We recently published research about global air travel trends, drawing on unique data from our Air Traffic Travel Intelligence solution. With data about every flight via every channel (both direct and indirect) throughout 2012, we have been able to create the most complete picture of passenger movements available.
In particular, the findings point to some interesting trends in the low-cost carrier market. The data sheds light on the regions and countries where LCCs are performing strongly, as well as areas in which significant commercial potential exists for the low-fare airline model.
What does the research tell us about the current market conditions for LCCs? Overall, it confirms that LCCs remain prominent in traditional markets. In Europe, the region with the highest penetration of LCC traffic, more than a third (38%) of total air travel in 2012 is attributable to low-fare airlines. Significant LCC penetration is also seen in South West Pacific (37%) and North America (30%).
LCCs are clearly well established in traditional markets, but some faster-growing markets reveal contrasting trends. Between 2011 and 2012, overall passenger volumes have grown more in Asia than anywhere else in the world, with increases of 9%. Levels of LCC penetration in these regions are relatively modest, with low-fare airline traffic representing just 19% of total air travel in Asia. However, the LCC share of air traffic in Asia increased by just over 2% between 2011 and 2012 – more than any other region – indicating the strength of the commercial opportunities there for low-fare airlines.
As the data shows, Asia is the world’s largest, most competitive market for air travel. While the regional statistics indicate that, overall, budget air travel is less readily embraced by passengers in Asia than in markets such as Europe, there are notable variations between countries. Whereas LCCs command only a 1% share of air traffic in China and 4% in Japan, their share climbs as high as 65% in the Philippines, 61% in Thailand, and 52% in Malaysia.
Airline competition in Asia is intense: 75% of the region’s air traffic is operated by more than three airlines. LCCs looking to increase their traffic in Asia may want to look beyond the ‘super routes’ that carry over 100,000 passengers each year, where 85% of air travel is concentrated. With small and medium-sized routes in Asia now growing by around 19%-21% each year, the region could offer LCCs a potentially high growth point-to-point opportunity.
In mature markets such as Europe, low cost carriers look for new business opportunities beyond their traditional model, for instance targeting higher yield corporate travellers who often book through the travel agency channel. Amadeus offers a portfolio of solutions that are adapted to all types of LCC business processes in order to help them generate more revenue through travel agency distribution.
For an interesting graphical presentation of the largest markets for LCCs, using data from the research, please visit The Economist.