Table of Contents
Overview
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- What you need to know
- Scope of this Report
Executive Summary
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- The market
- Near-term outlook is bright but airlines face uncertainty going forwards
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- Figure 1: International passenger numbers uplifted at UK airports, 2013-23
- Figure 2: Domestic passenger numbers uplifted from UK airports, 2013-23
- Companies and brands
- Brand research; Norwegian may need to boost awareness
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- Figure 3: Key metrics for selected brands, June 2018
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- Figure 4: Top 10 UK-based* airlines, by passenger numbers uplifted globally, 2017
- The consumer
- Proportion of UK consumers taking flights remains flat
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- Figure 5: Flights taken, June 2018
- Consumers may cut back on long-haul travel
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- Figure 6: Flight length, June 2018
- Budget versus full-service airlines
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- Figure 7: Types of airlines flown with, June 2018
- The growth of premium economy
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- Figure 8: Types of class flown, June 2018
- Attitudes towards paying for on-board food and drink
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- Figure 9: Types of class(es) flown, June 2018
- Boosting food and drink bookings using a pre-order discounted app
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- Figure 10: Attitudes towards buying pre-ordering food via an app, June 2018
- Smartphone usage on the rise
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- Figure 11: smartphone bookings for flights, June 2018
- Passengers are most willing to pay for legroom, Wi-Fi, and seat reservation
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- Figure 12: Paying for on-board services, June 2018
- What we think
Issues and Insights
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- Opportunities to develop on-board catering
- The facts
- The implications
- The rise in smartphone bookings is down to a mobile-first approach
- The facts
- The implications
The Market – What You Need to Know
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- Passenger uplift grew substantially over the past five years
- Holiday volume finally passes the 45.5 million mark
- Price will be an even more important driver in 2018
- Slowdown in international passenger uplift forecast over the next five years
- Wages have begun to grow faster than inflation
- Rising fuel costs will pose a problem for airlines over the next few years
- The EU’s Open Skies Agreement must be addressed in the Brexit negotiations
Market Size and Forecast
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- Near-term outlook is bright but airlines face uncertainty going forwards
- Holiday intentions remain robust but Open Skies Agreement is crucial to market performance
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- Figure 13: Passenger numbers uplifted at UK airports, 2013-23
- Figure 14: International passenger numbers uplifted at UK airports, 2013-23
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- Figure 15: Domestic passenger numbers uplifted from UK airports, 2013-23
- Figure 16: Total passenger numbers uplifted at UK airports, 2013-23
- Forecast methodology
Market Segmentation
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- Air travel continues to increase its market share
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- Figure 17: Overseas trips taken by UK residents, by mode of transport, 2015-17
- Overseas business travel hit by cut backs
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- Figure 18: Purpose of overseas trips, by air, 2016 and 2017
- Fall in flights to the US
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- Figure 19: Top 10 countries visited by UK residents, by air travel, 2016 and 2017
Market Drivers
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- The weak Pound is making trips abroad more expensive
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- Figure 20: Pound sterling versus euro and US dollar, June 2016-18
- Rising fuel costs putting pressure on airlines’ operational costs
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- Figure 21: Europe Brent Spot Price FOB* (Dollars per Barrel), July 2013-May 2018
- Airlines turn to surcharges for flights booked via GDS
- Brexit; the government must address the EU’s Open Skies Agreement
- Brexit; airlines could face problems over ownership
- Brexit; denied Boarding Regulation could be called into question
- Consumer confidence on the increase
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- Figure 22: Trends in how respondents would describe their financial situation, February 2009-June 2018
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- Figure 23: Trends in how respondents would describe their financial situation, by age, June 2018
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- Figure 24: Trends in consumer sentiment for the coming year, June 2018
Companies and Brands – What You Need to Know
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- The big two budget carriers continue to see strong growth
- IAG bids for low-cost long-haul Norwegian
- Brand research; Norwegian could benefit from boosting awareness
- Brand research; Jet2 has impressive experience ratings
- Lumo uses machine learning to predict flight destructions
- British Airways launch new seating plan
- Ryanair cuts adspend to focus on customer service
Market Share
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- The big two budget carriers continue to see strong growth
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- Figure 25: Top 10 UK-based* airlines, by passenger numbers uplifted globally, 2011-17
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- Figure 26: Top 10 companies in terms of passengers licensed under ATOL protection, 2018
- IAG looking to acquire low-cost long-haul carrier Norwegian
- Struggling Monarch collapses
Brand Research
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- Figure 27: Attitudes towards and usage of selected brands, June 2018
- Key brand metrics
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- Figure 28: Key metrics for selected brands, June 2018
- Brand attitudes: British Airways is regarded as highly trustworthy
