Table of Contents
Key Findings
Data Sources
Abbreviations
Issues in the Market
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- Airport relations
- Competition with rail and road
- Profitability
- Ancillary revenues
- Regulation
- Security
Global Summary
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- Demographic trends
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- Figure 1: Projected increase in global population by age segment, between 2005 and 2030
- Figure 2: Worldwide population distribution by age cohort, 2013 and 2050
- Demographic projections by major country market
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- Figure 3: Projected population decline in selected countries (m), between 2006 and 2030
- Figure 4: Worldwide population distribution by age cohort (in %) in selected major countries, 2013 and 2050
- Economy
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- Figure 5: Airline ROIC compared to the worldwide GDP growth rate, 1990-2014
- Growth forecast ratcheted down
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- Figure 6: World Economic Outlook (WEO) forecasts (% change unless noted otherwise), January 2015
- Inflation outlook
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- Figure 7: Inflation outlook for developed world economies (%), 2015
- Interest rates
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- Figure 8: Outlook for short-term interest rates, 2015
- Figure 9: Outlook for long-term interest rates, 2015
- Currency rates
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- Figure 10: Outlook exchange rates, 2015
- Outlook for spending on travel and tourism
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- Figure 11: Forecasted growth in spending on leisure travel & tourism by region, 2014-20 (in 2013 US$m)
- Figure 12: Forecasted growth in spending on business travel by region, 2014-20 (in 2013 US$m)
Trend in Air Travel and Airline Performance
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- Figure 13: Trend in air travel in top 20 aviation markets, 2012-18
- New routes in 2014-15
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- Figure 14: Top 15 countries for new airline routes in 2014
- New routes by airline
- Ryanair number 1 again
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- Figure 15: Top 17 airlines for new routes in 2014
- Germanwings, GOL and Southwest Airlines start biggest new routes in 2014
- A new airline launched
- More LCCs coming for China
- Airline performance
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- Figure 16: Airline performance: year-on-year change YTD November 2014 versus YTD November 2013
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Airline Ranking
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- Scheduled passenger-kilometres flown
- International flights
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- Figure 17: Scheduled passenger-kilometres flown – international, 2013
- Domestic flights
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- Figure 18: Scheduled passenger-kilometres flown – domestic, 2013
- Total flights (international and domestic)
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- Figure 19: Scheduled passenger-kilometres flown total (international and domestic), 2013
- Scheduled passengers carried
- International flights
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- Figure 20: Scheduled passengers carried – international, 2013
- Domestic flights
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- Figure 21: Scheduled passengers carried – domestic, 2013
- Total flights (international and domestic)
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- Figure 22: Scheduled passengers carried – total (international and domestic), 2013
- Scheduled freight-tonne-kilometres
- International flights
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- Figure 23: Scheduled freight-tonne-kilometres – international, 2013
- Domestic flights
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- Figure 24: Scheduled freight-tonne-kilometres – domestic, 2013
- Total flights (international and domestic)
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- Figure 25: Scheduled freight-tonne-kilometres total (international and domestic), 2013
Airport Relations
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- Airport competition
- Airlines face more competition than airports
- Regulation of airport fees
- Airport entry
- Airport charges
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- Figure 26: Proportion of European airports that raised, lowered or kept their fees constant, 2009-10*
- Multi-airport systems
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- Figure 27: Average fares and yields from the 5 London commercial airports to Amsterdam and Geneva, 2012*
- Stand-off between Air France and Aéroports de Paris
Competition with Rail and Road
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-
- Figure 28: Breakeven points for rail and car versus air travel for a 3-hour trip door to door, 2014
- Figure 29: Breakeven points for HSR versus LCCs and full-service carriers from a cost point of view, 2014
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- Figure 30: Recapitulation of market shares between rail and airlines in 10 important city pairs worldwide, 2014
