Abstract:
Since the emergence of the first low cost carrier (LCC) back in 2002 on the African continent in the South African Development Community (SADC) region, LCC activity has been moderate. Compared to LCC activity, from other parts of the world, such as Europe, North America and South East Asia, LCC activity has increased to the extent it the market has neared maturity and has made a huge impact to the passenger market. As for Africa, industry experts still consider that the air transport market is yet to experience further growth, as, as of 2017, Africa only represented 2.2% of the global market share according to a report on passenger demand and load factors by the International Air Transport Association (IATA).
The main objective of this research is to investigate passenger volumes and financial performance of the LCCs in the Southern African Development Community region. The existing literature for the LCC market has resulted in limited knowledge about the impact to the passenger market for this specific business model at regional economic bloc level.
Analysis of secondary data; passenger traffic volumes, seat capacity and load factors and airline case studies were conducted to identify growth in passenger volumes from 2000 to 2017, and financial performance of two airlines against industry global levels. In addition, qualitative information was gathered from dissemination of a questionnaire via email interviews conducted among industry experts with substantial knowledge of the African air transport industry. The questionnaire was structured to source information on the factors influencing and affecting LCC activity in the economic bloc.
The results of the secondary data indicate that LCCs stimulated passenger numbers between 2002 and 2017 to the air transport market, adding passenger volumes to the volumes carried by the Full-Service Network Carriers (FSNCs). Furthermore, the results indicated that financial performances of the two airlines selected for the case studies, between 2012 and 2017 performed positively recording net profit levels above the industry global levels.
The industry experts expressed opinion that the commercial viability and competitiveness of LCCs in the economic bloc could be dependent on several factors such as regional policy on air transport and strategy and management model, and not entirely on LCCs being government subsided or privately owned.