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AIRLINES WORLDWIDE - INTERNATIONAL - DECEMBER 2017

Published By :

Mintel

Published Date : Dec 2017

Category :

Travel Services

No. of Pages : N/A

Now the LCCs are increasingly looking for growth through establishing long-haul routes, as well as acting as feeders for long-haul flights. Not only are the dedicated LCCs like AirAsia X, WestJet, the Icelandic LCC WOW and Norwegian Airlines building up capacity in this market, but increasingly the LCC subsidiaries of the major European airline groups like Lufthansa’s Eurowings, Air France’s Joon and IAG’s LEVEL are also becoming players. In future, these big airline groups will continue to increase their long-haul budget offerings to the detriment of their standard full-service capacity.

Table of Contents

INTRODUCTION
Key findings
DATA SOURCES
ABBREVIATIONS
ISSUES IN THE MARKET
Distribution intermediaries
Insolvency
LCCs taking share
In-flight Wi-Fi
Political risk
GLOBAL SUMMARY
Demographic trends
Figure 1: Trend in world population by region, 2017-2100
Population ageing
Figure 2: Population aged 60 years or over by region, in 2017 & 2050
Implications for the air-travel sector
In-flight medical emergencies
Economy
Growth accelerating in most regions
Commodity exporters rebounding
Trade to rebound
Figure 3: Overview of the World Economic Outlook projections (% change, unless noted otherwise), October 2017 update
Interest rates
Figure 4: Forecasted trend in central bank interest rates by currency zone, October 2017
Figure 5: Forecasted trend in 10-year government yield by currency zone, October 2017
Currency rates
Figure 6: Outlook for exchange rates in 3 months & 12 months, 2017
Forex impact on airlines
Consumer demand
Price sensitivity
Airline capacity decisions
Outlook for spending on travel and tourism
Figure 7: Spending on travel & tourism worldwide, 2016 & 2027
Africa
Figure 8: Spending on travel & tourism in Africa*, 2016 & 2027
North Africa
Figure 9: Spending on travel & tourism in North Africa*, 2016 & 2027
Figure 10: Spending on travel & tourism in Sub-Saharan Africa*, 2016 & 2027
Asia Pacific
Figure 11: Spending on travel & tourism in Asia Pacific*, 2016 & 2027
North East Asia
Figure 12: Spending on travel & tourism in North East Asia*, 2016 & 2027
Oceania
Figure 13: Spending on travel & tourism in Oceania*, 2016 & 2027
South Asia
Figure 14: Spending on travel & tourism in South Asia*, 2016 & 2027
Figure 15: Spending on travel & tourism in South East Asia*, 2016 & 2027
Americas
Figure 16: Spending on travel & tourism in the Americas*, 2016 & 2027
Latin America
Figure 17: Spending on travel & tourism in Latin America*, 2016 & 2027
North America
Figure 18: Spending on travel & tourism in North America*, 2016 & 2027
Europe
Figure 19: Spending on travel & tourism in Europe*, 2016 & 2027
Middle East
Figure 20: Spending on travel & tourism in Middle East*, 2016 & 2027
Trend in growth of air travel
Figure 21: Trend in air passenger numbers by major country aviation market, 2014-20
Worldwide passenger numbers increased by 7% in 2016
Growth accelerated in 2017
Profitability improving
AIR TRAFFIC TRENDS
Figure 22: Air passenger volumes, 2014-July 2017
Global business confidence plateauing
Figure 23: Air passenger volume growth & the global composite PMI*, 2007-July 2017
Effect of lower fares wearing off
Figure 24: Global airline performance July 2017 & YTD
Latin American airlines growing fastest
Middle East coming back
Figure 25: Overall airline performance by major region, July 2017 & YTD
Europe slowing down
A similar case for Asia Pacific
A moderating uptrend in Africa
North American airlines hold on to earlier gains
Figure 26: Airline performance on international routes by major region, July 2017 & YTD
Domestic markets
Indian market regains some momentum
Strengthening economy boosting Russian RPKs
Passenger traffic lifted by a rebounding Japanese economy
Growth in demand and capacity picking up in the US
Australian demand and capacity on the downswing
