Punta Cana, RD.- According to a recent report by ResearchAndMarkets.com, the global low-cost airline market reached a size of $189.1 billion in 2022 and is expected to experience substantial growth in the coming years.
Projections indicate that the market will reach $315.4 billion by 2028, showing a strong compound annual growth rate (CAGR) of 8.7% over the period from 2023 to 2028.
Low-cost airlines, also known as budget airlines or no-frills airlines, offer affordable air travel options for short-haul flights with fewer amenities compared to conventional full-service airlines. These airlines have adopted several profitable strategies, such as charging separately for services such as food, beverages, early boarding, carry-on luggage, and car rentals, to generate non-ticket revenue.
They also operate single-type aircraft with minimal equipment to reduce weight, acquisition and maintenance costs while increasing fuel efficiency. Additionally, low-cost airlines often use less congested secondary airports to reduce airport fees, air traffic congestion, delays, and ground time between flights.
Low-cost airline market key trends and drivers
- Increase in domestic travel and tourism : Significant increase in domestic travel and tourism is a key factor driving market growth. Travelers are opting for low-cost airlines to explore various domestic destinations affordably.
- Direct booking and ticketless travel : Major airlines offer tickets directly through telephone or online reservations, eliminating the need for outside agencies. This reduces transaction costs and service fees. The growing adoption of ticketless travel and increased internet penetration are also contributing to the growth of the market.
- Non-stop point-to-point flights : Low-cost airlines operate non-stop point-to-point flights, reducing travel time and improving aircraft utilization.
- Business trip : Business travelers are increasingly focused on minimizing travel time and costs, which is positively influencing the market.
- Discounted rates : Market players are putting emphasis on offering discounted fares for early bookings while improving passenger connectivity.
- Impact of COVID-19 : The decrease in the number of commercial flights due to the COVID-19 pandemic and related travel restrictions negatively affected the market. However, the market is expected to recover as travel restrictions ease.
Competitive landscape:
Key players in the global low-cost airline market include Air Arabia PJSC, Alaska Airlines Inc., Capital A Berhad (Tune Group Sdn Bhd), easyJet plc, Go Airlines (Wadia Group), IndiGo, Jetstar Airways Pty Ltd (Qantas Airways Limited), Norwegian Air Shuttle ASA, Ryanair Holdings PLC, Southwest Airlines Co., SpiceJet Limited, Spirit Airlines Inc. and WestJet Airlines Ltd.
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