Low-Cost Carrier Market is Expected to Globally Reach $595.1 Billion by 2032 at 12.1% CAGR: Allied Market Research

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Dec 04, 2023, 10:30 ET

Liberalization of aviation markets and open skies agreements, low maintenance costs associated with aircrafts, and growth of the tourism industry drive the growth of the global low-cost carrier market.

WILMINGTON, Del., Dec. 4, 2023 /PRNewswire/ -- Allied Market Research published a report, titled, "Low-Cost Carrier Market by Aircraft Type (Narrow Body Aircraft and Wide Body Aircraft), Destination (Domestic and International), and Haul (Short Haul and Long Haul): Global Opportunity Analysis and Industry Forecast, 2022-2032". According to the report, the global low-cost carrier industry size generated $196.1 billion in 2022, and is anticipated to generate $595.1 billion by 2032, witnessing a CAGR of 12.1% from 2023 to 2032.

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115 - Tables
60 - Charts
330 - Pages

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Prime determinants of growth

Factors such as liberalization of aviation markets and open skies agreements, low maintenance costs associated with aircraft, and growth of the tourism industry drive the growth of the low-cost carrier market. However, high competition, and fluctuations in fuel prices hinder the growth of the market. Furthermore, innovative service offerings from low-cost airlines, and adoption of latest technologies by LCCs for ticket sales, check-ins, baggage processing offer remarkable growth opportunities for the players operating in the low-cost carrier market.

Report Coverage and Details:

Report Coverage	Details
Forecast Period	2023–2032
Base Year	2022
Market Size in 2022	$196.1 billion
Market Size in 2032	$595.1 billion
CAGR	12.1 %
No. of Pages in Report	330
Segments Covered	Aircraft type, destination, haul, and region
Drivers	Liberalization of aviation markets and open skies agreements Low maintenance costs associated with aircraft Growth of the tourism industry
Opportunities	Innovative unbundled service offerings from low-cost airlines Adoption of latest technologies by LCCs for ticket sales, check-ins, baggage processing
Restraints	High competition Fluctuations in fuel prices

Impact of Russia-Ukraine War

The closure of airspace around the conflict zone in Eastern Europe has led low-cost carriers to cancel flights to nearby destinations resulting in revenue declines from lost ticket sales.
The economic ripple effects such as rise in consumer prices across Europe and supply chain issues may reduce discretionary spending on travel in the near-term limiting passenger growth for low-cost airlines.

The narrow body aircraft segment to maintain its leadership status during the forecast period

On the basis of aircraft type, the narrow body segment held the highest market share in 2022, accounting for nearly four-fifths of the global low-cost carrier market revenue, and is estimated to maintain its leadership status during the forecast period. The segment is also expected to register the highest CAGR of 12.3% from 2023 to 2032. Narrow body aircraft typically have a single aisle and are well-suited for short to medium-haul routes, providing an ideal solution for carriers focusing on point-to-point travel. These aircraft, such as the Boeing 737 and Airbus A320 families, offer a balance between fuel efficiency and passenger capacity.

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The domestic segment to maintain its leadership status during the forecast period

On the basis of destination, the domestic segment held the highest market share in 2022, accounting for nearly three-fourths of the global low-cost carrier market revenue, and is estimated to maintain its leadership status during the forecast period. Domestic routes remain the largest market for low-cost carriers, especially major players such as Southwest Airlines Co. in the U.S., Ryanair group in Europe, and AirAsia which have built significant market share on regional routes by stimulating demand with affordability. Moreover, government aviation firms have sought investments to further expand domestic air networks.

The international segment is projected to manifest the highest CAGR of 13.6% from 2023 to 2032. The international segment in the low-cost carrier market encompasses air travel services that connect cities and regions across different countries. Low-cost carriers (LCC) operating in the international segment provide cost-effective options for passengers seeking affordable travel beyond national borders.

The short haul segment to maintain its leadership status during the forecast period

On the basis of haul, the short haul segment held the highest market share in 2022, accounting for nearly three-fourths of the global low-cost carrier market revenue, and is estimated to maintain its leadership status during the forecast period. The growth of regional economic integration and increased tourism activities contribute significantly to the growth of short haul LCCs. These carriers play a pivotal role in connecting cities and regions, fostering economic activities, and promoting tourism within specific geographical areas. Short haul LCCs enable travelers to explore nearby destinations conveniently, stimulating both business and leisure travel.

The long-haul segment is projected to manifest the highest CAGR of 13.4% from 2023 to 2032. Long haul airlines used to be the dominant players in the long-haul market, but long-haul LCCs have started to change that. These carriers concentrate on offering long distance travel options that are reasonably priced by utilizing developments in aircraft technology. The increase in need for direct and reasonably priced connections on longer routes has driven the growth of the segment.

Asia-Pacific to maintain its dominance by 2032

Based on region, Asia-Pacific held the highest market share in terms of revenue in 2022, accounting for nearly two-fifths of the global low-cost carrier market revenue. Asia-Pacific is also expected to witness the fastest CAGR of 13.1% from 2023 to 2032. Rapid economic development in Asia-Pacific. has seen aviation emerge as a key regional connectivity enabler with low-cost carriers at the forefront leveraging the price-sensitive, fast-growing middle class and youth demographic. AirAsia, IndiGo, Cebu Pacific are among leading low-fare airlines stimulated by progressive policy reforms. Moreover, large populations in China, India, and Indonesia provide scale economies that improve international viability while catering to sizable captive domestic audiences.

Recent Developments:

In April 2022, The Jetstar Group entered into a collaboration with IndiGo, allowing Jetstar customers to book connections and flights on IndiGo services through its Jetstar Connect platform.
In May 2023, Ryanair Holdings plc placed an order for 300 new Boeing 737-MAX-10 aircraft scheduled for delivery between 2027 and 2033. This strategic move aims to expand its fleet and enhance its market presence.

Key Highlights:

The low-cost carrier industry report comprehensively examines segments including narrow-body aircraft and wide-body aircraft. The analysis spans different regions, encompassing North America, Europe, Asia-Pacific, and LAMEA.
Integrating high-quality data, professional insights, and critical independent perspectives, the study adopts a research approach aimed at providing a well-rounded view of global markets. The goal is to assist stakeholders in making informed decisions to achieve their ambitious growth objectives.
The research involved a thorough review of over 3,700 product literatures, annual reports, industry statements, and comparable materials from major industry participants. This extensive review enhances understanding and insight into the market dynamics.

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Leading Market Players: -

AirAsia
easyJet plc
Eurowings GmbH
Flynas
InterGlobe Aviation Limited
Jetstar Airways Pty Ltd.
Ryanair Group
Scoot Pte Ltd
Southwest Airlines Co.
Volotea.

The report provides a detailed analysis of these key players of the global low-cost carrier market. These players have adopted strategies such as new product launches to increase their market share and maintain dominant shares in different regions. The report is valuable in highlighting business performance, operating segments, product portfolio, and strategic moves of market players to showcase the competitive scenario.

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