What you need to know

Airlines in the US appear to have found the solution to profitability – consolidation, more strategic capacity management, and ancillary fees. However, airlines remain in fierce competition for the lucrative business traveler who has driven changes in airline loyalty programs while also trying to appeal to the more price-conscious leisure travelers. Meanwhile, the merger of two top US carriers (American Airlines and US Airways) has created the newest largest airline in the world, which has airfare watchdogs and travelers alike on alert for potential route monopolies.

This report explores external forces shaping the airline industry and the challenges it faces, opportunities for growth, and innovations, as well as consumers’ travel habits, preferences, and attitudes toward airlines.

Definition

This report builds on the analysis presented in Mintel’s Airlines – US, August 2012 and the June 2011 and May 2010 reports of the same title.

For the purposes of this report, Mintel considers Airlines as US-based air carriers operating both domestically and internationally. Cargo/freight airlines, unscheduled passenger flights, and chartered passenger flights are not included in the scope of this report.

Value figures throughout this report are at rsp (retail selling prices) excluding sales tax unless otherwise stated.

Data sources

Sales data

Market Size and Forecast and Segment Performance: Total revenues based on data reported to the BTS (Bureau of Transportation Statistics) by airlines. Forecast generated by Mintel.

The market size included in this report covers domestic air carriers with annual operating revenues of at least $20 million. Operating revenues shown include: air fares, baggage fees, cancellation/change fees, transport-related revenue, including miscellaneous fees including in-flight onboard sales (food, liquor, pillows, etc), code share revenues, revenues from associated businesses (aircraft maintenance, fuel sales, restaurants, vending machines, etc).

Excluded from this report are revenues of cargo/freight airlines, unscheduled passenger flights, and chartered passenger flights.

Consumer survey data

For the purposes of this report, Mintel commissioned exclusive consumer research through GMI to explore consumer consumption of/attitudes and behaviors toward airlines. Mintel was responsible for the survey design, data analysis, and reporting. Fieldwork was conducted in June 2014 among a sample of 2,000 adults aged 18+ with access to the internet, including 1,035 internet users aged 18+ who have taken a flight in the previous 12 months.

Mintel selects survey respondents by gender, age, household income, and region so that they are proportionally representative of the US adult population using the internet. Mintel also slightly over-samples, relative to the population, respondents that are Hispanic or Black to ensure an adequate representation of these groups in our survey results and to allow for more precise parameter estimates from our reported findings. Please note that our surveys are conducted online and in English only. Hispanics who are not online and/or do not speak English are not included in our survey results.

Mintel has also analyzed data from Experian Marketing Services, using the NHCS (Simmons National Hispanic Consumer Study). The Experian Marketing Services, Simmons NHCS was carried out during November 2012 -December 2013 and the results are based on the sample of 24,005 adults aged 18+, with results weighted to represent the US adult population.

While race and Hispanic origin are separate demographic characteristics, Mintel often compares them to each other. Please note that the responses for race (White, Black, Asian, Native American, or other race) will overlap those that also are Hispanic, because Hispanics can be of any race.

Direct marketing creative

All consumer direct marketing creatives are provided by Mintel Comperemedia.

Mintel Comperemedia is a searchable competitive database tracking direct mail, print and online advertising in the US and Canada, as well as email in the US Comperemedia tracks information across nine sectors: Banking, Credit Card, Investments, Insurance, Mortgage and Loan, Telecom, Travel and Leisure, Retail, and Automotive.

For more information, please contact Account Services Management at 312.450.6353 or www.mintel.com.

Abbreviations and terms

Abbreviations

The following is a list of abbreviations used in this report:

A4A Airlines for America
APU Auxiliary Power Unit
BTS Bureau of Transportation Statistics
CPI Consumer Price Index
DOT Department of Transportation
FAA Federal Aviation Administration
FCC Federal Communications Commission
GBTA Global Business Travel Association
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Terms

Mintel makes reference to the major US-based airlines throughout this report and categorizes them based on operating characteristics:

Legacy carrier Airlines operating prior to deregulation (which occurred in 1978) with traditional “hub-and-spoke” operations and multiple service classes. Includes Alaska Airlines, American Airlines Group (which formed in 2013 through the American Airlines and US Airways merger), Delta Air Lines, Hawaiian Airlines, and United Airlines.
“Big three” legacy carriers The “big three” (formerly the “big four” due to the American/US merger) includes legacy carriers that have international routes and account for the majority of operating revenue and passenger headcount. The elite group includes American Airlines Group, Delta Air Lines, and United Airlines.
Low-cost carrier Airlines with a low-cost structure that typically provide less expensive airfare but that do not have multiple service tiers (as legacy or “traditional” carriers do). Includes ExpressJet, Frontier Airlines, JetBlue Airways, Southwest Airlines, and Virgin America.
Ultra-low-cost carrier Airlines with the lowest-cost structure built on an á la carte approach to ancillary fees. Includes Spirit Airlines and Allegiant Air.

Generations are discussed within this report, and they are defined as:

World War II/Swing generation Members of the WWII generation were born in 1932 or before and are aged 82 or older in 2014. Members of the Swing Generation were born between 1933 and 1945 and are aged 69-81 in 2014.
Baby Boomers The generation born between 1946 and 1964. In 2014, Baby Boomers are between the ages of 50 and 68.
Generation X The generation born between 1965 and 1976. In 2014, Gen Xers are between the ages of 38 and 49.
Millennials* The generation born between 1977 and 1994. In 2014, Millennials are between the ages of 20 and 37.
iGeneration The generation born between 1995 and 2007. In 2014, iGens are between the ages of 7 and 19.
Emerging generation The newest generation began in 2008 as the annual number of births declined sharply with the recession. In 2014 members of this as-yet unnamed generation are younger than age 7.

* also known as Generation Y or Echo Boomers

In order to provide an inflation-adjusted price value for markets, Mintel uses the CPI to deflate current prices. The CPI is defined as follows:

CPI The Consumer Price Index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.



The CPI and its components are typically used to adjust other economic series for price changes and to translate these series into inflation-free dollars. Examples of series adjusted by the CPI include retail sales, hourly and weekly earnings, and components of the national income and product accounts. In addition, and in Mintel reports, the CPI is used as a deflator of the value of the consumer’s dollar to find its purchasing power. The purchasing power of the consumer’s dollar measures the change in the value to the consumer of goods and services that a dollar will buy at different dates.



The CPI is generally the best measure for adjusting payments to consumers when the intent is to allow consumers to purchase, at today’s prices, a market basket of goods and services equivalent to one that they could purchase in an earlier period. It is also the best measure to use to translate retail sales into real or inflation-free dollars.



Based on Bureau of Labor Statistics definition.
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