Low-cost carriers (LCCs) are the airlines that passengers around the world love to hate. In 2024, low-cost carriers will account for about 34% of U.S. airline capacity, while traditional carriers will make up the remaining 66%. A new OAG report sheds light on low-cost carriers both in the U.S. and internationally, as well as industry trends. Note that some airlines are not truly binary low-cost carriers or full-service carriers (Southwest, for example, is considered a hybrid that adopted the low-cost carrier model). Some U.S.-based low-cost carriers are even introducing premium options in their cabins.

Low-cost airlines account for about a third of US airline capacity

The United States is roughly in line with the global average in terms of the share of low-cost carriers and traditional airlines. Since the Covid pandemic, low-cost carriers have increased their global capacity by 13%, while traditional airlines have not yet fully recovered to pre-pandemic levels. At the same time, the share of ultra-low-cost carriers (ULCC) in the United States has increased from 6% in 2015 to 11% in 2023 (Allegiant, Frontier Airlines and Breeze are examples of ULCCs).

With a capacity share of 34%, the US is at a similar level to Germany (with a 69/31 share between traditional and low-cost carriers). Low-cost carriers are popular in India (with a 71% share), Indonesia (with a 64% share) and Brazil (with a 58% share). However, they do not have large shares in East Asia, where they account for only 12% of China’s capacity share and 22% of Japan’s capacity share (due to a number of factors including regulatory structures and available airport capacity).

Globally, low-cost airlines occupy about a third of all scheduled airline seats each week and operate 30% of all scheduled flights worldwide. In recent years, they have been the fastest growing sector of the airline industry. Although low-cost airlines occupy a third of all seats, only 114 airlines do so (out of 741 airlines operating flights each week). This means that low-cost airlines represent only 15% of all airlines and are larger than the average airline. Four of the world’s top 10 airlines are low-cost airlines (Ryanair, Southwest, Indigo, easyJet).

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The low-cost business model

Passengers have a love-hate relationship with low-cost airlines. On the one hand, passengers often boast about how cheaply they were able to book the flight, but on the other hand, they complain about the poor service and the many additional fees.

Photo: Vincenzo Pace | Easy flying

Low-cost airlines operate simple and efficient models. They usually operate only one type of aircraft, the one with the maximum number of seats, fly the aircraft as much as possible each day and charge for additional services (such as baggage, preferred seating and snacks). They often operate from secondary airports further away from the city centre. Some, like Ryanair, sometimes deliberately inflame their customers by claiming that they are the cheapest and that is the only reason people fly with them.