More than $240 billion of growth in the low-cost carrier market is expected in the next few years. It comes as many low-cost airlines such as Ryanair, Wizz, and easyJet have seen success as the airline industry recovers from the pandemic.
The growth is expected to slow slightly at a compound annual growth rate (CAGR) of 15.15% during the forecast period. Despite the slight deceleration, the overall growth is expected to continue, doubling in the next 15 years.
More growth on the way
Between 2022 and 2027, the low-cost carrier market will grow at an estimated $248.65 billion, according to market research company Technavio. The market is segmented into service, type, and geography. The service group includes passenger and cargo operations, while type refers to narrowbody and widebody aircraft operating. Geography includes Asia-Pacific (APAC), North America, Europe, Middle East, Africa, and South America.
The market’s growth in the passenger segment will be significant during the forecast period, according to Technavio. The increase in numbers is mainly due to more passengers flying worldwide as the pandemic has eased. Last year, about 5 billion people flew globally, a 4% increase over the numbers in 2021. The marketing research company explained that the growth will continue for several years.
“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.”
Photo: Balta Mihaita Sorin/Shutterstock
The market is also broken up by the differences that each airline brings. To increase their market share, bigger, more prominent carriers have been providing additional services on flights, such as entertainment and food. Due to strict safety and regulatory rules and sizable investments, few additional carriers are expected to join the market during the five-year period.
Get the latest aviation news straight to your inbox: Sign up for our newsletters today.
Key vendors
The company said that expansions geographically might be notable in the development of product portfolios of airlines as they expand their presence in the market. Referring to carriers as vendors, Technavio shared four low-cost carriers in its report that are considered “key vendors.”
Photo: Dzerkach Viktar/Shutterstock
Cebu Pacific offers low fares, allowing customers to benefit from heavy discounts for plane seats in a particular time slot. Lion Air reportedly offers low-cost carriers to cargo and commercial customers across Southeast Asia.
easyJet features low-cost carriers through its website, including tickets at lower prices. Jet2 also showcases low-cost carriers through its website, where travelers can book at lower prices.
Increasing “efficiency and profitability”
Regarding market dynamics, the major trends include the rising preference by airlines to operate at smart airports.
“Smart airports ensure a seamless exchange of information among airport operators, airlines, and passengers,” the company explained. “These airports can increase the efficiency and profitability of aviation stakeholders during volatile economic conditions.”
Other trends include an increasing demand for luxury air travel, while increased operating expenses and the slowing of global trade are some of the key challenges for the market.
Source: Technavio
