Open skies agreements and more international visitors will bolster industry demand
New York, NY (PRWEB) January 06, 2014
The International Airlines industry has experienced its share of ups and downs during the past five years. In 2008, airlines experienced sustained growth as a result of rising air travel rates. However, in 2009, airlines experienced one of the most difficult years, as a collapse in demand, capacity cuts and plummeting prices culminated in a significant drop in revenue. Fortunately, from 2010, airlines were able to rebound thanks to hefty cost-cutting measures and an increase in travel demand. IBISWorld estimates revenue will grow at an annualized rate over the five years to 2013. During 2013, operators will increase capacity slowly as travel demand continues to recover and as a result, industry revenue is estimated to grow.
Concentration in the International Airlines industry has risen to a high level during the five years to 2013, with the top four companies (United Continental Holdings Inc., American Airlines Group Inc., Delta Air Lines Inc. and JetBlue Airways Corporation) holding more than half the amount of industry market share (see IBISWorld report 48111a for major player market shares). During this period, poor profitability and increasing competition have forced some airlines out of business, leading to industry consolidation and falling participation. The latest merger between American Airlines and US Airways has created the world's largest airline in terms of revenue. While the merger was challenged by the Department of Justice, it was eventually approved due to the risk of American Airlines going out of business entirely. High-profile mergers between Delta Air Lines Inc. and Northwest Airlines Corp. and United Airlines and Continental Airlines also occurred in the past five years.
According to IBISWorld Industry Analyst Andy Brennan, “revenue is expected to recover over the five years to 2018, as a growing number of international tourists coming to the United States will aid demand for industry services.” These tourists are the industry's major driver and will be encouraged by further cyclical depreciation of the US dollar. Future profit will largely depend on volatile fuel prices and airlines' ability to successfully hedge against their movement, as well as increases in the cost of greenhouse gas emissions. “New fuel-efficient aircraft will aid this cause and increase operator competitiveness in the global market,” says Brennan.
For more information, visit IBISWorld’s International Airlines industry in the US industry report page.
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IBISWorld industry Report Key Topics
The International Airlines industry provides air transportation of passengers and cargo over regular routes and schedules. These services include any flights that either end or originate internationally. Scheduled air passenger carriers, including commuter and helicopter carriers (except scenic and sightseeing), are included in this industry. Furthermore, airlines that provide scheduled international air transportation of mail on a contract basis are also 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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