Global Airlines: Opportunities Galore

April 2016

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.

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Fuel - single most important cost for airlines

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.

LCC continue to eat the market share of schedule operators

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.

External factors -a threatening force

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.

US airlines outpacing rivals

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.

Ancillaries growing

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.

Introduction

Scope
Key findings

Global and Regional Performance

Airlines ride the wave of low fuel prices
Premium traffic slowing down
Low cost carriers expanding in Eastern Europe
Stellar performance by US airlines

Competitive Landscape

American Airlines Group: Global leader
Bankruptcies still plaguing the industry
Global alliances
Disruptors affecting airline alliances?
Airlines: Key mode of transport

Key Trends and Developments

North America tops the leaderboard
Ancillary revenues maintain momentum
Low oil prices are boosting air travel
Expansion through partnerships and M&A ongoing
Direct online distribution on the rise
Mobile makes inroads
Protectionism threatens open skies agreements…
…but ASEAN comes closer to opening its skies
Plane orders continued in 2015
Airbus orders in 2015
The technology factor for supporting leadership
Sustainability across the board

Global and Regional Prospects

Sales to plateau by 2019
Domestic business travel expected to lead
Low cost carriers solid in the Philippines and Vietnam
Asia Pacific: A driving force
Israel and Nepal are expected to lag
Impact of low fuel prices on airlines
Competition intensifies
Airline travel: Breaking the sound barrier
Factors impacting the industry
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