Low-Cost Carrier Market to grow at a CAGR of 15.34% during 2024-2028
The Low-Cost Carrier Market is expected to grow at a CAGR of 15.34% during 2023 and 2028. During this period, the market is also expected to show a growth of USD 299.84 billion. In the context of the low-cost carrier market, the implementation of smart airports is a strategic initiative proposed by the International Air Transport Association (IATA) and the Airports Council International (ACI). These airports facilitate the seamless exchange of real-time information among airport operators, airlines, and passengers, enhancing operational efficiency and profitability during economically volatile conditions. The smart airport approach integrates all systems into a single digital grid, enabling deep cross-collaborations and improving operational efficiency, enhancing the passenger experience, and delivering personalized services. Smart airport terminals are built upon a converged IP platform, enabling high-speed broadband traffic throughout the aerodrome. This integrated and technologically advanced infrastructure is essential for low-cost carriers to maintain competitiveness and optimize their business operations.
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Technavio analysts predict that the Passenger service subsegment will lead the Service segment during 2024 and 2028 The global low-cost carrier (LCC) market is experiencing robust growth due to the surge in air travel demand, with passenger numbers reaching a record 5 billion in 2022, representing a 4% year-over-year increase. This trend is projected to continue, with passenger numbers expected to double in the next 15 years, primarily driven by the rapid expansion of air travel in the Asia-Pacific region. Consequently, major aircraft Original Equipment Manufacturers (OEMs) are revamping their production facilities to meet the heightened demand for new aircraft deliveries. Simultaneously, LCCs are modernizing their fleets to capitalize on emerging market opportunities within the LCC sector. The burgeoning passenger numbers are fueling the procurement of new aircraft to meet the increasing demand for affordable air travel.
Here are the various ways based on which the market is segmented:
There are several factors that are causing the market to flourish increase in air passenger traffic
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The Low-Cost Carrier (LCC) market has experienced significant growth in recent years, driven by increasing air passenger traffic and the demand for affordable travel options. LCCs have disrupted the aviation industry by offering lower fares through the elimination of non-aviation services such as meal services, priority boarding, and seat assignment. However, some LCCs are exploring new revenue streams, including last-minute bookings, carbon capture technologies, and the sale of sustainable aviation fuel to offset carbon emissions. Despite their focus on low fares, LCCs are not immune to the need for new aircraft acquisitions and crew training to maintain their fleets. This includes both narrow-body and wide-body aircraft for international and domestic routes. As LCCs expand their reach, they are also targeting crowded cities and small airports to cater to the tourism industry. However, the focus on low fares can come at the cost of comfort and convenience for passengers. This includes baggage fees, seat assignment fees, and long wait times at small airports. As LCCs continue to grow, they will need to balance their business model with the expectations of luxury-seeking travelers and the need for sustainability in the aviation industry. Travel agencies and airline operators are also adapting to the LCC market by offering bundled services and partnerships to provide a more comprehensive travel experience for customers. Overall, the LCC market is a dynamic and evolving landscape that requires innovation, adaptability, and a focus on sustainability to meet the changing needs and expectations of travelers.
According to Technavio, the global low-cost carrier (LCC) market is classified as a segment of the expansive global diversified support services market, which falls under the broader umbrella of the commercial services and supplies market. This market encompasses businesses primarily engaged in delivering labor-intensive support services to corporations and governments. The diversified support services sector comprises entities offering commercial cleaning services, dining and catering solutions, equipment repair services, industrial maintenance, auctioneers for industrial assets, storage and warehousing, transaction services, uniform rental, and other business-related support services. Technavio determines the size of the commercial services and supplies market by aggregating the revenues of enterprises dealing in commercial printing, environmental and facilities services, office services and supplies, security and alarm services, and diversified support services.
The Low-Cost Carrier Market is experiencing significant growth, fueled by the increase in air passenger traffic. Industries are leveraging the products belonging to the market for customer engagement, transactional notifications, and promotional offers.
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