LCCs as game-changers for new growth markets
Low-cost carriers (LCCs) have fundamentally reshaped India’s aviation landscape, turning air travel from a luxury into an everyday mobility option for millions. By connecting secondary cities, stimulating price-sensitive demand and expanding point-to-point networks, LCCs have opened up entirely new tourism flows and source markets across the country and beyond.
At a panel discussion titled ‘LCCs as Game-Changers for New Growth Markets’ during SATTE Conference 2026, industry leaders examined how the LCC model continues to evolve, its role in the current stature of India tourism, and how the travel trade can leverage the expanding connectivity landscape. The discussion was steered by Anil Parashar, Executive Director of ITQ Technologies.
A backbone of India’s aviation growth
Setting the context, Parashar emphasised that the rise of LCCs fundamentally changed the trajectory of Indian aviation. Before the early 2000s, rail travel dominated long-distance mobility in the country. “Without LCCs, aviation is incomplete in India,” he noted. “Many travellers who depended on train travel earlier are now flying. This transformation has been possible because of the LCC model.”
The traditional LCC model was built on simple operational efficiencies - single-aisle aircraft fleets, standardised crew training and streamlined operations. However, as the aviation ecosystem has evolved, the lines between low-cost and full-service carriers have increasingly blurred.
“Today, when we look at the environment, an airline like IndiGo hardly looks like a conventional LCC,” Parashar observed.
The evolving definition of an LCC
For airlines themselves, the LCC label is no longer as straightforward as it once was. Anshul Sethi, Head of Sales – India at IndiGo, explained that while the airline began as a low-cost carrier, its identity has evolved with the changing expectations of Indian travellers.
He noted that the core principles of the LCC model, point-to-point connectivity and route density, have enabled the airline to grow alongside the expanding Indian aviation market.
“We have grown with the Indian population and the demand in the country,” he said. “With products like IndiGoStretch, we are not just catering to existing business-class passengers but also creating a new category of travellers who aspire to travel more comfortably. We are not limiting ourselves to the lowest price anymore,” Sethi added.
According to Sethi, “India works in a way where we make hay when the sun shines. We had committed ourselves to Tier-II, Tier-III and Tier-IV cities, and now we are reaping the benefits of that.”
By leveraging a single aircraft type, opening more origin and destination networks, and moving beyond regional connectivity, the airline has steadily broadened its reach. “At the same time, we are also looking at wide-body aircraft expected to join the fleet from 2027.”
“We are thinking long-term,” he explained, aiming to align airline growth with the evolving aspirations of Indian travellers. “People now know exactly which seat they want to sit on. We are building products around those preferences.”
LCCs as true game changers
From the travel trade’s perspective, the impact of LCCs on India’s aviation and tourism ecosystem has been transformative. Sunil Kumar, President of the Travel Agents Association of India (TAAI), credited the rapid growth of India’s aviation sector largely to the expansion of LCCs, particularly IndiGo.
“India suddenly appeared on the global aviation map, and I would give a lot of credit for that to IndiGo,” Kumar said. “Without them, that visibility of India globally would not have been possible.”
At the same time, he pointed out that the LCC model has gradually evolved beyond simply offering the lowest fares. “Sometimes you see fares that are higher than full-service carriers,” he said. “But the important thing is that the airline has built connectivity and invested in the network anticipating returns.”
Kumar also emphasised how LCCs have made air travel accessible to a much wider segment of society. “Everyone in India can afford air travel today compared to what it was 20 years ago,” he noted. “The middle-income group has multiplies, and LCCs have made flying accessible to them.”
He added that LCCs have enabled travellers to reach destinations that were previously outside their travel plans. “They have given people the opportunity to reach places that were never within the realm of expectation earlier,” he said. Sunil highlighted the strength of a resolve to offer service at a price that people can afford, which otherwise was not possible at all.
Policy support and challenges
While LCCs have played a pivotal role in expanding aviation access, panellists stressed that policy support and regulatory reforms remain crucial for sustaining growth. Subhash Goyal, Chairman of STIC Travel & Air Charter Group, suggested a measure, which is visa-on-arrival without fees, which could significantly stimulate inbound tourism.
“In the age of artificial intelligence and computerisation, immigration authorities already have access to passenger information instantly,” Goyal said. “Visa-on-arrival without fees would have a huge multiplier effect on the economy.”
He also emphasised the importance of expanding international connectivity from secondary cities for airlines like Air India and Indigo.
“Cities like Bhopal have beautiful international terminals but no international flights,” he pointed out. “Delhi and Mumbai are already choked, and even with secondary airports they will reach capacity in a few years.”
The discussion also touched upon the sensitive issue of airfare regulation following recent debates around fare caps. Parashar referenced the recent observation by the Supreme Court of India, which suggested that surge pricing should be monitored and potentially capped.
“If the judiciary and the government keep interfering in fare management, how will the aviation boom continue?” Parashar asked.
Kumar, however, argued that such interventions are often a response to public sentiment rather than policy-driven decisions. “The recent call for fare caps is more an outburst from travellers,” he said. “Passengers sometimes face extremely high prices in urgent situations, and the government’s response reflects that public concern.”
Goyal added that the high cost of aviation turbine fuel (ATF) remains one of the biggest challenges for airline profitability. “In some cases, ATF can account for up to 50% of an airline’s direct operating cost,” he explained. “Bringing ATF down, and also including the same under the GST regime, could significantly ease operational pressures.”
At the same time, Goyal highlighted, “Airlines which went bankrupt was because government didn't support them. The airlines we are competing with, Emirates, Qatar, Etihad, they are all supported by government”
Regional connectivity & UDAAN challenge
India’s regional connectivity programme, UDAAN Scheme, also came under discussion. While the initiative has successfully opened new routes, Sethi noted that operating such routes can sometimes be financially challenging for airlines.
“Slots are like gold,” he explained. “Operating a UDAN route means using valuable slots, and the economics can become difficult if fare caps are also imposed.”
However, he acknowledged that the programme’s 2025 edition has introduced better discipline and focus. “The government has taken steps to ensure that the scheme focuses on far-flung regions like the northeast and hilly areas.”
The role of travel agents in the digital era
As aviation continues to digitise rapidly, the role of travel agents is also evolving. Sethi pointed out that India has witnessed an unprecedented democratisation of ticketing, enabled by digital platforms and a widespread travel agent network.
“Today we work with over 18,000 travel agents,” he said. “In fact, there may be nearly one lakh agents in the country selling air tickets.” Despite the rise of online booking platforms, travel agents remain highly relevant, particularly in emerging markets.
“Demand today is coming from Tier-II and Tier-III cities, where customers still rely heavily on travel partners,” Sethi explained. “Do we need travel agents? One hundred per cent. Almost 30-32% of our capacity is international. Now, we are seeing the need for distribution. But in 2026, we should be a little smart about what we are doing. Not just investing in a high-cost channel which will serve the same market.
Goyal agreed, noting that adaptability will determine survival in the evolving travel ecosystem. “The role of agents will always remain,” he said. “But only those who adapt to change will survive.”