- China
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- Figure 31: Impact on airlines of the opening of HSR lines on key inter-urban routes from Beijing, 2010 and 2012
- Italy
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- Figure 32: Rome-Milan train journey time and rail market share, 2007-15
- Japan
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- Figure 33: Shares of passengers by different means of transport according to length of route, 2014
- Spain
- Airlines losing out on Barcelona-Madrid route
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- Figure 34: Passengers travelling between Madrid and Barcelona by rail and air, in millions, 2003-13
- HSR competes with short-haul flights
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- Figure 35: A comparison of travel times and speeds between airplanes and HST for key intercity routes in Spain, 2014
- Car travel competes with airlines in the US
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- Figure 36: Thanksgiving holiday travellers by mode of transport, 2013-14
- Cost comparison
- Car travel gaining share over the years
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Profitability
-
-
- Figure 37: Growth of aviation compared to GDP, 1970-2012
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- Figure 38: Number of direct city-pair services, 1980-2012
- Massive capital requirements but poor returns
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- Figure 39: The number of new commercial aircraft required, 2011-31
- Airline sector suffers from fragmentation
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- Figure 40: Return on invested capital (ROIC)*, by industry sector of the value chain, 2004-11
- Restrictive regulation
- Controlled costs but weaker pricing power
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- Figure 41: The real price of air transport and real unit costs, 1970-2010*
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- Figure 42: Trend in the per-barrel price of oil and jet fuel (kerosene) over the past 10 years, to end 2014
- Figure 43: Jet fuel price, 9 Jan 2015
- No windfall for travellers in the US
- Low fuel prices may delay new aircraft orders
- Investors rewarded
- Low fuel cost poses supply risk
-
- Figure 44: Worldwide airline ancillary revenue, 2010-14
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- Figure 45: Key ancillary revenue components for a typical major US airline, 2013
- Figure 46: Key ancillary revenue components for traditional airlines* outside the US, 2013
- Successful LCCs depend on ancillary revenues
- Spirit, the ancillary revenue champion
- Ancillary revenue breakdown
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- Figure 47: Breakdown of Spirit’s ancillary revenue by type, 2011-13
- Spirit a proven financial success
-
- Figure 48: Comparison of pre-tax margins: Spirit versus major US airlines, LTM September 2014
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Airline Regulation
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- Congress at fault too
- Lack of action on NextGen
- Restructuring the FAA
- US systems out of date
Airline Security
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- Drones near airports a threat
Airline Alliances
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- oneworld
- Membership
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- Figure 49: Oneworld member airlines, 2015
- SriLankan Airlines, oneworld’s newest member
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- Figure 50: SriLankan Airlines’ passenger totals and load factors, 2000-14*
- London Heathrow number 1 route for ASKs
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- Figure 51: SriLankan Airlines’ 15 leading routes (ranked by ASKs), 2014
- SkyTeam
- Membership
- Strength in greater China
- Saudia is well positioned
- Alitalia to be recapitalised
- Two more marginal flag-carriers
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- Figure 52: SkyTeam member airlines, 2015
- Star Alliance
- Membership
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- Figure 53: Star Alliance member airlines, 2015
- Best coverage for Africa
- Strength in Asia
- Air India the latest addition
- FFP reciprocity
- Special fares and business solutions
- Air India’s fleet
- Strength in Europe too
- North America well covered
Distribution
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- LCCs succeed better at direct bookings
- GDSs still important
- The problem of merchandising ancillaries
- Airlines as retailers
- NDC – IATA’s plan for upgrading airline distribution
- Impact on travel industry players
- NDC pilot programme
- Support from a variety of stakeholders
- Plans for 2015
- Amadeus launches ancillary service booking tool
- Expedia introducing branded airfares in 2015
Alliances and LCCs
Future of Airline Distribution
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- ‘Distribution’ to evolve into ‘commerce’
- Direct channels to gain share
- Big Data’s contribution
- Hidden-city ticketing an ongoing debate
The Role of Social Media
-
-
- Figure 54: Social-media benchmarking of selected airlines, 2014
- YouTube
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Frequent-Flyer Programmes
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- FFPs as profit centres