A recovering economy is boosting demand in Brazil
Figure 27: Airline performance on domestic routes by major country market, July 2017 & YTD
DISTRIBUTION INTERMEDIARIES
GDSs depend essentially on air tickets
Figure 28: Bookings by type at Amadeus & Sabre, 2012-16
War with GDSs
Airlines react
Lufthansa charges €16 fee on GDS bookings
Lufthansa joined by Ukraine International Airlines
Most tickets still sold via indirect channels
More airlines to follow
British Airways joins Lufthansa
CWT avoids IAG charges
Distribution fees not the only issue
Air France follows suit
GDSs under pressure?
GDS CEOs continue to defend position
JetBlue cuts ties with 12 OTAs but not with major players
Metasearch favoured
Metasearch faces challenges
Rise of mobile poses a problem
Skyscanner demonstrates business benefits
NDC opens offers opportunities
It works in China
Airline/metasearcher relationship to evolve
Google a threat?
Loss of control
What can airlines do?
Harnessing ATPCo
ATPCO needs to evolve
Upgrading ATPCO
INSOLVENCY
Air Berlin
Figure 29: Trend in Air Berlin’s profit, 2007-15
100,000 Air Berlin flight tickets invalid
Lufthansa steps in
Lufthansa takes over long-haul routes
easyJet to get planes and routes
Air Berlin in last-minute talks with easyJet and Condor
easyJet takes over Airbus 320 leases and slots
Alitalia
Next steps
Seven offers for Alitalia
Lufthansa confirms interest in Alitalia
Cerberus’ offer to acquire Alitalia
Lufthansa close to Alitalia takeover
Alitalia’s path out of bankruptcy
New schedules for winter and summer 2018
Improved finances
Reinforcing the corporate segment
No significant customer attrition
A complete turnover in management
Future growth prospects
Monarch Airways
UK airlines rush to engage Monarch crew
Monarch administrators fought to retain landing slots
Monarch wins right to airport slots
London Gatwick slots sold
Niki goes under too
Hawaii’s Island Air files for Chapter 11
Airline has ceased operations
LCCS TAKING SHARE
LCCs have ramped up market share in Europe
Figure 30: Rising trend in LCC market share in Europe, 2002-17*
LCCs vs. legacy airlines
Figure 31: Trend in the share of flights in Europe: LCCs vs. traditional scheduled carriers, 2007-16
Figure 32: The biggest LCC country markets in Europe, 2016
Figure 33: LCC share of flights by major European country market, 2016
LCC share growing in German market
Dramatic expansion of Eurowings
Falling ticket prices
LCCs taking over in Spain
Figure 34: Year-on-year growth in seat capacity in Spain’s aviation market, 2014-16
LCCs grow in Eastern Europe
Figure 35: Seat capacity & LCC share of total, in the five largest Eastern European markets, February 2010 & February 2016
Wizz Air and Ryanair lead the pack
Figure 36: Trend in the capacity share of the top 5 airlines in the 5 leading Eastern European aviation markets, 2006-16
Legacy carriers losing share
Very little overlap between Wizz Air and Ryanair
Figure 37: Routes operated from 5 Eastern European countries by Wizz Air & Ryanair, in February 2016
Figure 38: Ryanair & Wizz Air combined share of selected country markets, seat capacity, in February 2016
Poland
Romania
Czech Republic
Hungary
Bulgaria
LCC penetration high in much of Asia
Figure 39: LCC share of available seats within select North East & South East Asian domestic markets, 5-11 June 2016
Some international routes heavily penetrated by LCCs
Figure 40: LCC share of available seats in the 20 largest international North East & South East Asian routes, 5-11june 2016
LCCs dominate in South Asia
Figure 41: Domestic market share of airlines in India, February 2017
The Indian aviation market is booming
Figure 42: Passengers carried by domestic airlines in India, January 2017
Other performance indicators
LCC long-haul flights a new challenge
Long-haul LCCs going strong in Asia
A sharp rise in traffic at AirAsia X
Figure 43: AirAsia X performance data, 2013-16
AirAsia X’s A330-300s have 377 seats
Figure 44: Number of seats on A330-300s operated by a sample of Asian & European carriers, 2016
Australia is the leading country market
