Despite volatile fuel costs, a healthier corporate sector will boost industry demand
New York, NY (PRWEB) September 27, 2014
The Charter Flights industry is flying again following several years of unexpected turbulence caused by the recession. The industry experienced a rough period during and immediately after the recession when revenue declined due to a decrease in travel and transport spending, particularly among corporate clients. Since 2011, demand for nonscheduled air transport services has grown as the broader economy has improved, corporate profit has reached record highs and per capita household income has increased. Despite a slow start at the beginning of the period, industry revenue is expected to increase over the five years to 2014. In 2014, industry revenue is expected grow as corporate profit and travel rates grow particularly strongly.
The Charter Flights industry provides nonscheduled air transport services for cargo and passengers. Cargo services account for about 17.5% of total industry revenue and are highly dependent on economic activity and trade. The biggest players in the industry specialize in freight, with their services normally undertaken on a contract basis with large clients such as freight-forwarding companies and the US military. The majority of industry revenue is derived from providing services to consumers for domestic and international trips, scenic tours and sightseeing. In this segment, the industry's closest competitors are major commercial airlines that run scheduled flights between determined locations. IBISWorld Economic Analyst Andy Brennan says, “demand for private charters has grown over the past few decades due to rising disposable incomes and demand for more bespoke, personalized services. Industry concentration has been growing over the past five years.” Market share concentration has nearly doubled as a result of organic growth by some players as well as significant merger and acquisition activity. Companies that provide transport for mining firms have fared better than others during the past five years, due to a strong demand for commodities. These include PHI and Bristow Group, which provide helicopter transport for oil and gas. Two largest players, Air Transport Services and Atlas Air Worldwide Holdings have increased market share through acquisitions.
The industry's recovery is expected to continue over the next five years, driven by higher per capita income and corporate profit. “As the economic environment continues to stabilize and the general business outlook becomes more confident, spending on luxury items such as chartered flights is anticipated to grow,” Brennan said. Consequently, over the five years to 2019, industry revenue is projected to increase. Despite these trends, industry profitability and demand will continue to be threatened by rising fuel prices and the corresponding increase in charter flight costs.
For more information, visit IBISWorld’s Charter Flights in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in the Charter Flights industry provide air transport services on an irregular or nonscheduled basis for passengers and cargo, also referred to as a charter arrangement. Industry operators allow people to fly where they want (in terms of destination and airport) and when they want, as opposed to commercial airlines that operate on a fixed schedule of destinations and times. This industry also includes scenic tours and sightseeing services.
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