The expansion of low-cost carriers not only indicates a level of economic prosperity within a region but also drastically improves the quality of life for those lucky enough to be serviced by them. This affordable air service can radically change one's ability to go on vacation or travel where and when needed in order to maintain the familial and personal relationships they value most. Whether in the
United States or some of the world's most rapidly developing aviation markets, budget airlines strongly contribute to economic growth. In this article, we will examine the relationship between low-cost airline growth and economic development in more detail. The impact of low-cost carriers emerges in stages. First, it affects the aviation industry before quickly transitioning to other travel-adjacent industries, ultimately resulting in economic benefits across the board. While the effect of low-cost carrier market entry does not always play out exactly the same way, typically, such airlines will stimulate traffic through lower fares, which will subsequently lead to an increase in competition overall. The bulk of research on low-cost airline service has focused on destination markets, primarily in sunny vacation destinations. Undeniably, the advent of budget airline services to places like Cancun, Punta Cana, and Saint Martin have contributed to developing these areas with lower fares, leading to higher demand, which significantly spurred the growth of these destinations' tourism industries. From an economic perspective, the presence of budget airlines and the reduction of fare prices make the consumer wealthier and more powerful within the market. While this may seem counterintuitive, a significant decrease in fares actually improves one's economic standing in an area of origin, not just spurring growth in popular tourist areas. If, at the end of the year, one has been able to save up around $2000 for a year-end vacation, a significant reduction in airfare makes that consumer's money go further, allowing them to either visit a more luxurious destination or maybe take two separate vacations entirely. Additionally, as more and more passengers are taking to the skies on more flights, there is an increasing demand for more hotels, more Ubers to and from the airport, and many other products and services, all providing more jobs, ultimately leading to long-term economic growth. Get all the latest right here on Simple Flying! The first of these is the advancement in aircraft technology, which allows for ultra-efficient, longer-range jets like the Airbus A320neo and the
Boeing 737 MAX. Secondly is a deregulated airline operating environment that both protects competition and enables airlines to undercut each other's prices. The final factor is the presence of a developed middle class, with spending power to demand low-cost flights. As we have discussed, the presence of budget airlines helps drive economic development, which in turn continues to push forward each of these three factors. First, with a strong and competitive aviation industry, there will be more demand for aircraft, pushing manufacturers to compete with each other by developing newer and more cost-efficient planes.