The worldwide emergence of low-cost carriers (LCCs) has revolutionized travel, brought affordable air transport within economic reach of large segments of the population, and massively expanded the market for air travel. Although Southwest Airlines, considered to be the first airline to have made low cost a central element of its strategy, has been operating in this mode since the 1970s, it is only in the last two decades that LCCs have grown exponentially and internationally to become a market-shaping force.
Since 2000, the LCC market has virtually exploded, covering dense networks across international markets. Presently, around 128 airlines are defined as LCCs, representing over 26 percent of all globally available seats in May 2012. Initially bound to the air transport markets of developed countries, a significant push in LCC capacity growth has resulted from the entrance of LCCs in developing countries, particularly in Asia and Latin America. However, other regions, in particular Sub-Saharan Africa, still appear to lag considerably behind in the development of LCCs.
Recent research has found that the entrance of LCCs has not only brought lower fares to the air transport market, but has also made a substantial contribution to countries’ economies. Tourism, for example, has been a key beneficiary of the emergence of LCCs, particularly for isolated island states, many of which are developing countries.
This book explores the characteristics of the LCC model and its impact on the air transport and related markets. Two case studies, Mexico and South Africa, will highlight some of the opportunities and challenges that LCCs have encountered. Using a defined framework, the authors then try to identify opportunities for LCC development in developing countries, focusing on the East African Community (EAC). Finally, the book outlines the role that international development agencies such as the World Bank Group can play in facilitating the development of LCCs in its client countries.
In consideration of the scope of such an endeavor, the purpose of this book is not to provide a holistic picture, but rather to build an initial foundation for further research into the development of LCCs in particular markets and regions.