Out of turbulence: Industry to experience slow recovery after economic depression.
London, UK (PRWEB) September 06, 2013
The Scheduled Passenger Air Transport industry includes all companies who transport passengers over domestic or international routes on regular timetables. The performance of the industry is affected by factors like consumer and business confidence, household income and airfare price levels. When sentiment is up and income is rising, demand for all travel tends to increase, leading to more passengers on planes. Consumers' price sensitivity to air travel means that low airfares boost demand. Over the five years through 2013-14, the industry has been buffeted by rising input costs and increased price competition.
IBISWorld expects industry revenue to grow at a compound annual rate of 0.4% over the five years through 2013-14 to reach £19.5 billion. The industry has been recovering since 2008-09, as revenue fell by 11.6% during the year. According to IBISWorld industry analyst Andrew Johnson, “the premium end of the market suffered by a greater extent as tight household budgets increased demand for low-cost services.” EasyJet and Ryanair are the only two of the major companies to expand passenger numbers and revenue throughout the period. Demand for domestic flights also fell as travellers switched to alternative forms of transport. The industry has adapted well and IBISWorld forecasts revenue growth of 0.4% in 2013-14 as outbound tourism expands with consumer confidence and a rising exchange rate. With recovery uncertain in the United Kingdom and eurozone, airlines will be nonetheless cautious about increasing capacity and are expected to offer further deals to attract consumers.
This fragile growth is expected to help industry profit margins recover further over 2013-14. The recovering demand from key markets like business travel will allow for margin growth. Labour rationalising and major restructures to match airline capacity with air travel demand will also help profit margins recover. The industry's recovery is expected to strengthen over the coming five years through 2018-19. Johnson adds, “improving demand for air travel and rising prices will support revenue growth.” Demand for air travel will be strongest from emerging economies as they will recover faster than the domestic economy. However, taxes and regulation threaten the growth of the industry. Increases in Air Passenger Duty and the development of the EU Emissions Trading Scheme threaten to increase cost and complexity.
The Scheduled Passenger Air Transport industry has a high level of concentration, with the four largest players accounting for 91.7% of industry revenue. Industry concentration increased over the past five years following worldwide trends of airlines consolidating. Larger airlines expanded their operations via acquisitions and organically through increasing routes and capacity. Major companies include International Airlines Group, EasyJet, Virgin Atlantic Airways and Ryanair.
For more information on the Scheduled Passenger 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
Companies in this industry provide air transport for passengers on scheduled routes only. This includes domestic and international flights.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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