Figure 45: AirAsia X's leading country markets served from Kuala Lumpur, 2016
Routes to the US?
Learning by trial and error
Figure 46: Routes launched & later abandoned by AirAsia X, 2009-15
LCCs flying transatlantic
Legacy LCC subsidiaries
North American LCCs
Lower fares to come?
Over-capacity and Brexit worries
Transatlantic LCC routes
Eurowings
Level
Norwegian Air Shuttle
Air Canada Rouge
WestJet
WOW Air adds new US services
easyjet collaboration with Norwegian and WestJet
Norwegian serves over 60 destinations
Figure 47: Norwegian's top 15 airports by departing flights, summer 2017
Expansion at Copenhagen
Figure 48: Destinations served by Norwegian from Copenhagen, summer 2017
US and Spanish routes dominate ASK rankings at CPH
Figure 49: Norwegian's top 15 routes from Copenhagen (CPH) by ASKs, summer 2017
Spain is biggest of 26 destinations from CPH
Figure 50: Norwegian's top 15 destinations from CPH ranked by weekly departing seats, summer 2017
Norwegian UK (NUK) gets transatlantic permit
Air France-KLM’s Millennial-focused airline
Getting the positioning right
‘Do not target Millennials explicitly’
Cutting costs
Future plans
Impact on legacy business models
Basic economy – a ‘loss-leader’ defence against ULCCs
IN-FLIGHT WI-FI
In-flight Wi-Fi driven by the iPhone
Paying for in-flight Wi-fi
Adoption growing fast
Outlook for in-flight Wi-Fi
A third of passengers log on to free Wi-Fi
Connectivity options
ATG networks
Satellite connectivity
Equipment suppliers
Figure 51: Juniper ranking of in-flight Wi-Fi providers, 2017
Panasonic Avionics
Gogo
Thales Group
SITA OnAir
Key market trends
In-flight Wi-Fi can be a money-spinner
Emirates Wi-Fi offering
Figure 52: Emirates’ revised in-flight Wi-Fi offering by loyalty tier, July 2017
Find ways to generate revenue
The importance of ancillary revenues
Figure 53: Top 10 airlines – Total ancillary revenue in 2016
Revenue streams from in-flight Wi-Fi
Figure 54: Forecasted airline share of the US$30-billion broadband-enabled ancillary revenue by type, 2018-35
E-commerce platforms
Figure 55: Projected ancillary revenues for airlines from in-flight Wi-Fi by region, 2018-35
Why not continuous in-flight shopping?
POLITICAL RISK
Brexit
A warning from Ryanair
Qatar
Some respite
Trump
The US becoming a pariah
Bombardier tariffs
Gulf carriers targeted
Delta CEO decries ‘subsidised’ Gulf carriers
Electronic travel ban a protectionist move
A move against open skies
Why only those ten airports?
Third travel ban blocked by judge
Judge in Hawaii rules against ban
Travel ban finally upheld
Turkey
TOP 20 COUNTRY MARKETS
Australia
Qantas
Virgin Australia
Figure 56: Australia – Passenger airlines: company market share by volume of passengers (%), 2013-15
Domestic market
Figure 57: Australia – Passenger airlines: domestic market share by volume of passengers (%), 2013-15
International market
Figure 58: Australia – Passenger airlines: international market share by volume of passengers (%), 2013-15
Brazil
LATAM Airlines Group
Figure 59: Brazil – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
Domestic market
International market
Figure 60: Brazil – Passenger airlines: international market share by volume of passengers (%), 2014-15
Canada
Air Canada
WestJet
Figure 61: Canada – Passenger airlines: company market share by volume of passengers (%), 2013-15
China
China Southern Airlines
Air China
China Eastern Airlines
HNA Aviation
Figure 62: China – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
Domestic market
International market
Figure 63: China – Passenger airlines: international market share by volume of passengers (%), 2014-15
Colombia
Avianca Holdings
Passenger transport
VivaColombia
Figure 64: Colombia – Passenger airlines: company market share by volume of passengers (%), 2014-15
Domestic market
Figure 65: Colombia – Passenger airlines: domestic market share by volume of passengers (%), 2014-2015
Figure 66: Colombia – Passenger airlines: international market share by volume of passengers (%), 2014-15
France
Air France-KLM
Domestic market
