Before the pandemic, low-cost airlines accounted for approximately 30% of the market share in Eastern and Western Europe, but after only 3 years, this airline has increased by nearly 10 percentage points.
To date, the world has not declared the end of the pandemic for Covid-19. However, things have calmed down enough to look back at the changes in the market during the past 3 years. The global aviation market has had very positive growth, although there are still some savings in spending.
We all think about the prospect of a recession, a market crash, but low-cost airlines have proven otherwise. Thinking about aviation, people immediately think of high-class, lavish standards at a price that is only suitable for the elite.
The pandemic has changed a lot of habits, including airline services. Photo: Dy Khoa.
Covid-19 forever changed the aviation industry
Therefore, there have been flights, customers who buy one ticket but can lie on the whole bench because no one buys two seats next to it. When low-cost airlines were born, the aircraft occupancy rate became a vital factor, and global airports began to get crowded. Passengers have the right to buy or not add luggage, seats and food to minimize the amount of money spent on the flight.
This need to reduce spending is appropriate in the post-Covid-19 context and the current volatile economic situation. Inflation is also a factor that causes customers to consider more than spending per spending. Although there are no complete and official statistics, the price of low-cost airline tickets does not seem to increase or increase very little compared to the general volatility of the market. If you work hard to find cheap tickets, you still have the opportunity to fly round trip Ho Chi Minh City – Bangkok for 2.5 million VND (including taxes and fees). For those who are passionate about travel or want to reduce travel expenses, improve the enjoyment value at the destination, accept some of the problems of low-cost airlines such as late hours, lack of comfort in seats.
Low-cost airlines are expected to recover quickly because of their flexible improvisation. Photo: Dy Khoa.
According to Investopedia, the low-cost airline revolution spread worldwide from 1990 to 2020. Low-cost airlines arrived in Europe in the 1990s and Asia in the 2000s. Top national airlines persist in most countries. Italy even re-nationalized Alitalia during the Covid-19 crisis. Low-cost airlines have been making progress over the years. However, the extreme stress of dealing with Covid-19 has put the survival of airlines in general and low-cost airlines in particular at risk, especially in new markets.
“Covid-19 has changed aviation forever; new travel requirements will likely be with us for years, changing travel patterns for many more years, travel is disrupted and moving between airports now requires a lot of procedures,” aviation data site OAG commented in an article.
However, according to this site, there is always light at the end of the tunnel. And low-cost airlines enjoy the rays. “The domestic aviation market is still open, international traffic connections no longer exist, and countries open and close require a high degree of labor flexibility and experience in stimulating demand is very important. A wide range of skills that low-cost airlines often have in abundance”, OAG appreciates the business flexibility of low-cost airlines.
Expect low-cost airlines to increase market share
In the aviation market data report, the low-cost airline market has seen many changes in the market since January 2020, the last month before Covid-19 had any impact. Accordingly, low-cost airlines had about 30.1% of market share in the previous two years and only increased to 32.1% in March 2022, a figure that represents a slow growth rate. But in absolute terms, the service capacity of low-cost airlines has increased to 87% compared to 79% of traditional service providers. “Simply put, low-cost airlines have returned, while traditional service providers have not changed much,” OAG commented.
The “modest” 2% increase in global low-cost airline capacity share contains some significant regional movements. Compare market share in some regions from January 2019 to March 2022, with significant changes in high volume markets such as Europe, Southeast Asia and the Middle East, where carriers have quietly but effectively increased capacity sharing during the lull of the pandemic.
Specifically, the strongest increase in market share was in the group of Eastern/Central Europe, increasing from 28.3% to 36.5%, equivalent to 8.2%. Next is Western Europe with 8.1% increase from 36.9% to 45% market share. Southeast Asia is also an optimistic market for low-cost airlines with an additional 5.7% market share, bringing the share to 54%.
The market share of low-cost airlines in the Middle East, North America, Central America – Caribbean has increased by 5.5%, 2.9% and 2.8%, respectively.
Low-cost airlines are expected to continue to increase their market share ahead of other air passenger service business models. Photo: Dy Khoa.
Airlines like Ryanair and Wizzair have made no secret of their ambitious growth strategies during the pandemic. In the Middle East, the continued growth of FlyDubai, the introduction of Wizzair Abu Dhabi, the Etihad/Air Arabia joint venture and of course the huge investment in FlyNas in Saudi Arabia explains the strong growth taking place in one of the world’s most vibrant aviation markets.
Even low-cost airline markets whose rates have fallen are good candidates for future growth. The nearly 5% drop in market share in the Pacific Southwest is due to Australia’s border closure and the premature demise of Virgin Australia. New airlines and opening of international markets will address the loss of market share over the next few months.
In Northeast Asia, the closure of important international markets such as Japan and South Korea remains a major issue. And it is expected to recover in 2022. It is still open to the possibility of the low-cost airline market developing in China.
The recovery is underway and some markets are getting closer and closer to recovery, at least in terms of capacity and demand. Low-cost airlines are in a very good position, with a strong position in aircraft orders and a track record of successful expansion into new markets. It is only a matter of time for low-cost airlines to raise the rate to 35% and beyond. If China has real low-cost airlines, then reaching over 40% market share becomes a real possibility.
@ Cafef
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Source: Vietnam Insider