EXECUTIVE SUMMARY UK July 2013 Airlines JOHN WORTHINGTON Senior Analyst Price is the bottom line for most travellers but low-cost airlines need to be wary of losing passenger goodwill over the issue of ‘hidden charges’ – an issue consumers feel very strongly about in an era where people expect greater transparency and integrity from brands and reputations can change quickly within the space of a few social media clicks.
1 Airlines Executive Summary July 2013 THE MARKET Slow growth pattern likely to continue In 2011 airline market volume recovered by 4.5%, but this was in relation to the 2010 total which was affected by the Icelandic ash cloud crisis. The underlying trend suggested a slight pick-up in passenger traffic which continued with a further 0.8% growth in 2012 reaching 203.3 million passengers uplifted at UK airports. International passenger uplift rose by 0.9% in 2012 but remained 4.6% below pre-recessionary levels in 2007; domestic traffic fell by 0.5% in 2012, with volumes having plummeted 21% since 2007. (See Figure 1) In the long term, the Department for Transport (DfT) expects demand for air travel to rise by 1-3% a year up to 2050, compared to average historical growth rates of 5% a year over the past four decades. This slowdown in growth rates is attributed to the likelihood of maturity across passenger markets and a projected end to the decline seen in average fares over the past 20 years. Budget shift The number of passengers uplifted by charter airlines dropped by 37% between 2007 and 2012. By contrast, scheduled passenger volumes have only fallen by 1% over the past five years. However, this overall stability in the scheduled segment is largely due to the budget airline sector. The volume of passengers uplifted globally by UK-based low-cost carriers has risen by 56% over the past five years compared to a 5% decline in full-service passengers. easyJet accounts for the lion’s share of this budget volume increase. In the longer term, the three largest budget airlines operating in the UK – easyJet, Ryanair and Flybe – accounted for 35% of all passengers at UK airports in 2012, compared to 10% in 2000. MARKET FACTORS Spain and France remain favourite destinations The total number of overnight visits abroad made by people in the UK fell by a fifth between 2007 and 2010. Following a slight increase of 2.3% in 2011, 2012 saw virtually no change, resulting in a total of just over 56.5 million trips abroad. This was around 13 million fewer trips than the number taken in 2007. FIGURE 1: VOLUME FORECAST OF TOTAL PASSENGERS UPLIFTED AT UK AIRPORTS, 2008-18 SOURCE: MINTEL
2 Airlines Executive Summary July 2013 FIGURE 2: MOST POPULAR OVERSEAS TRAVEL DESTINATIONS FOR UK RESIDENTS, 2012 SOURCE: OFFICE FOR NATIONAL STATISTICS, IPS/MINTEL Spain and France remain the favourite overseas travel destinations for UK residents accounting for 20% and 16% respectively of all trips abroad in 2012. The market share percentages for leading destinations have remained relatively unchanged since 2007. Air travel continues to account for around four out of five overnight trips abroad.
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- Spring '18
- Doros Michael
- Low-cost carrier, EasyJet, air travel, London Gatwick Airport