The growth limits of the low cost carrier model

Today, many low cost carriers (LCCs) continue to enjoy rapid growth and still have a fair number of new aircraft on order. There are signs however that the market for LCCs is limited, owing to increasing route density problems, primarily in Europe but seemingly also in North America: the fact that average frequencies have decreased and average route distances increased since 2001 indicate that LCCs are increasingly operating in exceedingly thinner niche markets. This perhaps explains why LCCs have been trying to adapt their business strategies to assure future growth by shifting to primary airports, facilitating transfers, engaging in codesharing, entering alliances, and acquiring other airlines. This paper identifies the possible factors limiting the LCC model's growth and explains how the largest LCCs in Europe and the US have subsequently reacted.