Table of Contents
Executive Summary
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- The market
- Total air passengers maintained a steady growth rate
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- Figure 1: Total air travel market, by passenger traffic volume, in million person-times, 2013-18
- It’s due to the stable growth of domestic air passengers
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- Figure 2: Domestic air travel market, by passenger traffic volume, in million person-times, 2013-18
- International segment recovered from a low passenger growth
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- Figure 3: International air travel market, by passenger traffic volume, in million person-times, 2013-18
- Increasing travellers bring demand for air travel in future
- Willingness to spend on self-indulgence motivates leisure travel
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- Figure 4: Spending preferences on self-indulgence – any importance*, 2014 and 2019
- Infrastructure development paves way for air travel
- But high-speed trains are very competitive in the domestic segment
- Future air travel market will see faster increase of international passengers
- Companies and brands
- Concentrated competition in domestic segment…
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- Figure 5: Airline companies’ market share in domestic segment, by passenger volume, 2015-18
- …while more fragmented competition in international segment
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- Figure 6: Airline companies’ market share in international segment, by passenger traffic volume, 2015-18
- Domestic airlines changed focus from international air routes to domestic ones
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- Figure 7: Number of scheduled air routes of domestic airline companies, 2014-18
- Domestic airlines introduce themed flights to differentiate flying experiences
- Airlines also looking into opportunities of increasing revenue from non-ticket services
- The consumer
- Full-service airlines enjoy much higher penetration than budget airlines
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- Figure 8: Penetration of different types of travel transport, May 2019
- Barriers for using budget airlines: inconvenient travel, low-quality cabin services and negative perception of budget airlines
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- Figure 9: Barriers for taking budget airlines in leisure travel, May 2019
- Indirect sales channels are still the primary choice for buying air tickets
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- Figure 10: Usage of different sales channels, May 2019
- Airlines’ official mobile apps are characterised by being trustworthy
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- Figure 11: Perception of two air ticket sales channels, May 2019
- On-board entertainment does not strongly motivate consumers to pay more
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- Figure 12: Services consumers are willing to spend more for air travel, May 2019
- On short-distance trips, airlines can use themed flights to compete with high-speed trains
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- Figure 13: High-speed trains vs airlines – travel length, May 2019
- What we think
Issues and Insights
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- Budget airlines need to change the perception for improved competitiveness
- The facts
- The implications
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- Figure 14: Message delivered by Ryanair
- Themed flights help airlines to compete on short-distance routes
- The facts
- The implications
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- Figure 15: “Panda plane” themed airplane by Sichuan airlines,
- Revenue from non-ticket items: In-flight meals innovated with the concept of total wellness
- The facts
- The implications
The Market – What You Need to Know
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- China’s air passengers maintained a steady growth rate
- …due to the large domestic segment keeping a stable growth
- International segment recovered from a low passenger volume growth
- Positive market conditions support air travel
- About half of consumers are willing to spend more for travel transportation
- Challenges for air travel business
- Looking forward, international air passengers are estimated to grow faster than the domestic
Market Size and Forecast
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- China’s air passenger growth exceeded the global level
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- Figure 16: Comparison of passenger volume in three markets, 2015-18
- Figure 17: Comparison of passenger traffic volume growth rate, China market and global market, 2016-18
- Total air passenger volume in China market has increased steadily over the past five years
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- Figure 18: Total air travel market, by passenger traffic volume, in million person-times, 2013-18
- Future air passengers in China market is estimated to maintain steady growth
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- Figure 19: total air travel market forecast*, by passenger volume, in million person-times, 2019-24(Est)
Market Segmentation
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- Domestic segment has seen stable growth rate of passenger volume
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- Figure 20: Domestic air travel market, by passenger volume, in million person-times, 2013-18
- Domestic air passengers will increase at a slower rate
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- Figure 21: Domestic segment forecast, by passenger traffic volume, in million person-times, 2019-24(Est)
- International segment recovered from low growth
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- Figure 22: International air travel market, by passenger volume, in million person-times, 2013-18
- Within the international segment: domestic airline companies increased their share of passenger volume
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- Figure 23: International air travel market of domestic and international airlines companies, by passenger traffic volume, in million person-times, 2013-18
- Future segment growth driven by favourable outbound travel market
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- Figure 24: International segment forecast, by passenger volume, in million person-times, 2019-24(Est)
Market Factors
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- More consumers go on trips
- More willingness to spend on self-indulgence motivates more leisure travel
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- Figure 25: Spending preferences on self-indulgence – any importance*, 2014 and 2019
- More airports accessible to consumers facilitate air travel
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- Figure 26: Number of airports in the China market, 2015-18
- Three important hub-cities expand their airports
- About half of consumers are willing to spend more toward travel transportation
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- Figure 27: Willingness of spending on transportation to destinations, domestic and outbound travel, November 2017
- Competition from high-speed railway in domestic travel
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- Figure 28: Passenger volume of high-speed railway and domestic airlines, in person-times, 2017-18
- Environmental concerns pressure airlines to adopt green operations
Key Players – What You Need to Know
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- Domestic segment characterised by concentrated competition
- Competition in the international segment is relatively more fragmented
- Airlines emphasizing direct sales channels
- Differentiate flying experiences with themed flights
- Rethinking economy class
- Services created to increase revenue from non-ticket sales
- Electric luggage tags introduced to reduce paper usage
Market Share
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- Concentrated competition in domestic segment
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- Figure 29: Airline companies’ market share in domestic segment, by passenger volume, 2015-18
- Budget airlines increased their market share in domestic segment
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- Figure 30: Two budget airline companies’ market share in domestic segment, by passenger volume, 2015-18
- Relatively fragmented competition in international segment
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- Figure 31: Airline companies’ market share in international segment, by passenger traffic volume, 2015-18
- Domestic airlines improved market share in the international segment by introducing more air routes
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- Figure 32: Comparison of market share in international segment, by international passenger volume, 2015-18
Competitive Strategies
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- Growth rate of international air routes is not as high as 2015
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- Figure 33: Number of scheduled air routes of domestic airline companies, 2014-18
- Figure 34: Year-on-year growth rate of scheduled routes, 2015-18
- Domestic airline companies strengthen the capacity of their direct sales channels
- Full-service airlines launched budget economy class to target price-sensitive consumers
- Budget airlines upgraded flying experiences by the premium economy class
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- Figure 35: Premium economy class by 9 Air
- Themed flights differentiate flying experiences
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- Figure 36: Disney themed plane by China Eastern Airlines
- Healthy diet walks into the cabins
- Airline brands sell more than just flights
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- Figure 37: Travel products sold on Airlines’ official website
Who’s Innovating?
