Airlines continued to focus on margins in 2015. Players are concentrating on ensuring optimum innovation, service and new flights in line with changing consumer demands. Strong price competition and low cost carriers' growing focus on value-added offers will result in divergent performance for different airline types. Carriers will also continuously expand their networks and frequency, often via codeshare agreements or partnerships in new and emerging markets.
A notable decrease in fuel expenses, which have helped improve airlines’ bottom lines due to the global decline in oil prices is expected to continue by the end of 2016. Fuel efficiency through high-performance next-generation aircraft will be a primary green strategy in the airlines’ approach going forward.
Schedule airlines are all seen suffering a decline in market share, as low cost carriers improve their margins and are able to compete better on short and mid haul routes.
Regional threats, including economic difficulties in China, the turmoil in the Middle East, and the now passed Ebola crisis in Africa are all factors that have impacted, and will impact operations.
Stronger demand for travel in the US market, competitive capacity growth, strong US economy and decreasing oil prices have been working in airlines’ favour by generating more revenues and boosting profitability.
Ancillary revenues remain a key strategic tool for players to maintain competitive fares and keep their operational costs low. Airlines rely heavily on the ancillary revenues, which account for a significant share of their income. Ancillary revenues generated via digital channels are increasing for airlines in addition to expanding their direct and own distribution channels through website and mobile app developments and improvements.
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