World Bank to Publish Book on LCCs in Developing Countries

The World Bank has long recognised aviation as a key enabler for economic development. The contrast between the remarkable growth of low-cost carriers (LCCs) in Asia and the persistent lack of adequate connectivity in Africa has now sparked the World Bank to study the role of LCCs in developing countries more closely.

The results will be published in a forthcoming book by the World Bank’s Lead Air Transport Specialist Dr. Charles E. Schlumberger and by Nora Weisskopf, Air Transport Specialist at the World Bank, entitled ‘Low-Cost Carriers – Opportunities and Impact in Developing Countries’.

“By comparing successful LCCs, for instance in Asia, Mexico or South Africa, with regions where low-cost airlines are struggling to take hold such as East Africa, we have been able to identify the factors that hamper the growth of airlines in some parts of the world,” said Dr Schlumberger, who is also among the organisers of the World Routes Strategy Summits. “Charges, taxes and fuel costs are often very high while the quality of the infrastructure can be poor. In addition, a small middle class as well as regulatory and market access issues have often put the breaks on airlines which try to build a network in Africa and other parts of the world. This means that their costs are high, while the yields remain fairly low.“

“There are good reasons to be optimistic though, as things are moving in the right direction in a number of countries and regions,” Dr Schlumberger explained. “The LCC business model may not yet be suitable for some markets which have very small air transport markets – like most of the Least Developed Countries. Nevertheless, there are significant opportunities, particularly in Africa, to lower overall costs and to provide air fares at more affordable prices to foster a more competitive air transport market. LCCs are like a turbocharger, but for them to work you have to have a well-running engine first.”

According to Dr Schlumberger, the public sector in developing countries needs to start seeing LCCs as an engine for economic growth. “This means that they should actively promote connectivity, rather than protecting the incumbents.” Referring to the world’s least developed countries, he added: “LCCs for LDCs - that’s what’s needed to stimulate growth.”

The book will be published in early 2014 and will be available as a free download on the World Bank’s website.