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- Flying paperlessly with battery-free electric luggage tags
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- Figure 38: Electric luggage tag by China Eastern Airlines
The Consumer – What You Need to Know
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- Penetration of budget airlines is far lower than the full-service
- Key passengers for international leisure flights
- Barriers for using budget airlines: inconvenient travel, low-quality cabin service and negative perception
- Indirect ticket sales channels have higher penetration than the direct channels
- Airlines’ official apps are associated with trustworthy image
- Services consumers willing to pay more for: It is not entertainment on board
- Airlines can try attracting short-distance travellers with themed flights
Penetration of Different Travel Transports
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- Full service airlines’ penetration exceeds budget airlines
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- Figure 39: Penetration of different types of travel transport, May 2019
- Income level does not have significant influence on travelling with domestic budget airlines for leisure
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- Figure 40: Penetration of domestic budget airlines* in leisure travel, by monthly household income, May 2019
- Passenger profile for international full-service airlines in leisure travel
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- Figure 41: Penetration of different types of travel transport – international full-service airlines, by gender and generation, May 2019
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- Figure 42: Penetration of different types of travel transport – international full-service airlines, by family structure, May 2019
- High-speed trains have reached high penetration level
Barriers for Taking Budget Airlines for Leisure Travel
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- Main barriers lie in concerns towards travel convenience and in-flight experiences
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- Figure 43: Barriers for taking budget airlines in leisure travel, May 2019
Purchasing Channels
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- Overall indirect channels have increased in usage rate
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- Figure 44: Usage of different air ticket purchasing channels, direct channels vs indirect channels, 2015 and 2019
- Travel booking apps are the most used channel for air ticket purchase
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- Figure 45: Usage of different air ticket purchasing channels, May 2019
- Air ticket sales transferring to mobile end
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- Figure 46: Comparison of PC website and mobile apps, 2015 and 2019, May 2019
Perceptions on Different Sales Channels
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- Airlines official channels are associated with trustworthy image
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- Figure 47: Perception of two air ticket sales channels, May 2019
Services Consumers Are Willing to Pay More For
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- What works: consumers are willing to pay more for comfortable and relaxing air travel rather than in-flight entertainment
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- Figure 48: Services consumers are willing to spend more for air travel, May 2019
- In-flight Wi-Fi can’t strongly persuade consumers to pay more
- Luggage delivery service is an opportunity to cash in at airports
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- Figure 49: Services consumers are willing to spend more for air travel – luggage delivery service*, May-15 and May-19
- Consumers are more interested in paying more for seats with wider legroom, in particular the post-90s
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- Figure 50: Services consumers are willing to spend more for air travel – additional legroom, by gender and generation, May 2019
High-speed Trains vs Airlines under Different Travel Contexts
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- Long-distance flights are less influenced by high-speed trains
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- Figure 51: High-speed trains vs airlines – travel length, May 2019
- Potential short-distance air travellers show interest in themed flights
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- Figure 52: Services consumers are willing to pay more for, May 2019
Meet the Mintropolitans
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- MinTs have taken more leisure flights than business flights
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- Figure 53: Penetration of different travel transports, May 2019
- Desire of comfortable flying experiences push MinTs away from budget airlines
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- Figure 54: Barriers for taking budget airlines, by consumer classification, May 2019
- Direct sales channels are however not the primary choice for MinTs
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- Figure 55: Top five air ticket purchasing channels for MinTs
- Relaxing air travel motivate MinTs to increase spending
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- Figure 56: Services consumers are willing to spend more for air travel, May 2019
Appendix – Methodology and Abbreviations
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- Methodology
- Fan chart forecast
- Abbreviations
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