Airline

Low cost airlines – Europe
Low-cost carrier (LCC) capacity grew at a rapid rate in 2007, with the number of seats increasing worldwide by 22.7% to 674.7 million, according to the Official Airline Guide (OAG), an information and data provider for the air transport industry. LCCs operated an estimated 133,000 flights, offering 21.8 million seats within Europe in September 2007, and accounted for 22% of total intra-regional flights up from 18% in September 2006. Low-cost capacity represented 30% of total available seats within the market, a rise of four percentage points compared with September 2006.
The European low-cost airline industry is apparently growing somewhat faster than the worldwide average, as the sector added 31,000 flights – offering 5.6 million seats within the region – year on year to end-September 2007, which represented increases of 30% and 35%, respectively. This means that budget airlines accounted for 16% of all flights (including long-haul) and 19% of all seats over the 12-month period, versus 14% and 17%, respectively, during the prior-year period. Alan Glass, OAG chief executive, commented, “If this trend continues, then it’s quite likely that within two years, Europe will equal North America in low-cost volumes, a scenario we would not have contemplated even five years ago.”
Low-cost, or ‘budget airlines’, have been one of the main drivers of growth in intra-European travel over the past decade. However, after a period of rapid expansion, it seems that the sector is now reaching maturity and that the growth is likely to slow down in the coming years. The low-cost business model is geared to short-haul routes, which allow for a quick turnaround of aircraft. As such, LCCs are increasingly in competition with other modes of travel, especially rail, which has undergone a substantial upgrading in recent years.
Key findings
The macroeconomic environment for the European LCC industry is worsening due to slowing economic growth, falling property...