- Most miles issued are sold to partners
- Managing redemptions
- Most miles redemptions are for flights
- FFP membership totals
-
- Figure 55: Membership totals for airline FFPs worldwide, 2015
- Frequent-flyer network demographics
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- Figure 56: Characteristics of North American frequent travellers, 2014
- Figure 57: Characteristics of non-North American frequent travellers, 2014
- The move from ‘miles’ to ‘spend’
- Most points are earned on the ground
- Southwest the first carrier to make the shift
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- Figure 58: Points earned per fare class in the Rapid Rewards FFP, 2015
- Delta the next to move
- United follows suit
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- Figure 59: United's new tier conditions for its FFP, 2015 (all monetary amounts in US$)
- Summary and comparisons of FFPs
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- Figure 60: Summary and comparison of selected airline FFPs, 2015
- JetPrivilege reciprocity
- Earning airline miles
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- Figure 61: Singapore Airlines’ booking class fares, 2015
- Miles & More
- SAS’ Eurobonus
- China Southern Airlines Sky Pearl Club
- Hong Kong Airlines Fortune Wings Club
- Emirates Skywards
- SriLankan Airlines launched its own FFP
- Air miles versus points
- Thai Airways International
- Cathay Pacific’s Marco Polo Club
- Asia Miles
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- Figure 62: Airlines participating in the Asia Miles loyalty scheme, 2015
- Qantas Frequent Flyer
- Flying Blue
- Bangkok Airways’ FlyBonus
- Qatar Airways
- Duration of validity
- Asiana Club
- EVA Air’s Evergreen Club
- Extra baggage allowance
- SriLankan FlySmiLes Baggage bonus programme
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- Figure 63: FlySmiLes' Baggage bonus programme tier requirements, 2015
- FFPs for children
- Family plans
- Redeeming airline miles
- Blackout periods
- Korean Air SKYPASS
- LCC FFPs
- AirAsia’s BIG loyalty programme
Passenger Use of Technology
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- Mobile devices
- American Airlines’ app
- In-flight Wi-Fi
- Present state of in-flight services
- People won’t pay for Wi-Fi though…
- In-flight Wi-Fi offerings by airline
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- Figure 64: Cost of in-flight Wi-Fi by selected airline, 2014
- JetBlue a step ahead
- Sponsors have covered costs for 2015
- Implementation delays
- Gogo ups the ante
- Virgin Atlantic: Gogo's third partner for ultra-fast in-flight Internet
- Further boost from AT&T’s abandonment
- Gogo gets FCC approval of 2Ku satellite
- Other projects
- Need for airline investment
- Multiple applications
Trend in Cabin Classes
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- Premium pays its way
- Business travel rebounding
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- Figure 65: Traffic growth by route, November 2014
- Figure 66: Premium traffic by route, October 2014
- Corporates slowly loosening travel restrictions
- Airlines invest in business class
- Transfer services – an added perk
- Serving the (top) 1%
- Number of first-class seats rising
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- Figure 67: Trend in first-class seats on flights worldwide, 2005-14
- Divergence between east and west
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- Figure 68: Trend in first-class seats on flights departing from European airports, 2005-14
- Figure 69: Trend in first-class seats on flights departing from Asian airports, 2005-14
- Western carriers upgrade to compete
- Distinguishing first class
- Hotels in the sky
- ‘The Residence’
- Luxury on the ground too…
- Packing them in like sardines
- United ‘squeezes out’ 14 additional aircraft
- Premium-economy cabins rated
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- Figure 70: Ranking of the world’s best long-haul premium-economy cabins, 2015
- Customisation can cause delays
Top 20 Country Markets
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- Australia
- Market segmentation – domestic/international
-
- Figure 71: Australia’s passenger airlines – market segmentation by volume, 2005-13*
- Market shares of airlines
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- Figure 72: Passenger airline market share by passenger volume, 2012-13
- Brazil
- Market segmentation – domestic/international
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- Figure 73: Brazil’s passenger airlines – market segmentation by volume, 2005-13
- Market shares of airlines
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- Figure 74: Passenger airline market share by passenger volume, 2010-13
- Figure 75: Domestic passenger airline market share by passenger volume, 2010-13
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- Figure 76: International passenger airline market share by passenger volume, 2010-13
- Canada
- Market segmentation – domestic/international
-
- Figure 77: Canada’s passenger airlines – market segmentation by volume, 2007-13
- Market shares of airlines
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- Figure 78: Passenger airline market share by passenger volume, 2010-13
