India's Low-cost Carriers Rule The Skies Dominated By IndiGo: Report

2 min read Last Updated : Aug 20 2024 | 11:48 PM IST

India ranks no. 1 among the top 10 countries with the highest share of low-cost carriers (LCCs) in overall airline capacity. According to the latest data from global travel data provider OAG, LCCs in India which are dominated by IndiGo, holds 71 per cent of the total seat capacity. This is ahead of its closest competitor, Indonesia, where LCCs control 64 per cent of the overall airline seat capacity.

India’s LCC share is much higher than the global average of 34 per cent, reported by OAG for 2024.

In contrast, China, one of the largest airline markets, remains dominated by legacy full-service carriers (FSCs), with LCCs holding only a 12 per cent market share. The UK market, however, is nearly evenly split, with LCCs having a slight edge over legacy carriers, thanks to multiple LCCs such as Ryanair, easyJet, and Wizz Air.

Countries with a higher share of LCCs compared to FSCs include Brazil in Latin America, and Italy and Spain in Europe. Developed countries like the US, Germany, and Japan are still predominantly served by FSCs.

The growing prominence of LCCs is evident from OAG’s data, which shows that the top four airlines in the world are LCCs: Southwest, Ryanair, IndiGo, and easyJet.

Since 2019, LCCs have increased their global share of capacity by 13 per cent, while legacy carriers have yet to fully recover to their pre-pandemic 2019 levels.

In India, much of the LCC’s success is due to IndiGo’s massive expansion. In July this year, IndiGo controlled 62 per cent of the domestic passenger market share and dominated the LCC sector with a 70.2 per cent share, including Akasa and SpiceJet.

However, Indian carriers still face challenges in shoring up ancillary revenues, which include fees for seats, food, special check-ins, seat upgrades, and extra luggage. The potential to increase these revenues in India appears limited.

IndiGo’s ancillary income accounted for 7.1 per cent of its total revenues in 2022, at $5.86 per traveller, ranking it 54 out of 64 airlines, according to CarTrawler, a business-to-business provider of the car rental and mobility solutions to the travel industry. In comparison, among the top 10 largest LCCs globally, Ryanair Group’s ancillary income represented 35.7 per cent of its total revenues, easyJet’s was 33.9 per cent, and Southwest’s was 24.9 per cent. IndiGo lags in this regard.

First Published: Aug 20 2024 | 11:48 PM IST