How Can Opting for Low-cost Carriers Bring Competitive Advantages to Your Business?

Highlights:

• Key operating features of low-cost carriers
• Ryanair’s come back in the Europe region
• Regional analysis of the domain
• Some key acquisitions in the sector

Low-cost carriers (LLCs) are the airlines that offer lower ticket fares and fewer amenities than full-service airlines. They charge extra for ancillary services such as baggage, food or drink, seat allocation, priority boarding, etc., which are usually offered by premium carriers. Besides all these facilities, they also offer less comfort to passengers. Unlike premium carriers, they only offer single-class service, there is no concept of economy class, premium economy, business, or first-class services in these airlines. They use secondary airports, they do not offer any connecting flights, nor do they offer comfortable seats. A few comfort features provided by LLCs are reclining seats, jetways, loyalty programs, spacious legroom, etc. Such types of carriers follow the shortest roots and are highly popular among business travelers because of the better travel policy compliance of these carriers.

What makes low-cost carriers cheaper?

Low-cost carriers mainly operate with a single-cabin configuration and try to fit in as many passengers as they can. This implies the cost of flying the aircraft can be equally shared by the maximum possible number of passengers inside the carrier. To accommodate a maximum number of passengers, the seats inside the carrier are spaced a bit closer together compared to some legacy airlines.

Moreover, onboard services are also pared down in these carriers. They limit the options for food and drinks rather than including these facilities in the cost of tickets. passengers must pay separately to use such facilities. These airlines also control baggage allowances. If passengers want to carry a small trolley with a handbag, then they must select these choices priorly.

The most interesting thing about LLCs that makes them cheaper is their use of aircraft fleets. A typical LLC generally operates from one family of aircraft. For instance, Southwest Airlines and Ryanair are the two LLCs that operate from Boeing 737s. The primary reason for maintaining a fleet with a single aircraft is to save costs. LLCs can easily negotiate with the aircraft provider on their first purchase or when they want to lease aircraft. Opting for a single fleet can also help carriers get a number of pilots who can fly any aircraft in the fleet and they can also get easy maintenance, spare parts, training, and other facilities at a minimal cost.

The best thing about LLCs is they offer point-to-point travel which helps them to attract the maximum number of potential travelers who try to avoid purchasing multiple tickets, bearing the risk of missed connections. Moreover, LLCs mostly opt for secondary airports to fly in and out. This is to reduce congestion and airport charges which do not include the cost of fancy terminals and boarding gates.

Ryanair’s robust comeback in Europe’s low-cost carrier competition

Ryanair, one of the popular low-cost carriers, has aimed to double its business in the rapidly growing Polish market and expand its business across Eastern Europe in the coming decade. The low fares of Ryanair helped it to dominate the markets of Ireland, Italy, and much of Western Europe. The low-cost carrier already operated from more than a dozen Polish airports. However, the lower fares offered by its rival Wizz Air hampered the business of Ryanair. To regain its position, Ryanair plans to open 25 new routes in the coming months to take over Wizz. By 2038, Ryanair aims to connect most of the places of Eastern Europe by operating at least twice as many planes as it currently has in Central and Eastern Europe. Ryanair mainly aims to connect to Poland, Europe’s biggest country where people have higher disposable incomes and pay more interest to fly frequently across the country.

Insights into the regional and country-wise expansion of the domain and some favorable acquisitions

The low-cost carrier industry is examined across various regions including North America, Asia-Pacific, Europe, and LAMEA. Among the regions, Asia-Pacific is predicted to manifest the highest CAGR of 13.1% during 2023-2032. While based on country-wise analysis, India is anticipated to showcase a noteworthy CAGR of 15.7% from 2023 to 2032. Many leading players in this domain have undergone a series of mergers and acquisitions to foster competitiveness. For instance, JetBlue Airways Corporation, a major United States low-cost airline announced the acquisition of a major United States ultra-low-cost airline. With this acquisition, the two biggest low-cost airlines aimed to offer several international routes for passengers willing to travel between Colombia and the US.   

To conclude, the increasing adoption of the latest technologies by low-cost carriers for check-ins, ticket sales, and baggage processing will flourish the domain to achieve new heights in the coming years. Moreover, the growth of the tourism industry is further expected to bring immense opportunities for the market in the future.

 

To help your business identify and capitalize on new opportunities in the low-cost carrier industry, feel free to talk to our industry experts today! They can also help you develop new business strategies and initiatives.

Related Post