Global Low-Cost Carrier Market To Reach $315 Billion By 2028

Summary

• Low-cost carriers have played a major role in the recovery of the global airline industry, attracting leisure and business travelers alike.
• The global low-cost airline market is projected to reach $315.4 billion by 2028, with a compound annual growth rate of 8.7%.
• The rise in domestic travel, tourism, and the convenience of online booking and touchless check-in are key drivers of the growth in the low-cost airline market.

Global air travel is on the rise after waves of pandemic-related disruptions in the last few years. Most airlines worldwide have completely recovered from the downturn and are looking ahead for further growth. Low-cost carriers play a major role in providing an efficient and economical way of travel for those who wish.

Globally, low-cost carriers have not only attracted leisure travelers but also made their mark in the business and vacation sectors. With the strong aviation recovery, particularly with the low-cost carriers, the global low-cost airline market will hit $189.1 billion in 2022. The number will only grow in the next five years, with an expected $315.4 billion low-cost market by 2028.

Low-cost airlines

Low-cost airlines, as the term suggests, are budget carriers that make affordable travel options possible for those who wish to choose one. These airlines offer fewer amenities while committing to safe travel between point A and point B. Such airlines rely on ancillary revenues by offering food for purchase onboard, selling carry-on baggage separately, early boarding fees, and seat selection fees.

Low-cost carriers generally fly to secondary airports, where they enjoy cheaper airport fees compared to larger hub airports. Low-cost carriers are also known to operate only one or two aircraft types, thereby minimizing their operating cost. For example, the world’s largest low-cost carrier by fleet size, Southwest Airlines, operates a fleet of over 950 Boeing 737 family aircraft. Having a single type across its entire fleet minimizes operational costs such as training, flight operations, and maintenance.

The projected growth

In recent years, particularly during the time of global economic instability, low-cost carriers have seen tremendous growth in terms of passenger volumes. As such, the airlines have expanded their network and grown their fleet to fulfill the increasing travel demand. While most low-cost carriers have reached pre-pandemic passenger volumes, especially in their respective domestic markets, they are on the path to further growth.

In the next five years, the global low-cost market is expected to see a compound annual growth rate (CAGR) of 8.7%, a remarkable rate. As such, between 2023 and 2028, the low-cost airline market will reach $315.4 billion, a whopping 65% overall growth in five years.

Key drivers of the growth

The global pandemic restricted air travel for what seemed like a lifetime. Travelers have not only been eager to return to normal, they are ready to explore everything that the aviation industry has to offer. The rise in domestic travel has significantly increased worldwide, with passengers choosing low-cost air travel options over other means. Similarly, tourism is driving low-cost market growth.

Online booking and touchless check-in and boarding processes have provided ease of access to air travelers. With more efficient booking platforms and hassle-free airport transitions, travelers are choosing low-cost options over other modes of travel.

With the low-cost airlines’ focus on secondary airports, smaller cities are connected, thereby providing non-stop flights between smaller city pairs. This is also driving the market growth.

More and more business personnel are keen to explore efficient, low-cost options for air travel, particularly when it is a short hop. The increased demand from the business travel community brings in much-needed growth for low-cost carriers.

What are your thoughts on the anticipated market growth for low-cost carriers? Tell us in the comments section.

Source: Cision PR Newswire