Low-Cost Carriers in Pole Position - How Adversity Has Led to Opportunity

February 15, 2022
One of the lessons from the global pandemic was never to miss an opportunity in adversity as many suppliers around the world will tell you! The airline industry as we all know suffered more than most as borders were closed, travel restrictions applied and consumer confidence evaporated in the face of rapidly increasing infection rates in nearly every country. Covid-19 has changed the aviation industry forever; new travel requirements are likely to be with us for many years, travel patterns have changed for many, corporate travel has been disrupted and travelling through an airport now requires numerous checks and pieces of paper. Anyone who has flown internationally will probably have had a PCR test before flying, carried papers confirming their vaccination record and had apps with QR codes loaded across various portable devices. We have all learnt something in the last two years and from an industry perspective two of those key learnings are that size is important and flexibility crucial, both of which make low-cost airlines the winners in the recovery.

Growth by Stealth

If it was possible in an aviation crisis the pandemic created a series of circumstances that played to the strengths of the low-cost airline community. Domestic airline markets remained opened, international connecting traffic ceased to exist, countries opened and closed requiring a high degree of labour flexibility and experience of stimulating demand crucial.

And then of course China will surely at some point have some real LCC carriers, or will it?

Major Aircraft Orders Coming

Airline capacity from these carriers will outstrip legacy airline growth over the next five years at least.

LCCs Spread Their Wings

For several reasons, not least of which is some archaic restrictions around overseas ownership designed to protect locally based carriers however inefficient those operators are, legacy airlines have had limited success in expanding outside of their own markets.

And then of course there is long haul low cost to consider…

How Far Can Low-Cost Go?

The aviation landscape has changed, the pandemic has been a larger disruptor than any Ryanair low fare offer. As we are already seeing, a and some markets are getting closer and closer to a recovery at least in terms of capacity and demand, price is another issue. It is only a matter of time before low-cost airlines take their capacity share above 35% and beyond. And should China ever embrace real low-cost airlines then reaching above 40% share becomes a real possibility, but one thing is for sure…only time will tell!
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