The boom in air travel witnessed until the second half of 2008 was fuelled by short-haul airlines. The rise of the low-cost providers opened up the market to consumers who had previously been unable to afford flights, while many with greater means reacted by increasing their overseas travel. European destinations received visitors in ever-greater numbers, and the continuing expansion of the airlines and their routes opened up new areas of the continent to the travel-hungry British.

However the third quarter of 2008 saw the recession hit travel hard. Passenger numbers fell, holidays were reduced, and – as the majority segment of air travel – short-haul was severely impacted. Fuel prices, exchange rates and falling consumer confidence all played a part in the first reduction for years in passenger numbers flying to Europe. And despite some pressures easing – oil prices, for example, have fallen significantly since 2008 – these have been replaced by new concerns including charges (Air Passenger Duty is set to rise in November 2009 and November 2010), disease, with swine flu declared a global pandemic, and the increasing viability of international rail travel, thanks to ventures such as the Railteam Alliance and the looming end to Eurostar’s monopoly.

This report examines these issues and more, and looks at whether the full-service short-haul model has a future in the face of increasing competition from low-cost airlines and continuing consumer trends (in light of the recession) towards choosing cheaper options. It considers developments that are having significant impact in the short-haul airlines marketplace, consumer trends, and provides an overview of the market.

Key issues:

How are short-haul airlines performing in the recession? How is short-haul air travel doing in competition with alternative methods of travel (including sea and tunnel)?

Who are the key short-haul airline consumers, and what is the demographic future of the market?

What does the future hold for full-service short-haul airlines? How are low-cost/no-frills airlines doing in comparison – are people ‘trading down’ from full-service to low-cost? Are any short-haul airlines moving into long-haul, and if so, what are the implications?

What are the long-term trends in short-haul air travel, and will these tougher economic times change consumer behaviour? Do people choose their short-haul flight provider based on price alone?

How do people book short-haul air travel? Is this changing?

What do people think makes for a good short-haul airline? Which companies provide this? Does the ‘optional’ costs model that low-cost airlines adopt deter people from using them?

Is Europe becoming prohibitively expensive as a destination? How are short-haul airlines combating this perception, if it exists?