Figure 67: France – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
International market
Figure 68: France – Passenger airlines: international market share by volume of passengers (%), 2014-15
Germany
Lufthansa
Air Berlin
Figure 69: Germany – Passenger airlines: company market share by volume of passengers (%), 2011-15
India
Air India
IndiGo
Jet Airways
SpiceJet
Domestic market
Figure 70: India – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
Figure 71: India – Passenger airlines: international market share by volume of passengers (%), 2013-15
Indonesia
Lion Air
Garuda
Domestic market
Figure 72: Indonesia – Passenger airlines: domestic market share by volume of passengers (%), 2011-15
International market
AirAsia
Figure 73: Indonesia – Passenger airlines: international market share by volume of passengers (%), 2011-15
Italy
Ryanair
easyJet
Figure 74: Italy – Passenger airlines: company market share by volume of passengers (%), 2011-15
Japan
All Nippon Airways (ANA)
Japan Airlines (JAL)
Figure 75: Japan – Passenger airlines: company market share by volume of passengers (%), 2012-13
Mexico
Domestic market
Aeroméxico
Alliance with Delta
Volaris
Interjet
Figure 76: Mexico – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
United Airlines
American Airlines
Delta Air Lines
Southwest Airlines
Figure 77: Mexico – Passenger airlines: international market share by volume of passengers (%), 2014-15
Russia
Aeroflot
S7 Airline
Figure 78: Russia – Passenger airlines: company market share by volume of passengers (%), 2014-15
South Africa
South African Airways (SAA)
Comair
Figure 79: South Africa – Passenger airlines: company market share by volume of passengers (%), 2014-15
Domestic market
Figure 80: South Africa – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
International market
Emirates
British Airways
Figure 81: South Africa – Passenger airlines: international market share by volume of passengers (%), 2014-15
South Korea
Korean Air Lines
Asiana Airlines
Jeju
Air Busan
Figure 82: South Korea – Passenger airlines: company market share by volume of passengers (%), 2013-15
Spain
Ryanair
IAG/Vueling
Figure 83: Trend in IAG’s capacity by region for the year ended 31 December 2016
Figure 84: Key performance data by airline subsidiary, 2016
Air Europa
Figure 85: Spain – Passenger airlines: company market share by volume of passengers (%), 2014-15
Turkey
Turkish Airlines
Pegasus Airlines
Figure 86: Turkey – Passenger airlines: company market share by volume of passengers (%), 2014-15
Domestic market
Figure 87: Turkey – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
International market
Figure 88: Turkey – Passenger airlines: international market share by volume of passengers (%), 2014-15
UK
easyJet
Figure 89: Key figures for easyJet, 2007 compared to 2017
Figure 90: Key performance data, 12 months to end September 2016 & 2017
British Airways
Ryanair
Figure 91: UK – Passenger airlines: company market share by volume of passengers (%), 2011-15
US
Southwest Airlines
Delta Air Lines
United Air Lines
American Airlines
Domestic market
Figure 92: US – Passenger airlines: domestic market share by volume of passengers (%), 2011-15
International market
Figure 93: US – Passenger airlines: international market share by volume of passengers (%), 2011-15
Vietnam
Vietnam Airlines
VietJet Aviation
Domestic market
Figure 94: Vietnam – Passenger airlines: domestic market share by volume of passengers (%), 2011-15
International market
Figure 95: Vietnam – Passenger airlines: international market share by volume of passengers (%), 2014-15
FREQUENT-FLYER PROGRAMMES
Figure 96: Frequent-flyer programme details by airline, 2017
American’s CEO likens miles to Bitcoin
Delta thins the top tier
Co-branded credit cards an exception
Delta ups requirements drastically
Mixed reaction to change
Air France-KLM switches to expenditure-based programme
TECHNOLOGY
Alexa skills
Biometric IFE
Goggles for Air France’s new Joons LCC
Gogo’s new hardware
IFE on easyJet
Netflix streaming services
Check-in no longer necessary for iPhone app users
