The low-cost carrier market is estimated to grow by USD 249 billion between 2022 and 2027, however, the growth momentum will decelerate at a CAGR of 15.15% during the forecast period.
The market is segmented by service (passenger service and cargo service), type (narrow body and wide body), and geography (APAC, North America, Europe, Middle East and Africa, and South America). To understand more about the low-cost carrier (LCC) market, request a sample report.
The market growth in the passenger service segment will be significant during the forecast period. The growth of the segment is primarily driven by the increasing number of air passengers worldwide.
For instance, in 2022, the global passenger footfall stood at 5 billion. This was a 4% increase over the previous year's value. This number is anticipated to double in the next 15 years due to the rapid growth in air travel in APAC.
Besides, the rising focus among vendors to use fuel-efficient aircraft to control operational expenditure has led aircraft OEMs to constantly improve their product offerings. This is expected to further drive the growth of the segment over the forecast period.
Low-Cost Carrier (LCC) Market Insights -
Vendors: 15+, including Air Arabia PJSC, Air Canada, Capital A Berhad, Cebu Pacific, Deutsche Lufthansa AG, easyJet Airline Co. Ltd., Fly LEVEL SL, InterGlobe Aviation Ltd., Jet2 Plc, Lion Air, Norwegian Air Shuttle ASA, PAL Holdings Inc., Pegasus Air Transport Corp., PT Garuda Indonesia (Persero) Tbk., Qantas Airways Ltd., Ryanair DAC, Singapore Airlines Ltd., Southwest Airlines Co., Vueling Airlines SA, WestJet Airlines Ltd., among others
Coverage: Parent market analysis; key drivers, major trends, and challenges; customer and vendor landscape; vendor product insights and recent developments; key vendors; and market positioning of vendors
Segments: Service (Passenger service and Cargo service), Type (Narrow body and Wide body), and Geography (APAC, North America, Europe, Middle East and Africa, and South America)
Global Low-Cost Carrier Market - Vendor Insights
The global low-cost carrier market is fragmented with the presence of many vendors. Prominent vendors are focusing on ensuring effective services by providing additional services such as entertainment and snacks to increase their market share.
The chances of new vendors entering the market are expected to be low during the forecast period due to the presence of stringent safety and regulatory norms and the need for substantial investments. Geographical expansions may play a significant role in developing the product portfolios of vendors and expanding the presence of vendors in the market. Some of the key vendors covered in the report include:
Major Trends –
- Rising preference for smart airports
- Growing demand for luxury air travel
- Increasing penetration of blockchain in the airlines industry
The rising preference for smart airports is identified as the major trend in the market. Smart airports ensure a seamless exchange of information among airport operators, airlines, and passengers. These airports can increase the efficiency and profitability of aviation stakeholders during volatile economic conditions. It involves the integration of all systems into a single digital grid. This allows sharing of real-time information and deep cross-silo collaborations, which improves operational efficiency.
In addition, the effectiveness of the airport infrastructure allows airline operators and airport authorities to access converged network architecture, thus reducing turnaround times for airlines and ensuring a better passenger experience. This trend will positively influence the growth of the market during the forecast period.
Key challenges –
- Increasing operating expenses
- The slowdown in global trade
- Stringent regulatory norms and operational challenges
The increase in operating expenses is identified as the major challenge affecting market growth. The US sanctions on Iran's oil exports and production has led to a surge in fuel prices.
In addition, the rise in labor costs has increased the overall operating expense (OPEX) of LCCs. In 2021, labor costs constituted approximately one-third of the overall operational costs of airline companies. This has been increasing significantly after being stable for many years and has contributed to the upward pressure on the cost units and affected the profit margins of LCCs.
In addition, increasing competition has compelled vendors to invest significantly in technology solutions to expand their digital presence as well as market penetration. All these factors are expected to have a negative impact on the growth of the market.
