LCCs Expand as 114 of 741 Global Airlines Go Low-Cost

The global aviation landscape is shifting significantly as low-cost carriers (LCCs) gain prominence, according to a new report by OAG. Out of 741 airlines operating worldwide, 114 are LCCs, which now account for approximately 33% of all airline seats and 30% of scheduled flights each week.

John Grant, Chief Analyst, OAG, noted that LCCs have become a major force in the aviation sector. Although they represent just 15% of all airlines, LCCs manage a substantial share of the market's seating capacity. These carriers typically operate a single aircraft type, maximize seating configurations, and charge extra for services such as seat selection and enhanced Wi-Fi.

LCCs often cut costs by choosing airports further from city centers or using shuttle services. They also prefer direct customer bookings over using travel agencies or intermediaries, as reported by A21.

LCCs have shown robust growth, increasing their share of global capacity by 13% since 2019. In contrast, traditional airlines have not yet returned to their pre-pandemic capacity levels. This expansion is supported by new aircraft orders placed during and immediately after the pandemic.

Traditional airlines face delivery delays, which impact them more than LCCs. Additionally, LCC expansion in regions like China and Japan has been constrained by regulatory issues and airport capacity limitations.

LCCs focus on operational efficiency, with ancillary revenue—such as from onboard purchases and premium services—often surpassing ticket sales. This model has led them to offer additional products like vacation packages, credit cards, mobile contracts, and even hotel and cruise options.

The distinction between traditional airlines and LCCs is becoming increasingly blurred as LCCs introduce new routes and destinations. Some LCCs have partnered with traditional airlines to offer connecting services, though this can add complexity and cost.

Long-haul LCCs encounter unique challenges. They perform best in large, non-seasonal markets with less competition. In the United States, ultra-low-cost carriers (ULCCs) such as Spirit, Allegiant, and Frontier have carved out a niche serving secondary cities with minimal service. However, rising operational and labor costs have made it harder to maintain their cost advantages.