- Figure 79: Domestic passenger airline market share by passenger volume, 2010-13
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- Figure 80: International passenger airline market share by passenger volume, 2010-13
- China
- Market segmentation – domestic/international
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- Figure 81: China’s passenger airlines – market segmentation by volume (m passengers), 2005-13
- Market shares of airlines
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- Figure 82: Passenger airline market share by passenger volume, 2011-13
- Colombia
- Market segmentation – domestic/international
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- Figure 83: Colombia’s passenger airlines – market segmentation by volume, 2005-13
- Market shares of airlines
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- Figure 84: Passenger airline market share by value, 2009-13
- Figure 85: International passenger airlines – company market share* by value (%), 2009-13
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- Figure 86: Domestic passenger airlines – company market share by value (%), 2009-13
- France
- Market segmentation – domestic/international
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- Figure 87: France’s passenger airlines – market segmentation by volume, 2005-13
- Market shares of airlines
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- Figure 88: Passenger airline market share by passenger volume, 2009-13
- Germany
- Market segmentation – domestic/international
-
- Figure 89: Germany’s passenger airlines – market segmentation by volume, 2008-13
- Market shares of airlines
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- Figure 90: Passenger airline market share by passenger volume, 2009-13
- India
- Market segmentation – domestic/international
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- Figure 91: India’s passenger airlines – market segmentation by volume, 2008-13
- Market shares of airlines
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- Figure 92: Passenger airline market share by passenger volume, 2010-13
- Indonesia
- Market segmentation – domestic/international
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- Figure 93: Indonesia’s passenger airlines – market segmentation by volume, 2007-13
- Market shares of airlines
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- Figure 94: International passenger airlines – company market share by passenger volume (%), 2011-13
- Figure 95: Domestic passenger airlines – company market share by passenger volume (%), 2011-13
- Italy
- Market segmentation – domestic/international
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- Figure 96: Italy’s passenger airlines – market segmentation by volume, 2007-13
- Market shares of airlines
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- Figure 97: Passenger airline market share by passenger volume, 2009-13
- Japan
- Market segmentation – domestic/international
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- Figure 98: Japan’s passenger airlines – market segmentation by volume, 2007-13
- Market shares of airlines
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- Figure 99: Passenger airline market share by passenger volume (%), 2012-13
- Mexico
- Market segmentation – domestic/international
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- Figure 100: Mexico’s passenger airlines – market segmentation by volume, 2006-13
- Market shares of airlines
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- Figure 101: Passenger airline market share by passenger volume (%), 2009-13
- Russia
- Market segmentation – domestic/international
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- Figure 102: Russia’s passenger airlines – market segmentation by volume, 2009-13
- Market shares of airlines
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- Figure 103: Passenger airline market share by passenger volume, 2009-13
- South Africa
- Market segmentation – domestic/international
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- Figure 104: South Africa’s passenger airlines – market segmentation by volume, 2007-13
- Market shares of airlines
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- Figure 105: Passenger airline market share by passenger volume (%), 2011-13
- Figure 106: International passenger airlines – company market share by passenger volume (%), 2011-13
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- Figure 107: Domestic passenger airlines – company market share by passenger volume (%), 2011-13
- South Korea
- Market segmentation – domestic/international
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- Figure 108: South Korea’s passenger airlines – market segmentation by volume, 2008-13
- Market shares of airlines
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- Figure 109: Passenger airline market share by passenger volume, 2009-13
- Spain
- Market segmentation – domestic/international
-
- Figure 110: Spain’s passenger airlines – market segmentation by volume, 2005-13
- Market shares of airlines
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- Figure 111: Passenger airline market share by value, 2009-13
- Turkey
- Market segmentation – domestic/international
