Ready for Takeoff?: The Potential for Low-Cost Carriers in Developing Countries (Directions in Development)

The emergence of low-cost carriers (LCCs) has been a major catalyst for the development of the aviation industry. LCCs have revolutionized the way we travel, brought affordable air transport within economic reach of large segments of the population, and massively expanded the market for air travel. Since 2000, the LCC market has literally taken off, penetrating international markets with a dense network. Presently, around 128 airlines are defined as LCCs, representing over 26 percent of all globally available seats in May 2012.

Although some generalizations prevail, no LCC business model is the same. Many airlines are classified as low-cost carriers, but to what extent do these airlines actually adhere to the fundamentals of low-cost strategies? How does this breed of carriers impact the aviation market? Is the model transferable to any market? Could LCCs be the key trigger for the development of air transport in many developing countries that suffer from limited connectivity and high fares?

Based on existing literature, case studies, and primary research, Ready for Takeoff? The Potential for Low-Cost Carriers in Developing Countries attempts to shed light on these questions. By analyzing various definitions and approaches that have been used to explain the LCC business model and its impact on a market, and by identifying a number of requirements that are crucial for the survival of LCCs, this book seeks to provide some clarity on the question of whether LCCs can be a key driver in fostering aviation in many developing countries. Using the case of the East Africa Community, the book s preliminary assessment indicates that, given the limited traffic domestically and in the region, combined with numerous challenges such as the lack of a significant middle class driving demand, stalled liberalization efforts, limited safety and security oversight, few navigational aids, and limited human and financial resources to create a low-cost airline the emergence of profitable LCCs in the region may be premature. In light of projected economic growth, tourism, and forecasted traffic increases there is, however, great potential in the market for the reduction of fare levels and the creation of a competitive market, as well as the provision of a breeding ground for LCCs to flourish.

To unlock this potential and for LCCs to take hold, stakeholders in the aviation industry will have to proactively address some of the challenges identified in the book. In turn, this will create a suitable environment for successful LCCs to emerge. Directed at practitioners and policy makers alike, Ready for Takeoff? The Potential for Low-Cost Carriers in Developing Countries outlines a number of concrete measures that should be considered by stakeholders, including the removal of market distortions, optimized infrastructure investments, and improvements in safety and security oversight. Such measures will foster a competitive aviation sector that can bring the benefits of affordable and safe air transport to many developing countries.