EPRSauthor By / June 26, 2014

Low-cost air carriers in Europe

Following the deregulation of the EU commercial air market in the 1990s, the low-cost carriers (LCCs) segment started to develop…

@ kentoh / Fotolia
Low-cost carriers in Europe
@ kentoh / Fotolia

Following the deregulation of the EU commercial air market in the 1990s, the low-cost carriers (LCCs) segment started to develop in the EU. Nowadays, the European aviation sector remains the most active one for LCCs business , with 250 million passenger trips per year, followed by the North America (173 m) and Asia (117m). The dramatic growth of the LCCs in the last 15 years, currently representing a market share of 26% in Europe , has brought important benefits to the consumers, offering them low fares, more choice as far as regional or minor destinations are concerned. It has also represented a stimulus to independent travel and it has considerably changed the way Europeans travel and the impact this had made on the tourism sector. However, this evolution is also characterised by continous debate over issues related to transparency, working conditions of the employees, and protection of consumers´ rights as well as fair competition with flag carriers. Recent European Commission initiatives in the air transport sector have also addressed some of these key points. In the COM(2013)130 Proposal for a Regulation on Air transport: enforcement of passenger rights; air carrier liability limits , the Commission proposed a major update of EU regulation on the rights of passengers and obligations of airlines. Furthermore, in April 2014, the new Guidelines on State aid to airports and airlines were adopted. By doing so, the legislator clarified EU state aid rules on the public financing of airports and start-up aid to airlines.

This keysources gathers documents on the evolution of LCCs in Europe and some key related aspects: impact on national or regional tourism; competition with the traditional airlines and high speed rail; transparency; working conditions in the sector as well air passenger rights.


Brussels relaxes crackdown on regional airport sweeteners / Financial Times, 21 February 2014 (EP Intranet access only)
The article comments on the adoption of new guidelines for limiting state aid to regional airports and airlines and its impact on LCCs segment.

Annual Analysis of EU Air Transport Market 2012 / Mott MacDonald, 2013, 327 p.
This annual analysis of the EU Air Transport Industry has been commissioned by the Directorate General for Mobility and Transport (DG MOVE). It draws a factual analysis of how and why European air transport has evolved in relation to other global regions, also focusing on the low cost carriers fragment (pp.91-97).

Low-cost air fares: How ticket prices fall and rise / BBC, June 2013
The article reveals how some low cost carriers modulate and control tickets´price according to their marketing strategies.

The development of low cost carriers in Europe / World Tourism Organisation, in Global Report on Aviation – Responding to the needs of new tourism markets and destinations, 2012, pp.31-35

Low Cost Carriers / ICAO
The article also includes a list to all operating and ceased LCCs.


High speed rail vs. low-cost air: competing or complementary modes? / Florence School of Regulation, European University Institute, March 2014, 20 p.
This paper summarises the content of the presentations delivered during the 2nd Florence Intermodal Forum, looking at discussing the expected challenges stemming from the coexistence of high-speed trains and low-cost carriers in the same passenger transport market.

Low-cost airlines: Stimulation effects wear off / Aviation economics, June 2014
Focusing on UK-Europe traffic, the analysis shows that low-cost carriers (LCCs) will stimulate demand on new routes through lower fares for a few years. However, it concludes that, over time, in a mature market like the UK-Europe high LCC growth rates cannot be maintained indefinitely.

The geography of European low-cost airline networks: a contemporary analysis / Dobruszkes, F.; Journal of Transport Geography, vol. 28, April 2013, pp. 75–88
This article presents an in depth overview of LCCs market in Europe. According to the author, low cost airlines mainly serve Western large cities and tourist areas, they operate many niche routes but also compete with traditional airlines. it also argues that there is no a single European low-cost model.

Distinction between low cost and ‘legacy’ airlines increasingly irrelevant / KPMG, 2013
This article summaries the findings of the KPMG 2013 Airlines Disclosure handbook ( full text available ). It states that the difference between the cost base of low cost carriers (LCCs) and legacy airlines has narrowed greatly over the last six years. Furthermore, from a customer perspective, the distinction between the two business models for short distances is increasingly irrelevant as traditional flag carriers’ short haul operations now compete head to head with the LCC’s point to point services.

Concession bargaining in the airline industry: Ryanair’s policy of route relocation and withdrawal / Olischer, F. T.; Dörrenbächer, C.; Berlin School of Economics and Law, 2013, 28 p.
This paper examines the European low-cost airline industry by investigating how the rise of low-cost carriers has influenced the relationship between airlines and airports. The authors analysed two case studied on Ryanair’s policy of route relocation and withdrawal and show how this processes of concession bargaining works.

