Low-cost carriers (LCCs) have played a major role in aviation’s extraordinary expansion over the last quarter century, and are expected to continue to do so. By 2030, their numbers are expected to almost double, according to current forecasts. LCCs are an established and evolving part of the aviation industry. Although LCCs pursue a number of different business models, one common factor is a consistent focus on the customer. In a cyclical industry affected by rising fuel prices as well as crises such as terrorist attacks and health scares, LCCs have understood that maintaining a competitive advantage requires a relentless pursuit of reducing costs, increasing revenue and maximising efficiency. Today, they produce around 33 percent of all scheduled airline seats per week and operate 30 percent of all scheduled flights, making them the fastest growing sector in the industry in recent years. Their operating model is to operate a single aircraft type; aircraft with the maximum number of seats; Flying planes for as long as possible every day and charging for additional services such as preferred seating or improved Wi-Fi.

Low-cost carriers take every opportunity to cut costs, such as landing at an airport 90 kilometers from the city center. With their relentless obsession with costs, LCCs also tend to deal directly with their customers—avoiding OTAs and intermediaries whenever possible. Since LCCs operate a third of all seats worldwide, you might think there are hundreds of such airlines. However, the OAG currently defines 114 airlines as LCCs, 741 of which operate flights every week. So, since LCCs represent only 15 percent of all airlines but 33 percent of all seats, it is quite clear that LCCs are larger than the average airline. There is one important reason for this: to be successful, an LCC must have a level of operations that allows it to maximize its operational efficiency. For the larger LCCs, this usually means operating at least a hundred aircraft and only one aircraft type. Today, four of the world’s top ten airlines are LCCs: Southwest: Ryanair; Indigo and easyJet.

The long-haul low-cost airline model has always been in vogue, but whether they are profitable is another question. There have been a number of launches and subsequent failures around the world. Long-haul low-cost airlines do best in very large markets with no seasonality and low frequencies from competitors. It will always be challenging for a long-haul low-cost airline to compete in a seasonal market with seven flights a day from established airlines with attractive frequent flyer programs, regardless of the fare. Nevertheless, next-generation narrow-body aircraft with extended flight ranges could change the dependence on more expensive wide-body B787 aircraft. The aviation market is huge, with 5.9 billion seats and 36.7 million flights operated by the end of 2024, giving today’s travelers a choice of airlines, products and schedule options. The low-cost airlines may have been able to maintain their “low-cost” label, but when you compare the cost of the ancillary services to the airline’s fare, it’s sometimes a close call.