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Airlines - UK - August 2016

OVERVIEW
What you need to know
Scope of the report
EXECUTIVE SUMMARY
The market
Figure 1: Volume forecast of total passengers uplifted at UK airports, 2011-21
Figure 2: Volume forecast of domestic passengers uplifted at UK airports, 2011-21
Figure 3: Volume forecast of international passengers uplifted at UK airports, 2011-21
The consumer
Air travel is growing thanks to strong holiday and business markets
Figure 4: Flight types taken, July 2015 to June 2016
A rise in consumers flying premium economy
Figure 5: Classes flown in the last 12 months, July 2015 to June 2016
A quarter of consumers willing to pay for Wi-Fi on long-haul flights
Figure 6: Flight behaviours (I), June 2016
Figure 7: Attitudes towards flights II (2), June 2016
What we think
ISSUES AND INSIGHTS 
Perceptions of budget airlines has improved over the last two years
The facts
The implications
Usage of premium economy on the rise
The facts
The implications
Younger consumers and parents most willing to pay for onboard Wi-Fi
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Strong growth in 2015 and H1 2016, but further growth may be curbed by Brexit
Brexit result; consumer caution and possible regulation changes
A weak pound is making holidays more expensive
MARKET SIZE AND FORECAST 
Strong growth in 2016 but challenges remain
Growth forecast but at a slightly slower rate
Figure 8: Passengers uplifted at UK airports, 2011-21
Figure 9: Volume forecast of total passengers uplifted at UK airports, 2011-21
Figure 10: Volume forecast of domestic passengers uplifted at UK airports, 2011-21
Figure 11: Volume forecast of international passengers uplifted at UK airports, 2011-21
MARKET DRIVERS 
Brexit result; consumer caution and possible regulation changes
A weak pound is making holidays more expensive
Figure 12: Pound versus euro, 10 August 2015 to 10 August 2016
Figure 13: Pound versus US Dollar, 10 August 2015 to 10 August 2016
Weak Pound could boost trips to Eastern Europe
Figure 14: Post Office City Cost Barometer 2016
Low oil price leads to low airfares
Figure 15: Europe Brent Spot Price Free On Board (FOB), Dollars per Barrel, August 2011 to August 2016
Rail remains and expensive option for domestic holidaymakers
Figure 16: UK rail fares index, 2004-16
Figure 17: UK rail fares index, 2004-16
North African and Turkish markets suffering
Ryanair to pivot growth from the UK could potentially increase fares
Decision delayed for expanding Heathrow
SEGMENT PERFORMANCE 
Air travel increases market share
Figure 18: Overseas trips taken by UK resident, by mode of transport, 2014 2015
Figure 19: Overseas trips taken by UK resident, by mode of transport, Q1 2014 and Q1 2015
Independent bookings grow while packages fall
Figure 20: Independent versus non-independent air travel bookings, 2014-15
Scheduled flights increase while charter decrease
Figure 21: Passengers uplifted at UK airports, scheduled versus non-scheduled, 2008-16
Italy overtakes France as thrid top destination
Figure 22: Top ten countries by air visits, 2014-15
KEY PLAYERS – WHAT YOU NEED TO KNOW
Virgin Atlantic viewed as a stylish and trendy brand
British Airways is the UK’s favourite airline brand
Thomson Airways is the most popular charter airline brand
Thomas Cook’s association with ATOL protection instils trust
easyJet is the UK’s most popular budget airline
Broadly negative views of Ryanair
MARKET SHARE
Ryanair enjoys double digit growth
Figure 23: Top 10 UK-based airlines, by passengers uplifted globally, 2010-15
BRAND RESEARCH
Brands covered
Virgin Atlantic
British Airways
Thomson Airways
Thomas Cook Airlines
easyJet
Ryanair
Brand map
Figure 24: Attitudes towards and usage of selected brands, June 2016
Key brand metrics
Figure 25: Key metrics for selected brands, June 2016
Brand attitudes: British Airways and Virgin offer consistently high quality
Figure 26: Attitudes, by brand, June 2016
Brand personality: Ryanair viewed as unappealing
Figure 27: Brand personality – Macro image, June 2016
Although perceived as stylish and trendy, Virgin Atlantic considered to be overpriced
Figure 28: Brand personality – Micro image, June 2016
Brand analysis
Virgin Atlantic most likely to be rated an excellent experience
Figure 29: User profile of Virgin Atlantic, June 2016
British Airways is the UK’s favourite airline brand but also viewed as overpriced
Figure 30: User profile of British Airways, June 2016
Thomson Airways is the most popular charter airline brand
Figure 31: User profile of Thomson Airways, June 2016
Thomas Cook Airlines association with ATOL protection instils trust
Figure 32: User profile of Thomas Cook Airlines, June 2016
easyJet is the UK’s most popular budget airline
Figure 33: User profile of easyJet, June 2016
Broadly negative perception of Ryanair
Figure 34: User profile of Ryanair, June 2016
LAUNCH ACTIVITY AND INNOVATION 
Amadeus to tackle customer abandonment in the flight booking process
Etihad Airways rolls out its new iPhone app
