Freight Air Transport in the UK Industry Market Research Report Now Updated by IBISWorld

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Demand for the services provided by the Freight Air Transport industry declined with economic conditions in the five years through 2012-13 as world trade volumes fell but a modest recovery is expected over the next five years to 2017-18 driven by improved world trade and domestic economic conditions and growing volumes of express parcels generated by online retail. For these reasons, industry research firm IBISWorld has updated its report on the Freight Air Transport industry.

IBISWorld industry market research
Some volatility in demand is expected as competition increases

The Freight Air Transport industry includes businesses that provide air transport of commercial and private cargo, on either scheduled or non-scheduled routes, domestically and internationally. Industry performance relies on demand for transporting time-sensitive goods and valuable items. The industry's services are the fastest, but often the most expensive way to move freight and mail. Speed is a luxury that freighters can sometimes go without. According to IBISWorld industry analyst Andrew Johnson, “demand for industry services declined with economic conditions in the five years through 2012-13”. World trade volumes, particularly those of high-value goods, have struggled over the five-year period, damaging industry demand.

A significant contraction occurred during 2009-10, when revenue fell by 6.5%. This happened during the heart of a recession, as businesses ran down inventories and trade plummeted. The uncertainty of the recovery in the UK economy and instability within the eurozone has hampered the industry's recovery. Industry revenue is expected to fall at a compound annual rate of 2.3% over the five years through 2012-13 to £943.8 million. A return to growth of 0.9% is expected in 2012-13, helped by strength in key markets and improvements in demand for goods by UK consumers. The five years through 2012-13 have posed challenging trading conditions and enterprises are expected to have declined at a compound annual rate of 6.4%. Those enterprises that remain have been able to contain costs effectively and expand as others have failed. Ongoing cost cutting by major players will contribute to a healthier average operating profit margin in 2012-13.

Over the next five years, broadly the recovery is expected to strengthen driven by improved world trade and economic conditions at home. However, the growth of the industry is not expected to be smooth, with some volatility in demand expected. Industry revenue is forecast to return to modest growth over the five years through 2017-18. Johnson adds, “the growing volume of express parcels generated by online retail is expected to support industry growth as mail volumes decline”. A surge in demand will encourage sales for the first few years, and this is likely to have a positive effect on profit. After this prosperous time, competition should increase through growth in capacity by existing operators and strengthening competition from foreign airlines. International environmental regulation is expected to constrain the industry over the coming years.

The Freight Air Transport industry has a high level of market share concentration, with the top four players accounting for 83% of total revenue. Major companies include British Airways, Deutsche Post (DHL Air), Virgin Atlantic Airways and Global Supply Systems.

For more information on the Freight Air Transport industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.

IBISWorld industry Report Key Topics

The industry includes businesses that provide air transport of commercial and private cargo, on either scheduled or non-scheduled routes, domestically and internationally. It also includes air transportation that is part of a national postal system but excludes door-to-door courier services.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalisation & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on many UK industries. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in London, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.co.uk or call 0-203-008-6568.

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Gavin Smith
IBISWorld
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