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- Figure 112: Turkey’s passenger airlines – market segmentation by volume, 2007-13
- Market shares of airlines
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- Figure 113: Passenger airline market share by passenger volume, 2010-13
- UK
- Market segmentation – domestic/international
-
- Figure 114: UK passenger airlines – market segmentation by volume, 2007-13
- Market shares of airlines
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- Figure 115: Passenger airline market share by passenger volume (%), 2009-13
- US
- Market segmentation – domestic/international
-
- Figure 116: US passenger airlines – market segmentation by volume, 2007-13
- Market shares of airlines
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- Figure 117: Passenger airline market share by passenger volume, 2010-13
- Vietnam
- Market segmentation – domestic/international
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- Figure 118: Vietnam’s passenger airlines – market segmentation by volume, 2010-13
- Market shares of airlines
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- Figure 119: Domestic passenger airline market share by passenger volume, 2011-13
Top Ten Airlines
American Airlines (now combined with US Air)
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- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 120: American’s mainline fleet, 2013-14
- Regional fleet
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- Figure 121: American's regional fleet, 2013-14
- Future deliveries
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- Figure 122: Aircraft deliveries, 2014-18 and beyond
- Current developments
- AMR/US Airways merger completed
Delta Air Lines
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- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 123: Delta's fleet, 2014
- Fleet restructuring
-
- Figure 124: Delta's aircraft orders, 31 December 2013
- Current developments
- Five classes
- Increased revenue from corporate clients
- Basic Economy to compete with ULCCs
- No fuel-related discounts on the horizon
- A renewed American Express agreement
- Funded through sale of Concur stake
- Delta to get ‘a little more’
Southwest Airlines
-
- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
-
- Figure 125: Cost per available seat mile comparison between selected airlines, 2014
- Fleet
- Fleet upgrading
- Boeing 737 MAX
- Boeing Next-Generation 737
- Southwest Cabin Refresh
- Transition of Boeing 717 aircraft
- Incorporation of the larger Boeing 737-800 into the fleet
- Fleet reduced in 2014
- 500 new aircraft coming
-
- Figure 126: Southwest's aircraft orders, 2015-27
- Current developments
- Southwest to fly abroad
China Southern Airlines
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- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 127: China Southern's fleet, 2014
- Current developments
- Senior managers fired
- ‘Cultural’ branding
United Airlines
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- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
- Fleet plan
-
- Figure 128: United's mainline fleet plan at 22 January 2015
- Figure 129: United's regional fleet plan at 22 January 2015
- United to replace ageing long-haul planes with new Boeing 777s
- Current developments
- United adds transatlantic routes for summer 2015
- New York to Venice
- Chicago to Dublin
- Washington to Paris
Lufthansa Group
-
- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 130: Lufthansa Group aircraft fleet, 31 December 2013
- Fleet additions
-
- Figure 131: Leased aircraft, change compared to 31/12/12, additions 2014-15 and purchase options, 31/12/13
- Current developments
- Lufthansa’s new budget airline
- Eurowings opposed by employees
- A black day for germanwings
- Industry insight: interview with Lorenzo Stoll of SWISS, a subsidiary of Lufthansa
Ryanair
-
- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
- Current fleet and growth objectives
- Price of aircraft
- Price concessions granted
- Current developments
- Change in airport strategy
- Full-year profit forecast lifted
Air France-KLM
-
- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 132: Air France-KLM fleet, 31 December 2013
- Current developments
- Group under pressure
- Transavia.com expanding
- HOP!
IAG
-
- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 133: IAG’s fleet, 30 June 2014
- Current developments
- Merger and acquisition activity
- Qatar Airways buys 10% stake in IAG
- IAG trying to acquire Aer Lingus
easyJet
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- SWOT
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 134: easyJet fleet, fiscal year 2013-14
-
- Figure 135: Future aircraft deliveries, FY 2015-FY 2019
- Current developments
- easyJet tests frequent-flyer loyalty scheme
- 15,000 frequent flyers rewarded
- Other initiatives
What Next?
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- Rebounding profitability set to continue
- Kerosene price to stay low
- More pricing power due to consolidation
- Airlines as lifestyle brands?
- The Starbucks of airlines?
- Branded luggage?
- Hotels show the way
- Service delivery the key
- Emirates trying to build a lifestyle brand
- Future aircraft
- Battery technology improving
- Biofuels an interim solution
- Chopping off the tail
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