Low Cost Airlines Market Size, Share, Competitive Landscape and Trend Analysis Report, by Purpose, by Destination : Global Opportunity Analysis and Industry Forecast, 2024-2034

Key Market Dynamics 

Low cost airlines have grown exponentially worldwide over the past few years, owing to rise in economic activities, ease of travel, development of the travel & tourism industry, rapid urbanization, changes in lifestyle, consumers preference for low-cost service along with non-stops, and frequent service. Moreover, increase in purchasing power of middle-class households, especially in developing regions, and high internet penetration coupled with e-literacy notably contribute toward the growth of the global low cost airlines market. However, factors such as volatile crude oil prices and increase in terrorism & crime rate, political uncertainty, & natural calamities hinder the low cost airlines market growth. Furthermore, an increase in cases of COVID-19 led to travel restrictions, which severely affected the low cost airlines industry.

Improvement in economic condition and surge in disposable income are significant factors that propel the growth of the low cost airlines market. After the 2009 economic crisis in Europe and the economic crisis in China, the world economy witnessed a standstill. However, a strong recovery from the crisis resulted in notable economic growth, especially in developing economies, and has led to an increase in disposable income among the middle-income groups. In addition, disposable income of individuals in Asia-Pacific has witnessed a high growth rate, thus acting as a major driver for boosting the low cost airlines market size. 

Moreover, transportation through airlines provides a significant support to economic development. The current trend of increasing connectivity of major cities of high economic activity enables the transfer of goods, people, capital, technology, and ideas. Moreover, the price to consumers of air transport, meanwhile, continues to decrease, after adjusting for inflation, owing to the introduction of low cost airlines and highly competitive rivalry among the airlines. 

Strategic partnerships and alliances have created significant opportunities in the global low cost airlines market by enabling carriers to expand their reach, optimize resources, and enhance customer offerings without incurring substantial costs. Through code-sharing agreements, joint ventures, and collaborations with other airlines, airports, and travel-related businesses, low-cost carriers can access new routes, increase passenger traffic, and improve operational efficiency. These partnerships often lead to shared marketing efforts, loyalty program integration, and streamlined connectivity, which attract more customers and promote brand loyalty. In addition, alliances with hotels, car rental agencies, and tour operators allow budget airlines to provide comprehensive travel packages, diversifying revenue streams and improving the overall customer experience. Thus, by leveraging the strengths of their partners, low cost airlines are anticipated to mitigate risks associated with market entry, navigate regulatory challenges in foreign markets, and benefit from economies of scale in areas such as aircraft procurement, maintenance, and training. Ultimately, these strategic collaborations have driven growth, innovation, and competitiveness in the global low cost airline sector, making air travel accessible and affordable for passengers worldwide. 

Value Chain of Low-Cost Airlines

The value chain of low cost airlines centers on maximizing efficiency and minimizing expenses across all operations. These carriers typically employ a simplified fleet with a single aircraft type, operate point-to-point routes to avoid costly hub systems, and utilize secondary airports with lower fees. They prioritize quick turnaround times and high aircraft utilization to maximize revenue. Onboard services are minimal, and ticket sales are primarily conducted online to reduce distribution costs. Low cost airlines also focus on generating ancillary revenue through add-ons and maintain a lean workforce with multi-tasking employees. Fuel hedging is often used to manage costs. By streamlining operations and eliminating non-essential services, low cost carriers can offer competitive fares while maintaining profitability, creating a no-frills experience that appeals to budget-conscious travelers.

Lower-cost U.S. Carriers Expansion in the U.S. Market

The expansion of lower-cost carriers in the U.S. market has significantly reshaped the airline industry. Airlines such as Southwest, Spirit, and Frontier are increasing their market share by offering competitive pricing and expanding their route networks. The growth is driven by a surge in demand for affordable travel options, prompting these carriers to enhance their services and destinations. Moreover, the rise of budget-friendly airlines fostered greater competition, which has led to better deals for consumers and prompting traditional airlines to adjust their pricing strategies to retain market share.

Market Segmentation 

The global low cost airlines market is segmented into purpose, destination, distribution channel, and region. By purpose, the market is segregated into leisure travel, visiting friends & relatives (VFR) , and business travel. By destination, the market bifurcated into domestic and international. By distribution channel, the market is fragmented into online, travel agency, and others. Region wise, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. 

Regional/Country Market Outlook 

• The growth rate of low cost airlines market demand in the Asia-Pacific region has been rapid, driven by an increase in air travel demand, economic growth, and a rise in middle class. For instance, India's IndiGo has seen rapid expansion, becoming the country's largest airline with a significant market share. Similarly, AirAsia, headquartered in Malaysia, has expanded its operations across several countries, establishing a dominant presence in Southeast Asia. In Vietnam, VietJet Air has experienced substantial growth, which has captured a significant portion of the domestic market and expanding its international routes. The growth rate in Asia-Pacific is also supported by liberalized air travel policies and investments in aviation infrastructure. According to various market analyses, the Asia-Pacific low cost airline market sector has been growing at an average annual rate of around 6%-8%, significantly outpacing the global average, highlighting its dynamic and rapidly evolving nature. 