Auto check-in not so popular
TEN BIGGEST AIRLINES
Figure 97: Top 10 airlines by scheduled RPKs flown (international & domestic), 2016
AMERICAN AIRLINES (AA)
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet
Figure 98: American’s fleet at 31 December 2016
Future deliveries
Figure 99: Future aircraft deliveries for American Airlines, 2017-20*
Current developments
American reduces international capacity from Chicago O’Hare
International capacity from O’Hare has declined
Figure 100: American’s capacity at O'Hare, 2007-17
American gaining ground on United 
Figure 101: American’s seat capacity share at O’Hare, 2007-16
American operates 138 routes from O’Hare, of which United serves 123
Figure 102: American’s top 40 routes from O’Hare in comparison with United, 2017
American’s summer 2017 network from O’Hare
DELTA AIR LINES
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet
Figure 103: Delta’s aircraft fleet at 31 December 2016
Future deliveries
Figure 104: Delta’s future aircraft deliveries – purchases and options, as at 31 December 2016
Figure 105: Delta’s aircraft purchase commitments by year of expected delivery, 31 December 2016
Current developments
Corporate travel outlook brightest in years
Delta introduces free texting
Delta to invite Aeroméxico as transatlantic JV member
UNITED AIRLINES (UAL)
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet
Figure 106: United’s mainline aircraft fleet, 31 December 2016
Future deliveries
Figure 107: Aircraft purchase commitments, 31 December 2016
Current developments
United Continental takes a tumble
United ready to ‘re-bank’ hubs
United launches new long-haul routes
EMIRATES
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet and future deliveries
Figure 108: Emirates’ operating aircraft fleet & new orders at 31 March 2017
Current developments
‘Superconnectors’ under pressure
Figure 109: Growth in passenger traffic on the three main Gulf carriers, Emirates, Etihad & Qatar Airways, 2006-16
New competitors in the market
Adapting the business model
CHINA SOUTHERN AIRLINES
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet
Figure 110: China Southern’s fleet at 31 December 2016
Future deliveries
Current developments
Domestic routes
Regional routes
International routes
SOUTHWEST AIRLINES
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet
Figure 111: Southwest’s aircraft fleet, 2017
Future deliveries
Figure 112: Southwest’s aircraft firm orders & options, 2017
Current developments
International routes
LUFTHANSA
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet
Figure 113: Lufthansa airline group aircraft fleet, 31 December 2016
Future deliveries
Figure 114: Lufthansa airline group’s expected aircraft deliveries, 2017-25
Current developments
Lufthansa completely dominates German market
Lufthansa Partners with blockchain start-up
A B2B solution
BRITISH AIRWAYS
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet and future deliveries
Figure 115: British Airways’ fleet & expected future deliveries at 31 December 2016
Current developments
Fares for under £40
RYANAIR
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet
Future deliveries
Current developments
Ryanair cancels 18,000 flights
CHINA EASTERN AIRLINES
SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Fleet
Figure 116: China Eastern’s aircraft fleet at 31 December 2016
Future deliveries
Figure 117: Fleet additions & retirements at China Eastern, 2017-18
Current developments
AIR FREIGHT
Figure 118: Top 10 airlines by scheduled freight tonne, kilometres flown (international & domestic), 2016
WHAT NEXT?
Where will growth occur?
Figure 119: Projected passenger numbers by region in 2035
Further growth of LCCs
Long haul a growth opportunity
China and Russia
Consolidation of Europe’s aviation sector
More fragmented than US
Figure 120: Market share of total seats in % of top 6 carriers in Western Europe, 2017
Figure 121: Market share in % of total seats of top-6 carriers in the US, 2017

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