Low-cost airlines to lead post-Covid recovery

Budget airlines will lead the aerospace industry in bouncing back from Covid, as their smart cost-cutting and operational responsiveness enables them to capitalise on pent-up demand and new opportunities before higher-cost airlines.

Low-cost airlines have done better at cutting costs

While every carrier has had to tighten its belt, the low-cost carriers (LCCs) have managed to stretch their already-frugal budgets even further. With demand this low, their ability to keep their routes cash-positive with a load factor lower than before is incredibly important.

LCCs have already been seen snapping up pent-up demand by rapidly increasing capacity as flight corridors reopen to countries in Europe. This shows that they’ve been able to stay agile and resilient during the pandemic. For example, easyJet’s sale and leaseback agreements provide them with a flexible fleet that can roll with changes in demand, putting them in a much better position than higher-cost carriers that have had to retire numbers of planes.

LCCs cater to cash-strapped passengers

Passengers have also had to tighten their belts. 87% of people polled worldwide are concerned about their finances, according to GlobalData’s COVID-19 Recovery Survey. This means they’re likely to turn to budget airlines, strengthening LCCs’ market position and taking a further chunk out of other airlines’ profits.

Leisure traffic will bounce back first

LCCs tend to focus on leisure travellers and those visiting friends and family. This market is set to bounce back earlier than business travel, which is a major target market for higher-cost carriers. This means LCCs will be raking in profits in the short term.

With travel habits transformed by the pandemic, at least for the short term, the agility and frugality of LCCs will help speed the recovery. We can expect to see them emerge as leaner, more competitive carriers and earn larger market shares in the future.

Budget airlines will lead the aerospace industry in bouncing back from Covid, as their smart cost-cutting and operational responsiveness enables them to capitalise on pent-up demand and new opportunities before higher-cost airlines.

Low-cost airlines have done better at cutting costs

While every carrier has had to tighten its belt, the low-cost carriers (LCCs) have managed to stretch their already-frugal budgets even further. With demand this low, their ability to keep their routes cash-positive with a load factor lower than before is incredibly important.

LCCs have already been seen snapping up pent-up demand by rapidly increasing capacity as flight corridors reopen to countries in Europe. This shows that they’ve been able to stay agile and resilient during the pandemic. For example, easyJet’s sale and leaseback agreements provide them with a flexible fleet that can roll with changes in demand, putting them in a much better position than higher-cost carriers that have had to retire numbers of planes.

LCCs cater to cash-strapped passengers

Passengers have also had to tighten their belts. 87% of people polled worldwide are concerned about their finances, according to GlobalData’s COVID-19 Recovery Survey. This means they’re likely to turn to budget airlines, strengthening LCCs’ market position and taking a further chunk out of other airlines’ profits.

Leisure traffic will bounce back first

LCCs tend to focus on leisure travellers and those visiting friends and family. This market is set to bounce back earlier than business travel, which is a major target market for higher-cost carriers. This means LCCs will be raking in profits in the short term.

With travel habits transformed by the pandemic, at least for the short term, the agility and frugality of LCCs will help speed the recovery. We can expect to see them emerge as leaner, more competitive carriers and earn larger market shares in the future.