• The growth rate of low cost airlines market in the LAMEA region has been extensive, driven by increase in demand for affordable air travel and expanding middle-class populations. For instance, in Latin America, low-cost carriers like Brazil's Gol Linhas Aéreas and Mexico's Volaris have reported significant growth, with Volaris expanding its domestic and international routes and capturing a larger market share. In the Middle East, Flydubai has experienced rapid expansion, serving over 90 destinations and contributing to the region's aviation growth by offering budget-friendly options compared to traditional carriers. In Africa, airlines such as Fastjet have employed into the rise in demand for air travel across the region, which provides cost-effective solutions for intra-regional travel. These airlines have leveraged the growth in preference for budget travel among price-sensitive consumers, robust tourism sectors, and the development of regional airports to sustain their growth. Consequently, the LAMEA low-cost airline market continues to expand at a rapid pace, reshaping the low cost airlines market share landscape in these regions.

Industry Trends: 

• The increased adoption of digital technologies has set a significant industry trend in the global low cost airlines market growth by transforming operations and enhancing customer experiences. Airlines have leveraged advanced digital platforms for efficient ticketing, check-in, and boarding processes, reducing operational costs and streamlining workflows. Mobile apps and websites offer user-friendly interfaces for booking and managing travel, providing passengers with greater convenience and control. Furthermore, data analytics and AI are being used to optimize flight schedules, pricing strategies, and maintenance operations, leading to improved efficiency and cost savings. In-flight services have also been enhanced through digital innovations, including Wi-Fi connectivity and personalized entertainment options. By embracing these technologies, low-cost airlines can better meet customer expectations, drive ancillary revenue through targeted offers, and maintain competitive advantage in a rapidly evolving market. 

• The expansion of route networks to secondary and tertiary cities has set a significant trend in the global low cost airlines market by entering into underserved and high-potential areas, thereby driving growth and market penetration. By targeting smaller cities, low cost carriers (LCCs) can access new customer bases that were previously reliant on alternative transportation modes or more expensive legacy carriers. The strategic move reduces congestion at major airports and allows LCCs to offer competitive fares, attracting cost-sensitive travelers. Moreover, these routes often face less competition, which enables airlines to establish strong market positions and foster local economic growth through increased tourism and business travel. Thus, focus on secondary and tertiary cities ultimately enhances the overall network efficiency and profitability of low cost airlines market opprtunities. 

Competitive Landscape 

The major players operating in the low cost airlines market include Air Arabia PJSC, AirAsia Group Berhad, Alaska Air Group, Inc., Azul S.A., easyjet Plc, New World Aviation, Inc., Norwegian Air Shuttle ASA, Qantas Airways Limited, Ryanair Holdings Plc., and Westjet Airlines Ltd. 

Other players in low cost airlines market include Southwest Airlines, JetBlue Airways, Spirit Airlines, Frontier Airlines, Wizz Air, Vueling Airlines, Pegasus Airlines, Indigo, SpiceJet, Cebu Pacific, and others. 

Recent Key Strategies and Developments 

• In June 2023, SkyUp Airlines LLC has planned to operate charter flights to the U.S. with a fleet of single-aisle Boeing 737s after the U.S. Department of Transportation granted the airline a license to operate foreign air freight with a new simplified process. 

• In May 2023, Scoot completed an agreement to use Embraer's E190-E2 to expand its fleet as the low-cost airline seeks to strengthen its presence in Southeast Asia. 

• In May 2023, Boeing and Ryanair announced an agreement for the low-cost airlines, with an order for up to 300 Boeing 737 Max 10s to strengthen their presence in the global market.  

• In February 2023, Air India Ltd. has signed a contract with Airbus SE and Boeing to procure jetliners and increase its portfolio of jetliners. 

• In October 2022, Indigo India, has planned four new domestic routes to expand its extensive network in India, which now includes 74 destinations. From October 30, 2023, the airline has launched 2 routes, 4 times/week between Ahmedabad (AMD) and Jammu (IXJ) and between Ranchi (IXR) and Bhubaneshwar (BBI) . 

Key Sources Referred 

1. Federal Aviation Administration (FAA)  

2. Bureau of Transportation Statistics (BTS)  

3. International Civil Aviation Organization (ICAO)  

4. Civil Aviation Authority (CAA)  

5. Eurocontrol 

6. European Union Aviation Safety Agency (EASA)  

7. Australian Government Department of Infrastructure, Transport, Regional Development and Communications 

8. Transport Canada 

9. Japan Civil Aviation Bureau (JCAB)  

10. Civil Aviation Administration of China (CAAC)  

Key Benefits For Stakeholders

• This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the low cost airlines market analysis from 2024 to 2034 to identify the prevailing low cost airlines market opportunities.
• The market research is offered along with information related to key drivers, restraints, and opportunities.
• Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
• In-depth analysis of the low cost airlines market segmentation assists to determine the prevailing market opportunities.
• Major countries in each region are mapped according to their revenue contribution to the global market.
• Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
• The report includes the analysis of the regional as well as global low cost airlines market trends, key players, market segments, application areas, and market growth strategies.