An airline is a company that provides air transport services for traveling passengers and freight. Airlines utilize aircraft to supply these services and may form partnerships or alliances with other airlines for codeshare agreements. Generally, airline companies are recognized with an air operating certificate or license issued by a governmental aviation body.
A low-cost carrier or low-cost airline (also known as no-frills, discount or budget carrier or airline, or LCC) is an airline without most of the traditional services provided in the fare, resulting in lower fares and fewer comforts. To make up for revenue lost in decreased ticket prices, the airline may charge for extras such as food, priority boarding, seat allocating, and baggage.
The low-cost model focuses on business and operational practices that reduce airline costs. That means using secondary airports (with lower taxes), offering no frills on the flight and charging for services like seat reservation and checked-in baggage.
Low-cost carriers (LCCs) have gradually evolved to become a popular alternative to full-service airlines over the last 10-15 years, where price has become a critical factor in determining the carriers. Low-cost carriers (LCC) have become a popular alternative to traditional scheduled airlines over the last two decades.
The growth of the market is attributed to the rise in economic activity, ease of travel, travel & tourism industry, urbanization, 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.
Low cost airlines have grown exponentially worldwide over the past few years, owing to rise in economic activity, ease of travel, travel & tourism industry, urbanization, changes in lifestyle, consumer’s 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.
The global low cost airlines market is segmented based on purpose, destination, and distribution channel. By purpose, the market is divided into leisure travel, VFR, business travel, and others. By destination, it is bifurcated into domestic and international. Based on distribution channel, the market is classified into online, travel agency, and others.