The low-cost airline model will lead post-Covid-19 recovery and help revitalize demand, says GlobalData, a leading data and analytics company.
In its latest Covid-19 Recovery Survey, Global Data estimates that the frugal cost-cutting measures taken and operational responsiveness will see these carriers move quickly to absorb pent-up demand and capitalize on any opportunities ahead of other high-cost model airlines.
Meanwhile, the pandemic has amplified consumer concerns around personal finances. The survey showed that globally, a staggering 87 percent of respondents were “extremely”, “quite”, or “slightly” concerned about their personal financial position.
“Low-cost carriers (LCCs) have trimmed costs well. Although all airlines have drastically reduced costs to weather the storm created by Covid-19, it is evident that low-cost carriers have managed to push already low-cost bases even lower. These carriers can now operate cash-positive routes with a lower load factor than before, which is incredibly important with the current low levels of demand,” said Gus Gardner, travel and tourism analyst at GlobalData.
He added that LCCs were the first off the blocks to capture any pent-up demand in the market and were successful in doing so.
“Wizz Air responded quickly by adding capacity from the UK to the Canary Islands when it was added to the travel corridor list,” he said.
The GlobalData survey also indicates that LCCs have shown a high degree of resilience and flexibility to network planning and aircraft deployment.
Moreover, the low fares offered by LCCs will better cater to the increased need for affordability.
“Cost-cutting measures will allow LCCs to push ticket prices to new lows if necessary and still break-even, leaving other carriers at the risk of flying unprofitably if they choose to compete. These airlines will likely gain a stronger foothold in the market as a result of the pandemic. With leisure travel most likely to rebound first and LCC’s short distance, point-to-point networks will better suit pandemic-cautious travelers looking for trips closer to home,” Gardner concluded.