more than doubled since COVID-19 first struck, effectively changing the industry for decades to come. Since the pandemic, travel demands have increased, with a higher influx of passengers and greater need for available flights – much to the frustration of the consumer. Within this market, “LCCs have accounted for approximately one-third of the global air travel industry,” making them a lucrative area of an industry that is turning its focus more on sustainability and lower carbon emissions for the future of travel.

The Secret to Low-Cost Airline Success

The LCC aspect of the airline industry owes its success to several factors. Since 2017, LCCs have seen a rise in popularity, though in more recent years this trend has really taken off. According to Allied Market Research, “improvement in economic condition and surge in disposable income are significant factors that propel the growth of low-cost airlines market.” Factors like strategic or simple pricing structure, using online and direct ticket booking, eliminating extra ground staff and vendors, utilizing single class seating, excluding add-on services like food and drink, and other modified features are what really distinguish LCCs, making them stand out amongst the competition – especially those that are focused on offering even higher-priced, first class features rather than cost-effective options.

Another aspect of LCCs involves the type of aircraft used. Typically, “single type aircraft with minimum equipment to reduce weight, acquisition and maintenance costs while increasing fuel efficiency” are a feature of LCCs, as well as flying out of secondary airports instead of main, heavily trafficked locations. While companies like Delta are buying hundreds of new Boeings for their inventory, budget airlines are focusing on smaller aircraft that are more cost effective.

Potential Pitfalls of Low-Cost Airlines

Conversely, there are potential hindrances and pitfalls that many established LCCs have already faced. One most notable occurrence was in December 2022, when over 2 million passengers were left stranded after thousands of Southwest Airline flights were canceled during a winter storm. The federal lawsuit resulted in major fines totaling over $140 million for Southwest, causing a huge blow to the airline’s credibility. Some also argue that economy or budget airlines do not have the financial stability, staff, or guarantee of safety needed for success. For example, Southwest Airlines has been dealing with an employee strike, with a tentative flight attendant union agreement only just recently established this March. These kinds of internal issues, as well as factors like “volatile crude oil prices and increase in terrorism & crime rate, political uncertainty, & natural calamities,” make the market for LCCs, and airlines as a whole, unreliable and unpredictable at times. But regardless of the issues seen by the LCC industry, there is a notable uptrend in the demand for future-focused and economically mindful airline travel options, ensuring the need for LCCs and more aviation professionals in the field.

Learning to Master the Skies

At Capitol Technology University, we offer programs that help students gain a professional edge in the field of Aviation. Through hands-on flight simulator training, a foundational pilot curriculum, and expert faculty and partners in the industry, your educational experience at Capitol Tech is tailored for your success. Learn more about our flight program by visiting our website.