Airlines - UK - August 2019

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Significant slowdown in market growth
Figure 1: International passenger numbers uplifted at UK airports, 2014-24
Figure 2: Domestic passenger numbers uplifted from UK airports, 2014-24
Increasing environmental pressures on aviation industry
Overcapacity in Europe puts downward pressure on airfares
Companies and brands
Jet2.com fastest growing major UK airline
Virgin Atlantic strengthens position as Connect Airways acquires Flybe
New developments around electric aircrafts that take off vertically
Dubai International plans to become a destination in its own right
Capacity optimisation by Volantio
The consumer
Over half of UK adults travelled by air in the year to June 2019
Figure 3: Flights taken, June 2019
Holidays account for largest share of flights taken
Almost one third of passengers flew domestically
Loyalty can be increased through subscription models
Flexibility in booking process allows travellers to shape their own experience
Almost one in three passengers makes use of an airline’s app
Figure 4: Use of airlines’ and airports’ services, June 2019
Roughly 4 in 10 passengers would be interested in booking holiday excursions/activities on board
Figure 5: Attitudes towards leisure activities at airports and buying experiences on board, June 2019
Alcohol most purchased duty free product with an airline
Figure 6: Purchased duty free products, June 2019
Long-haul passengers willing to pay for a better flying experience
Figure 7: Price versus flying experience, June 2019
Almost half of passengers think their own devices are more convenient
Figure 8: Attitudes towards in-flight entertainment and interaction, June 2019
The majority of passengers expect airlines to develop alternative fuels
Figure 9: Attitudes towards sustainability and travelling by train, June 2019
What we think
ISSUES AND INSIGHTS
Increasing environmental pressures on growing aviation industry
The facts
The implications
Price vs experience
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Significant slowdown in market growth
Increasing environmental pressures on aviation industry
Several airlines have gone bust amid rising oil prices
Overcapacity in Europe puts downward pressure on airfares
Airlines face rising labour costs
British Airways’ data breach could lead to a hefty fine
MARKET SIZE AND FORECAST
Significant slowdown in market growth
Figure 10: Passenger numbers uplifted at UK airports, 2014-24
International traffic expected to be hit harder than domestic traffic in 2019
Figure 11: Total passenger numbers uplifted at UK airports, 2014-24
Figure 12: International passenger numbers uplifted at UK airports, 2014-24
Figure 13: Domestic passenger numbers uplifted from UK airports, 2014-24
Forecast methodology
MARKET SEGMENTATION - OVERSEAS FLIGHTS TAKEN BY UK RESIDENTS
Softer demand for overseas flights after seven years of consecutive growth
Figure 14: Overseas trips taken by UK residents, by mode of transport, 2015-18
Holidays; the only segment within overseas air travel to record growth in 2018
Figure 15: Overseas trips taken by air by UK residents, by purpose, 2015-18
Italy outperformed top 10 destinations in terms of growth in 2018
Figure 16: Overseas trips taken by air by UK residents, by destination, 2015-18
MARKET DRIVERS
Brexit uncertainties impact demand for overseas holidays and business trips
Increasing environmental pressures on aviation industry
Several airlines have gone bust amid rising oil prices
Figure 17: Europe Brent Spot price, yearly averages 2010-18, forecast 2019-20 per July 2019
Overcapacity in Europe puts downward pressure on airfares
Airlines face rising labour costs
Grounding of Boeing 737 MAX aircraft impacts airlines’ profits
British Airways’ data breach could lead to a hefty fine
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Jet2.com fastest growing major UK airline
Virgin Atlantic strengthens position as Connect Airways acquires Flybe
New developments around electric aircrafts that take off vertically
KLM raises awareness of sustainable aviation being a joint responsibility
Dubai International plans to become a destination in its own right
Capacity optimisation by Volantio
Eurowings and Lufthansa above-the-line spend increased significantly
MARKET SHARE
Jet2.com fastest growing major UK airline
Figure 18: Top 10 UK-based* airlines, by passenger numbers uplifted globally, 2013-18
Virgin Atlantic strengthens position as Connect Airways acquires Flybe
LAUNCH ACTIVITY AND INNOVATION
New aircraft on the horizon
Hybrid Air Vehicles develops hybrid aircraft for more sustainable flights
New developments around electric aircrafts that take off vertically
Airlines are looking to reduce their emissions
LanzaTech’s sustainable fuel used for first commercial flight by Virgin Atlantic
KLM raises awareness of sustainable aviation being a joint responsibility
New services to enhance the check-in experience for morning flights
Jet2holidays expanded its Twilight Check-In service
Wake Up at the Gate package for families at Dubai International Airport
Airports strive to offer the best experience
Jewel Changi Airport has opened its doors
Dubai International plans to become a destination in its own right
Data-driven approach to increase airlines’ revenue
Capacity optimisation by Volantio
