Low-cost carriers (LCCs) may yield several benefits to destinations including increased tourist arrivals, improved destination competitiveness and enrichment of regional economies. Governments in several destinations, particularly insular tourism destinations, have acted as proponents towards LCCs offering attractive subsidisation schemes. Nonetheless, the degree to which LCCs contribute to tourism development remains questionable. Using semi-structured interviews with industry stakeholders, the aim of this paper is to explore the supply-side perceptions of the impacts of LCCs on the tourism industry of Cyprus. Findings reveal concerns over the influence of LCCs on the development of the island’s tourism industry. Whilst air transport inherently impacts tourism development, this study concludes that demand-related issues and government policies interact to shape the environment in which LCCs operate, and consequently, affect tourism development. This paper concludes by highlighting the narrowing gap between different airline types and proposes that further research on the changing environment in aviation is conducted.