Real time onboard seat auctions to be made possible
Ryanair plan to launch new corporate jets
Ryanair set to roll out new digital services
Ryanair reveals plans for budget accommodation service
Thomas Cook Airlines launch new routes for 2017
Thomas Cook introduces new routes for summer 2017
THE CONSUMER – WHAT YOU NEED TO KNOW
The proportion of consumers flying grows over the past year
Use of budget carriers is more common
More consumers are purchasing premium economy seats
Charter flights most likely to be booked in-store
Most consumers are happy to book on a smartphone
A quarter of consumers willing to pay for Wi-Fi on long-haul flights
Budget long haul appeals to younger frequent flyers
FLIGHT TYPES TAKEN 
Air travel is growing as consumer return overseas
Figure 35: Flight types taken, July 2015 to June 2016
Figure 36: Last flight type taken, June 2015
Easing the stresses of business travellers
Frequent flyers are more likely to live in London or Scotland
Figure 37: Number of flights taken in the last 12 months, June 2016
Figure 38: Number of flights taken in the last 12 months, by flight types taken in the last 12 months, June 2016
AIRLINE TYPES FLOWN 
A greater proportion of people are flyer using charter airlines
Figure 39: Airline types flown in the last 12 months, June 2016
16-24s are big users of full-service airlines
Figure 40: Airline types flown in the last 12 months, by age, June 2016
Perceptions of budget airlines are improving
Figure 41: Perceptions of service improvements on budget airlines over the past few years, June 2016
Parents also feel budget airlines have improved
Figure 42: Willingness to pay for a more comfortable flight, June 2016
CLASSES FLOWN
Premium economy usage increases
Figure 43: Classes flown in the last 12 months, July 2015 to June 2016
Premium economy more popular with younger consumers…
Figure 44: Attitudes towards paying for premium economy, short-haul versus long-haul, June 2016
…while economy is more popular with older consumers
Figure 45: Classes flown in the past 12 months, by age, June 2016
Families are key target groups for premium economy
FLIGHT BOOKING 
Around a quarter book flights offline
Figure 46: How last flight was booked, June 2016
Charter flights most likely to be booked in-store
Budget carriers are far more likely to be booked online than full-service
Seniors are the mostly likely group to book offline
Figure 47: How respondents would describe their financial situation, by age, June 2016
Figure 48: Consumer’s financial outlook for the coming year, by age, June 2016
Figure 49: What extra money is spend upon, by age, June 2016
Figure 50: Plans to book a holiday in the next three months, by age, June 2016
DEVICE USED FOR ONLINE BOOKING 
Reaching consumers while out and about
Most consumers are happy to book on a smartphone
Figure 51: Attitudes towards using a smartphone to book a flight, June 2016
Figure 52: Attitudes towards using a smartphone to book a flight, by age, June 2016
Smart TV bookings are one to watch for the future
Figure 53: How last flight was booked online, June 2016
FLIGHT BEHAVIOURS 
Half of flyers exhibit savvy shopping behaviours
Figure 54: Savvy flyers*, June 2016
Comparing different flight combinations to get the cheapest deal
A quarter of consumers willing to pay for Wi-Fi on long-haul flights
A sizable proportion think that loyalty programmes are confusing
Figure 55: Attitudes towards airline loyalty programme, June 2016
Figure 56: Flight behaviours (I), June 2016
Finding the cheapest flight
Figure 57: Flight behaviours (II), June 2016
ATTITUDES TOWARDS FLIGHTS I
Opportunity for medium-haul long weekends for the right price
Multicentre trips popular with young people and Londoners
The majority of travellers open to stopovers to save money
Figure 58: Attitudes towards flights I, June 2016
ATTITUDES TOWARDS FLIGHTS II
Consumers want the option of booking packages on airline websites
Business-to-customer interaction through live chat messaging
Figure 59: Attitudes towards flights II (1), June 2016
Courting older demographics
Figure 60: Willingness to pay for extra services, by age, June 2016
Budget long haul appeals to younger frequent flyers
Figure 61: Attitudes towards flights II (2), June 2016
MOBILE OWNERSHIP – FLIGHT ATTITUDES AND BEHAVIOURS
CHAID ANALYSIS
More parents think premium economy is worth it, while young frequent flyers are open to long-haul flights on budget carriers
Figure 62: Target groups based on attitudes toward airlines – CHAID – Tree output, June 2016
Figure 63: Target groups based on attitudes toward airlines – CHAID – Table output, June 2016
APPENDIX – DATA SOURCES, ABBREVIATIONS, AND SUPPORTING INFORMATION
Abbreviations
Definitions
Forecast methodology
Figure 64: Best- and worst-case forecast for total UK passenger uplift, 2016-21
Figure 65: Best- and worst-case forecast for domestic UK passenger uplift, 2016-21
Figure 66: Best- and worst-case forecast for international UK passenger uplift, 2016-21

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