Low Cost Airline Impacts

LCCs (Low Cost Carriers) first emerged in 1950, by the Pacific South Airlines started offering nothing but low prices on air travel. Followed by the great success of Southwest Airlines from 1967 onwards, as well as facilitated by the liberalisation in air transport market, it has been in centre stage of the global civil aviation industry ever since. In spite of facing many challenges such as high oil prices, softening demand, surplus capacity, new participants as well as subsidiaries from FCCs (Full Cost Carriers) have been joining the main stream to survive, compete and dominate in airline business, mainly on short-haul routes. Given it’s nearly 60% cost advantage (Doganis 2001), some of them did succeed, for example, Ryanair from Ireland, easyJet from UK, these two airlines account for more than 80% of market share in scheduled low cost market in Europe, according to European Tourism Management (2003). However, many LCCs were forced to withdraw services on unprofitable routes, for instance, AirAsia X ceased flying NZ flights, and will stop flying to Europe and India. Some LCCs even filed for bankruptcy, this can be illustrated by Danish LCC Cimber Sterling, which declared bankruptcy due to fierce competition between LCCs and rising costs. This essay is written to discuss the impacts that LCCs have had on the global aviation industry in the 21st century. It breaks down in three areas, namely, economic impacts, environmental impacts and social impacts. The economic impacts focus on tourism and secondary airports. Environmental impacts include positive and negative aspects caused by the rapid development of LCCs. Social impacts set out social inclusion and exclusion in terms of passenger coverage.

LCCs boost up regional tourism by providing more destinations with more frequencies at lower prices. There is a close relationship between civil aviation industry and tourism industry. Travel and tourism is the world’s largest industry, and airlines play a pivotal

References: Boeing. (2010). Current Market Outlook 2010-2029. Settle: Boeing Commercial Airplanes. Belobaba, P., Odoni, A. & Barnhart, C. (2010). The Global Airline Industry. UK: John Wiley & Sons Ltd. Baum, T. (2004). Low Cost Air Travel: Social Inclusion or Social Exclusion. Glasgow: the university of Strathclyde. Cooper, C., Fletcher, J., Gilbert, D., Shepherd, R., & Wanhill, S Chan, D. (2000). The development of the airline industry from 1978 to 1998: A strategic global overview. Journal of Management Development, 19 (6), 489 – 514. Calder, S. (2003). No Frills, The Truth Behind the Low-Cost Revolution In The Skies. (2nd ed.). London: Virgin Books. Civil Aviation Authority. (2006). No-frills Carriers: Revolution or Evolution? A Study by the Civil Aviation Authority. Doganis, R. (2001). The airline business in the 21 century. London: Routledge. European Tourism Management. (2003). LOW COST AIRLINES: A VERITABLE CHANCE FOR THE DEVELOPMENT OF SMALL AIRPORTS AND REGIONAL TOURISM?. Bournemouth University. Internet World Stats IATA. (2003). World Air Transport Statistics. (46th ed.). Montreal. Gillen, D. & Hinsch, H.(2001). Measuring the economic impact of liberalisation of international aviation on Hamburg airport. Journal of Air Transport Management, 7 (2001), p. 25 – 34 Predeaux, B