New York, NY (PRWEB) January 07, 2015
The Scheduled Air Transportation industry has taken flight over the five years to 2014 as discretionary spending has grown and increasing average fare prices have lifted revenue by 4.7% per year on average. The industry is expected to generate $31.1 billion in revenue in 2014, up 4.9% from 2013. This is a dramatic improvement since the recession when deteriorating global economic conditions constrained travel spending by both consumers and businesses. According to IBISWorld Industry Analyst Andy Brennan, “Over the past five years, a high-value Canadian dollar prompted travellers to make international travel plans instead of travelling domestically, leading to higher growth for the industry's international segment.”
The Scheduled Air Transportation industry has become slowly liberalized over the past few decades as the Canadian government has eased aviation regulation, allowing for the emergence of low-cost carriers and altering the industry's completive environment. The industry is still dominated by large established network carriers; however, heavily discounted fares have become a feature of the industry. According to Statistics Canada, average fare prices for discounted tickets are still yet to pass their pre-recession level. This heavy price competition has led to lower profit margins for some operators, especially with oil prices remaining stubbornly high over the past five years. “The recent fall in the world price of crude will be a welcome relief for airlines that spend over 30.0% of their operating budget on fuel,” says Brennan.
More growth is expected over the next five years as airlines consolidate the gains they made since the recession. Profit margins will depend to a large extent on the volatile price of oil, with the recent fall in oil anticipated to boost profit margins substantially. Ancillary fees will continue to be important revenue drivers for airlines. WestJet and Air Canada implemented new baggage fees in 2014 and both plan to roll out broader Wi-Fi availability on planes over the next few years that will charge customers for access to the web and for in-flight entertainment. Overall, industry revenue is expected to increase each year on average over the five years to 2019.
For more information, visit IBISWorld’s Scheduled Air Transportation in Canada industry report page.
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IBISWorld industry Report Key Topics
This 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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