Low-Cost Carrier (LCC)

A Low-Cost Carrier (LCC) is an airline that offers reduced base fares by eliminating standard services—such as checked baggage, meals, and seat selection—and charging for them as optional add-ons.
Key facts
  • Definition: A Low-Cost Carrier (LCC), also known as a budget airline or discount airline, offers lower fares by unbundling traditional services.
  • Common synonyms: Low-cost airline, budget airline, discount airline.
  • Revenue model: Lower base fares offset by ancillary fees for extras like baggage, seat selection, and priority boarding.
  • Largest LCC by passengers: Ryanair.
  • LCC vs. ULCC: Ultra Low-Cost Carriers push the model further with even lower fares and more add-on fees.

What is a Low-Cost Carrier?

A Low-Cost Carrier, commonly abbreviated as LCC and also known as a budget airline or discount airline, is an airline that does not offer traditional services normally included as part of the fare, thereby offering lower fares at the expense of fewer comforts. This usually means that checked baggage is not included, or the complimentary food and drinks offered by more premium carriers. The offering varies from one carrier to the next.

A brief history of Low-Cost Carriers

Southwest Airlines pioneered the LCC model in the United States in 1967, focusing on short-haul, point-to-point routes with no-frills service. Ryanair adopted the model in Europe in the late 1980s, sparking rapid growth of budget airlines across the continent and beyond.

What makes a Low-Cost Carrier cheaper?

Low-cost carriers have a lower operating cost structure than other airlines. These companies offer decreased ticket prices to passengers, but recoup those losses by charging for a range of extras such as food, priority boarding, seat allocation, and baggage.Low-cost carriers reduce operating costs through the following methods:
  • Single aircraft type fleet: Reduces training and maintenance costs.
  • Secondary airport usage: Lower landing fees at less congested airports.
  • Unbundled ancillary fees: Charging separately for baggage, meals, and seat selection.
  • High seat density configurations: More seats per aircraft to maximize revenue.
  • Point-to-point routing: Simpler operations without complex hub connections.
The sourcing and re-selling of aircraft is also essential to the business model of these airlines.

How many Low-Cost Carriers are there?

There are a range of low-cost carriers around the world, serving various populations and routes. The top low-cost carriers, ranked below by number of passengers moved annually: sources include airline annual and quarterly reports, BTS data, and industry estimates for 2024. Figures marked ~ are extrapolated from partial-year data.
Airline
Region
Passengers (millions)
Ryanair
Europe
197
Southwest Airlines
USA
~133
IndiGo
Asia
107
easyJet
Europe
91.1
AirAsia Group
Asia
63
Wizz Air
Europe
62.7
Lion Air Group
Asia
55
Vueling
Europe
38.2
Pegasus Airlines
Europe
32
Volaris
Latin America
28
VietJet Air
Asia
26
Cebu Pacific
Asia
24.5
Jetstar Group
Asia
23
Norwegian
Europe
22.6
Transavia
Europe
~22
Frontier Airlines
USA
~20
Allegiant Air
USA
~15
flydubai
Middle East
~15
Air Arabia
Middle East
~13
Eurowings
Europe
~12
Key sources: CAPA · Statista · Airline annual/quarterly reports (Norwegian Q4 2024, AirAsia Q4 2024, IndiGo FY2024, Cebu Pacific 2024)

LCC vs. ULCC: What's the difference?

Ultra Low-Cost Carriers (ULCCs) take the budget model even further. Here's how they compare:
Low-Cost Carrier (LCC)
Ultra Low-Cost Carrier (ULCC)
Base fare
Low
Very low
Ancillary fees
Moderate (baggage, seat selection, meals)
Extensive (nearly everything is an add-on)
Seat pitch
Standard economy
Often tighter
Examples
Southwest, easyJet, Ryanair
Frontier, Allegiant

Do corporate travelers have to use Low-Cost Carriers?

This depends entirely upon the company and the Corporate Travel Policy it has in place. In an effort to reduce traveling costs, some companies may require that staff fly exclusively using low-cost carriers. On the other hand, some companies might prioritize the comfort of travelers and permit larger budgets.A well-defined travel policy should specify:
  • Permitted routes: Which routes or trip lengths allow LCC bookings.
  • Baggage reimbursement rules: Whether checked baggage fees are covered.
  • Booking class restrictions: Any limits on fare classes or add-ons.
  • Approval requirements: When exceptions need manager sign-off.
In some countries, passengers have complained that the costs of flights are not transparent enough. While the final cost may appear attractive, some passengers are unhappy that basic needs are charged for, and that the price can rise significantly.
Some passengers also complain that the itinerary information is misleading. Some airlines, for example, offer flights to “Barcelona” when in fact the flights land some 90 kilometers away in neighboring Girona.

Are there airlines cheaper than LLCs?

Ultra low-cost carriers (ULCCs) have emerged in recent years and differentiate themselves from low-cost airlines by offering significantly cheaper prices but with a greater number of add-on fees. The business model remains largely the same, but pushed to an extreme.

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