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- Figure 29: Attitudes, by brand, June 2018
- Brand personality: consumers see Virgin Atlantic and British Airways as exclusive
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- Figure 30: Brand personality – Macro image, June 2018
- easyJet seen as basic but functional
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- Figure 31: Brand personality – Micro image, June 2018
- Brand analysis
- Virgin Atlantic achieves the highest experience rating
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- Figure 32: User profile of Virgin Atlantic, June 2018
- British Airways remains the UK’s favourite airline brand
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- Figure 33: User profile of British Airways, June 2018
- Jet2 has an impressive experience rating
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- Figure 34: User profile of Jet2, June 2018
- easyJet is perceived to be better value than Ryanair
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- Figure 35: User profile of easyJet, June 2018
- Norwegian needs to boost awareness
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- Figure 36: User profile of Norwegian, June 2018
- Ryanair’s reputation continues to struggle but it’s not hurting sales
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- Figure 37: User profile of Ryanair, June 2018
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Launch Activity and Innovation
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- Qantas plans to launch direct flights from London to Sydney by 2020
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- Figure 38: The Boeing 787 Dreamliner
- British Airways launches new seating plan
- JetBlue launches Private Jet services for the masses
- British Airways adds Santiago and Washington DC routes
- Lumo uses machine learning to predict flight disruptions
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- Figure 39: Lumo’s flight prediction tool
- Flio helps travellers navigate airports
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- Figure 40: The Flio app offers airport maps and discounts amongst other services
Advertising and Marketing Activity
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- Ryanair plans to cut adspend to focus on customer service
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- Figure 41: Total above-the line, online display and direct mail advertising expenditure on ads, 2014-17
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- The proportion of UK consumers taking flights remains flat
- Consumers could cut back on long-haul flights
- Budget carriers dominate over full-service
- Nearly a fifth of passengers flew premium economy in the past year
- Airlines are considering unbundling fares
- Smartphone usage on the rise
- Passengers most willing to pay for legroom, Wi-Fi, and seat reservations
Flights Taken
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- Proportion of UK consumers taking flights remains flat
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- Figure 42: Flights taken, June 2018
- Business trips expected to decline in 2018
- London could be boosted by expansion of third runway
- Encouraging visits to friends and relatives
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- Figure 43: Top 10 nations with citizens living in the UK, 2015
Length of Flight and Classes Flown
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- Consumers may cut back on long-haul travel
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- Figure 44: Flight length, June 2018
- Budget versus full-service airlines
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- Figure 45: Types of airlines flown, June 2018
- Charter airlines primarily favoured by older consumers
- Affluent parents can be key targets for premium economy
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- Figure 46: Types of class flown, June 2018
Food Services on Flights
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- Attitudes towards paying for aboard food and drink
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- Figure 47: On-board food and drink preferences, June 2018
- Boosting food and drink bookings using a pre-order discounted app
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- Figure 48: Attitudes towards pre-ordering food via an app, June 2018
- Short-haul; families are key targets for on-board food and drink on short-haul flights
- Long-haul; age and gender bias for self-catering on flights
- Full-service carriers recognise the value of free food and drink
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- Figure 49: Providing free food, budget versus full-service airlines, June 2018
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- Figure 50: Important factors for purchasing food, June 2018
Consumer Behaviours Related to Airlines
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- Smartphone usage on the rise
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- Figure 51: Behaviours related to flights, June 2018
- The rise in smartphone bookings is down to a mobile-first approach
- Responsive Web Design (RWD)
- Progressive advancement
- Passengers are most willing to pay for legroom, Wi-Fi, and seat reservation
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- Figure 52: Paying for on-board services, June 2018
- Distinct age bias when it comes to stopovers
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- Figure 53: Choosing direct flights versus stopovers, June 2018
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- Figure 54: Choosing airports further away from destination, June 2018
- Young parents are key targets for loyalty schemes
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- Figure 55: Target group for airline loyalty schemes – CHAID – Tree output, May 2018
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID analysis methodology
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- Figure 56: Target groups based on statements about airlines – CHAID – Table output, May 2018
Appendix – Market Size and Forecast
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- Forecast methodology
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- Figure 57: Best- and worst-case forecast for international UK passenger uplift, 2018-23
- Figure 58: Best- and worst-case forecast for domestic UK passenger uplift, 2018-23
- Figure 59: Best- and worst-case forecast for total UK passenger uplift, 2018-23
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