The Evolution of low-cost Carrier operational strategies pre- and post-recession

This study presents an analysis of low-cost carrier (LCC) competition strategies for Continental US (CONUS) domestic markets. Using OAG schedule data from 2005 to 2015, pre- and post-recession trends in LCC flight offerings were analyzed and compared with their major carrier counterparts in terms of number of markets served, flight frequency, and competition structures of served markets. Results show that LCCs are increasing the number of markets served to/from large airports and are entering highly-competitive markets. The results further suggest that LCCs and major carrier strategies evolved differently during the study period, where LCCs outpaced major carriers in terms of markets entered while major carriers have gained a greater flight frequency share in the markets they already serve. Results clearly indicate that overall LCCs are still growing in terms of O-D markets served and increasing competition with major carriers. However, evidence suggests that each of the top four LCCs adopted different operating strategies as part of their business model during the study period.