Los Angeles, CA (PRWEB) October 01, 2013
The Domestic Airlines industry has remained flat over the five years to 2013, with revenue declining marginally at an annualized rate of 0.3% to $138.3 billion. According to IBISWorld Industry Analyst Andy Brennan, “Rising fuel prices and the corresponding increase in ticket prices have threatened industry profitability and demand, particularly in 2009, when the recession further decreased demand.” Rising unemployment rates and falling disposable income during the recession resulted in a stark 16.3% decrease in revenue. Beginning in 2010, however, more passengers boarded domestic flights as economic conditions improved, causing revenue to rise. As demand continues to rebound, revenue is anticipated to increase 0.4% in 2013 as a greater number of Americans choose to travel by air.
The Domestic Airlines industry participation declined over the past five years, with the total number of firms estimated to contract at an average annual rate of 0.7% to 348 as a result of mergers and acquisitions, consolidations and bankruptcies. For example, United Airlines and Continental Airlines merged in 2010, creating the world's largest airline. American Airlines and US Airways are also currently attempting a merger that, if successful, will further add to the industry's high level of concentration. These trends indicate that many companies are having difficulty sustaining operations. Airline profitability has been low by historical standards for most of the period. Many firms have left the industry due to heavy losses sustained over the past decade. “In terms of profit, low-cost airlines such as JetBlue Airways and Southwest Airlines have been the most successful, as their business models allowed for a more flexible operations structure,” says Brennan.
Over the five years to 2018, industry revenue is forecast to exhibit positive growth. Heavy passenger traffic will return as consumer and business sentiment recover and spending increases. Additionally, the US dollar is expected to remain relatively weak over the next five years, increasing demand from foreign tourists. The industry will likely experience further structural changes in the form of mergers and acquisitions, given the competition from low-cost airlines. As a result, the number of industry firms is forecast to decline in the five years to 2018.
For more information, visit IBISWorld’s Domestic Airlines in the US industry report page.
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IBISWorld industry Report Key Topics
The Domestic Airlines in the US industry provides air transportation for passengers and cargo over regular routes and on regular schedules. Network carriers operate a significant portion of their flights using at least one hub where connections are made for flights on a spoke system. Regional carriers provide service from small cities, mostly using smaller aircraft and jets to support the network carriers' hub and spoke systems. Airlines that transport mail are included in this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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