How Much Market Share Do Low-Cost Carriers Hold?

One-third of scheduled airline capacity across the globe is handled by low-cost carriers (LCCs). As air travel numbers continue to return to normal levels, industry analysts anticipate more growth for the category of airlines.

With the downtime amid the pandemic, several carriers were reportedly able to adapt their strategies and assess their markets to determine growth. Several LCCs have also introduced new routes in the past few years, adding more competition to legacy airlines.

How many LCCs are there?

The share of global scheduled capacity on LCCs from September 2022 to August of this year is split up by flights, seats, and available seat kilometers (ASKs). According to aviation analytics provider OAG, 31% of the share makes up flights, seats account for 35%, and 27% are the ASKs. Currently, there are more than 800 scheduled airlines globally, with just over 100 being designated as LCCs.

Photo: Joe Kunzler | Simple Flying

However, although there are a plethora of airlines, around 80% of all flying, as measured by ASKs is performed by 103 airlines, about 13% of all scheduled carriers, according to OAG. LCCs make up 29 of the 103 airlines, showcasing a solid presence globally. Dallas-based Southwest Airlines is the largest low-cost airline in the world, reportedly providing 11% of worldwide ASKs. Ryanair follows closely behind, accounting for 10% of global ASKs.

A worldwide business model

Here are the top 10 LCCs in terms of market share, according to OAG.

While most of the top 10 LCCs are based in North America or Europe, the airline category is not limited to those regions. OAG reported that the low-cost business model has been replicated around the world and has been deemed successful. IndiGo and Lion Air operate in South Asia and India, which reportedly have the highest market penetration by LCCs and accounted for more than 60% of all seats in the last year.

How are LCCs able to keep prices low?

There are several factors that go into what makes LCCs cheaper. A notable difference between budget airlines and legacy carriers is their fleet. Most LCCs only operate one aircraft family in large numbers, with an average age of just under 12 years, according to OAG data.

Operating the same aircraft family is not the only factor that allows for cheaper ticket prices. Aircraft interiors configured into a single cabin decrease costs because airlines can accommodate as many passengers as possible. While the seats may not have as much room compared to an aircraft cabin operated by a legacy carrier, the ticket for the flight is most often more affordable.

On LCCs, onboard service is slim to none. Beverages and food offerings are limited and available for purchase rather than being included in the ticket cost. Carryon bags are also subject to an additional fee, meaning the price is not always reflected during the time of booking but rather at checkout.

Photo: Spirit Airlines

Passengers also have to pay for their seats. While this occurs on legacy airlines to score economy seats with extra legroom or seats closer to the front of the aircraft, most LCCs charge for any seat selection regardless of where it is located in the cabin or if it has more legroom.

Although the base price of a ticket on a low-cost airline is low, passengers selecting multiple additional items known as ancillary products can rack up their total cost on low-cost airlines. The strategy has allowed the most successful LCCs to generate around half of all their revenues, according to OAG. Last year, the cost of ancillary services amounted to $103 billion globally, a statistic that contributed to the UK government launching a consultation into low-cost airline pricing.

Source: OAG