Migacore develops demand forecasting models for travel industry
ADVERTISING AND MARKETING ACTIVITY
Above-the-line spend by airlines decreased by almost 4% in 2018
Figure 19: Total above-the-line, online display and direct mail advertising expenditure on ads by airlines, 2016-18
Jet2.com focusses on trust and low fares in its national campaign in 2018
Figure 20: Top 10 above-the line, online display and direct mail advertising expenditure on ads by airlines, 2016-18
Eurowings and Lufthansa above-the-line spend increased significantly
Nielsen Ad Intel coverage
BRAND RESEARCH
Brand map
Figure 21: Attitudes towards and usage of selected brands, June 2019
Key brand metrics
Figure 22: Key metrics for selected brands, June 2019
Brand attitudes: easyJet most closely associated with offering good value
Figure 23: Attitudes, by brand, June 2019
Brand personality: Ryanair is more likely to be considered unethical
Figure 24: Brand personality – Macro image, June 2019
British Airways and Virgin Atlantic seen as special and stylish, but consumers believe this comes at a price
Figure 25: Brand personality – Micro image, June 2019
Brand analysis
British Airways has highest share of committed customers
Figure 26: User profile of British Airways, June 2019
Many travellers had an excellent experience with Virgin Atlantic
Figure 27: User profile of Virgin Atlantic, June 2019
Jet2.com has the highest satisfaction rating among selected low-cost airlines
Figure 28: User profile of Jet2.com, June 2019
easyJet seen as more trustworthy than selected low-cost competitors
Figure 29: User profile of easyJet, June 2019
Rebranding Flybe should pay off as awareness and differentiation remain behind
Figure 30: User profile of Flybe, June 2019
Ryanair third most used airline despite poor image
Figure 31: User profile of Ryanair, June 2019
THE CONSUMER – WHAT YOU NEED TO KNOW
Over half of UK adults travelled by air in the year to June 2019
Almost one third of passengers flew domestically
Loyalty can be increased through subscription models
Flexibility in booking process allows travellers to shape their own experience
Alcohol most purchased duty free product with an airline
Long-haul passengers willing to pay for a better flying experience
FLIGHTS TAKEN
Over half of UK adults travelled by air in the year to June 2019
Figure 32: Flights taken, June 2019
Figure 33: Participation and frequency in last 12 months, by demographics, June 2019
Holidays account for largest share of flights taken
Figure 34: Flights taken, by purpose, June 2019
FLIGHT DESTINATIONS
Almost one third of passengers flew domestically
Figure 35: Flight destinations, June 2019
BUDGET VS FULL-SERVICE AIRLINES
Loyalty can be increased through subscription models
Figure 36: Airline types flown with in the last 12 months, June 2019
CLASSES FLOWN
Flexibility in booking process allows travellers to shape their own experience
Figure 37: Classes flown, June 2019
AIRLINE AND AIRPORT SERVICES
Almost one in three passengers make use of an airline’s app
Figure 38: Use of airlines’ and airports’ services, June 2019
Roughly 4 in 10 passengers would be interested in booking holiday excursions/activities on board
Figure 39: Attitudes towards leisure activities at airports and buying experiences on board, June 2019
Opportunities for airports to develop more leisure activities
Figure 40: Attitudes towards leisure activities at airports – CHAID analysis, June 2019
DUTY FREE PRODUCTS
Alcohol most purchased duty free product with an airline
Figure 41: Purchased duty free products, June 2019
About one third of duty free customers bought three or more products
Figure 42: Purchased duty free products - repertoire, June 2019
Highest interest in duty free alcohol and fragrance, skincare or make-up
Figure 43: Considered duty free products, June 2019
Alcohol duty free products mostly appeal to older generations
Figure 44: Considered duty free products, by demographics, June 2019
PRICE VERSUS EXPERIENCE
Long-haul passengers willing to pay for a better flying experience
Figure 45: Price versus flying experience, June 2019
Many short-haul passengers are willing to accept lower levels of comfort for a lower ticket price
IN-FLIGHT ENTERTAINMENT AND INTERACTION
Almost half of passengers think their own devices are more convenient
Figure 46: Attitudes towards in-flight entertainment and interaction, June 2019
Virtual reality likely to appeal to families
ATTITUDES TOWARDS SUSTAINABILITY
The majority of passengers expect airlines to develop alternative fuels
Figure 47: Attitudes towards sustainability and travelling by train, June 2019
Younger generation keen on travelling by train
Figure 48: Attitudes towards sustainability and travelling by train, by demographics, June 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Definitions
Consumer research methodology
CHAID methodology
Figure 49: Airlines – CHAID – table output, June 2019
APPENDIX – MARKET SIZE AND FORECAST
Volume forecast for total passengers uplifted at UK airports
Figure 50: Total passenger numbers uplifted at UK airports, 2014-24
Volume forecast for international passengers uplifted at UK airports
Figure 51: International passenger numbers uplifted at UK airports, 2014-24
Volume forecast for domestic passengers uplifted at UK airports
Figure 52: Domestic passenger numbers uplifted from UK airports, 2014-24
Forecast methodology