LOW COST, HIGH GROWTH

The global low cost airlines market was valued at $117,726 million in 2016, and is projected to reach $207,816 million in 2023, registering a CAGR of 8.6% from 2017 to 2023.

The development of the travel & tourism sector fosters the growth of the low cost airlines market. Low cost airlines are passenger airlines, which offer travelling service tickets at relatively cheaper rate compared to other airlines (full service or traditional airline). Low cost airlines are also known as “no frills airlines,” “prizefighters,” “low-cost carriers (LCC),” “discount airlines,” and “budget airlines.” Some of the popular low cost airlines include Ryanair and EasyJet.

In 2016, the global scheduled airline passenger was estimated to be 3.8 billion; and around 28% of these passengers were carried by low cost airlines. However, the distribution/penetration of low cost airlines is equally distributed. For instance, in LatviaEurope, around 80% of the passengers are flown by low-cost carriers; whereas, in Africa, nearly half of the countries have no low cost airline service.

The growth of the market is attributed to the rise in economic activity, ease of travel, travel & tourism industry, urbanisation, changes in lifestyle, consumers’ preference for low cost service along with non-stops, and frequent service, increase in purchasing power of middle class households especially in the developing regions, and high internet penetration coupled with e-literacy.

However, factors such as volatile crude oil price and increase in terrorism & crime rate, political uncertainty, & natural calamities hinder the market growth. Conversely, sustainable airport governance, operational & financial improvement is anticipated to leverage the growth of the low cost airlines market.

Nevertheless, factors such as high investment & operational cost but low profitability is anticipated to be a major challenge of the low cost airlines industry.

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