Low-cost carriers and airports’ performance: empirical evidence from a panel of UK airports / Bottasso, A ; Conti, M. ; Piga, C; Industrial and corporate change, 2013, vol.22 (3), pp.745-769
The authors investigated the total factor productivity (TFP) for a panel of the UK largest airports´over the 2002-2005 period and investigate whether the presence of LCCs has some impact on airports’ TFP. The study concludes that considerable entry of LCCs on European markets has impacted positively on the vertical chain by facilitating airports’ productivity improvements.

Cheap flights to smaller cities: good news for local tourism? Evidence from Italy / Alivernini, A D’Ignazio, A; Migliardi, A; Bank of Italy, 2012, 22 p.
This paper focuses on the impact of low cost carriers on local tourism, presenting case studies from Italy. The authors conclude that proximity to a low cost operating airport, measured in terms of travel time, exerts a positive effect on tourism receipts.

Study on the effects of the implementation of the EU aviation common market on employment and working conditions in the Air Transport Sector over the period 1997/2010 / Steer Davies Gleave, 2012, 191 p.
This study includes both a quantitative and qualitative assessment of employment in the EU air transport sector, low cost carriers sector included, and provides forecasts for how employment could develop over the period to 2020, and estimates of indirect employment in the sector.

The Development of the Low Cost Model in the European Civil Aviation Industry / Swansea University, Cardiff University, 2012, 58 p.
This study has been commissioned by the European Transport Workers’ Federation and funded by the European Commission. The main findings are the following: developments in the low costs model were not uniform and a variety of low cost business strategies had emerged; had implications not only for staff working at LFAs but also for staff of service providers and aviation workers in competitor (legacy airlines),and had implications for trade unions seeking to negotiate on behalf of members’ working for the LFAs.

New Europe, new low-cost air services / Dobruszkes, F.;Journal of Transport Geography, vol. 17, 2009, pp. 423–432
The author analyses the development of LCCs following the enlargement of the European Union to East Central Europe and the related new forms of mobility: post-migration flows from the east by those who have gone to work in Western Europe, new tourist practices and new types of business as well.

The consequences of the growing European low-cost airline sector / European Parliament, DG IPOL, 2007, 76 p.
The study provides an analysis of the impact of the changes in air transport market as a consequence of the emergence of low fares airlines. Evidence proves that this development has had a significant impact on established airlines, the main airports, and also on intra- and intermodal competition, European tourism, passenger flows and regional development.

Stakeholder views

European Commission

Competition policy brief on new guidelines for state aid to airports and airlines , April 2014

European Parliament

Parliamentary question on Airline unions and unfair competition , Marc Tarabella (S&D), Jean Louis Cottigny (S&D), 14 April 2014

Parliamentary question on European Parliament Report 2011/2196(INI) and size and weight of hand baggage , Ramon Tremosa i Balcells (ALDE), 25 November 2013

Parliamentary question on European Parliament Report 2011/2196(INI) Transparency of prices on websites of low-cost airlines , Małgorzata Handzlik (PPE), 13 May 2013

Consumers’ views

The European Consumer Organisation (BEUC)
Price transparency and online booking payment surcharges , April 2013
Following the decision of the UK Office of Fair Trading (OFT) responding to a super-complaint launched by BEUC, the association calls on the European Low Fares Airline Association to improve conditions for all European consumers when purchasing flights.

Industry sector

European Transport Workers´ Federation (ETF)
Europe must stop social dumping and flags of convenience in civil aviation , July 2014
“Scientific research has revealed that the arrival of low fares airlines has introduced social dumping practices in the European aviation sector. The conference organised by the European Transport Workers’ Federation (ETF) demands that the Commission, the European Parliament and the Council stop these unfair practices and address the concerns of the workforce through the adoption of new specific legislation.

European Low Fares Airline Association (ELFAA)
ELFAA condemns the unfair pricing practices and misinformation to passengers by Online Travel Agencies , March 2014
“ELFAA urges the European Commission and national and European consumer protection agencies to stop turning a blind eye to the widespread, unfair pricing practices of numbers of online travel agencies, which lure consumers in to their websites with the promise of non-existent fares, to which they subsequently apply a previously-undisclosed mark-up at the end of the booking process.”

European Cockpit Association (ECA)
Reflection on economic crisis implications for aviation , March 2013
One chapter of the document focuses on the effects of the low-cost carrier model on the pilots and explains how this results in less career development opportunities for the the main land pilots and in a partial detriment of the working conditions.


Latest statistics for 2013 show increase in passenger numbers and employees / European Low Fares Airline Association Statistics, December 2013

Low cost carrier global seat capacity / Amadeus, 2013
In the first semester of 2013, London represented the world ‘largest LCC city by capacity, with approximately 15 million of available seats in the first semester of 2013; the European LCC sector is the first market with 182 million of aproximate seat capacity volume in the same time frame.

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