Aviation
Low-cost carrier (LCC)
An airline built for the lowest cost per seat, selling cheap fares plus paid extras.
Last reviewedWhat does Low-cost carrier (LCC) mean?
A low-cost carrier keeps CASK low with a simple model: one aircraft type, many seats per aircraft, quick turnarounds so each aircraft flies more hours a day, point-to-point routes, cheaper secondary airports, direct online sales and no free extras. It sells low base fares and charges for bags, seats and food (ancillary revenue). Ryanair, easyJet, Southwest, IndiGo, Air Arabia and AirAsia are examples. Example: if an LCC's CASK is 0.04 against 0.07 for a full-service rival on similar routes, it can charge lower fares and still earn a margin. Full-service airlines often respond with basic economy fares or their own low-cost subsidiary.
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Related terms
- CASK (cost per available seat kilometre)Total airline operating cost divided by ASKs.
- Hub-and-spoke networkAn airline network that routes passengers through a central airport to connect many cities.
- Porter's generic strategiesCompete on lowest cost, on being different, or by focusing on a niche.
- RASK (revenue per available seat kilometre)Total airline revenue divided by ASKs.
- ASK (available seat kilometre)One seat flown one kilometre: the standard measure of airline capacity.
- RPK (revenue passenger kilometre)One paying passenger flown one kilometre: the standard measure of airline traffic.
- Load factorThe share of seats filled with paying passengers: RPK divided by ASK.
- Yield (airlines)Passenger revenue per revenue passenger kilometre: the average fare per kilometre.