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Airlines - UK - August 2017

“Airlines have enjoyed strong growth over the past two years. Cheap oil has kept fuel bills down, and the savings enabled airlines to cut fares. However, Brexit is casting a shadow on the industry. There are concerns over the Open Skies Agreement, airline ownership rules and declining consumer disposable income. However, while companies may cut back on business travel, holidaymakers should prop up the market as budget carriers slash prices to stimulate growth.”
– Fergal McGivney, Travel Analyst

This report looks at the following areas:

  • The battle between low-cost carriers and full-service carriers
  • Full-service carriers still dominate long-haul markets but low-cost carriers are gaining a foothold
  • Google Flights usage is still small, but industry players voice concern
  • Opportunities in the VFR (visits to friends and relatives) market

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Table of contents

  1. Overview

    • What you need to know
      • Scope of the Report
      • Executive Summary

          • The market
            • International passenger uplift
              • Domestic traveller uplift
                • Figure 1: International passenger numbers uplifted from UK airports, 2012-22
                • Figure 2: Domestic passenger numbers uplifted from UK airports, 2012-22
                • Figure 3: Total passenger numbers uplifted from UK airports, 2012-22
              • The consumer
                • No change in the proportion of consumers taking flights
                  • Figure 4: Flight types taken, June 2016 and June 2017
                • The battle between low-cost carriers and full-service carriers
                  • Figure 5: Airline types flown in the last 12 months, June 2016 and June 2017
                • Premium economy offers a more affordable alternative to business class
                  • Figure 6: Classes flown, June 2017
                • Paying for ancillaries; nearly a quarter of long-haul passengers have paid for extras
                  • Figure 7: Passengers who paid for extra services on a short-haul flight, July 2017
                  • Figure 8: Attitudes towards paying for extra comfort on a long-haul flight, July 2017
                • Scope for easy-to-use rewards scheme
                  • Figure 9: Attitudes towards flight services I, June 2017
                • Smart technology for dealing with delays and cancellations
                  • Figure 10: Attitudes towards flight services II, June 2017
                • Hassle of claiming for compensation opens up doors for tech companies that automate the process
                  • Figure 11: Attitudes towards flights, July 2017
                • What we think
                • Issues and Insights

                  • The battle between low-cost carriers and full-service carriers
                    • The facts
                      • The implications
                        • Full-service carriers still dominate long-haul markets but low-cost carriers are gaining a foothold
                          • The facts
                            • The implications
                              • Google Flights usage is still small, but industry players voice concern
                                • The facts
                                  • The implications
                                    • Opportunities in the VFR (visits to friends and relatives) market
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Passenger forecast to slow over the next few years
                                            • Brexit – Bumpy ride ahead for UK airlines?
                                              • Owners of Dublin-based Ryanair could face problems
                                                • Uncertain time for IAG
                                                • Market Size and Forecast

                                                  • Passenger growth forecast to slow over the next few years
                                                    • International passenger uplift
                                                      • Domestic passenger uplift
                                                        • Heathrow expansion gets the green light but plans have been scaled back
                                                          • Figure 12: Passenger numbers uplifted at UK airports, 2012-22
                                                          • Figure 13: International passenger numbers uplifted at UK airports, 2012-22
                                                          • Figure 14: Domestic passenger numbers uplifted from UK airports, 2012-22
                                                          • Figure 15: Total passenger numbers uplifted at UK airports, 2012-22
                                                        • Forecast methodology
                                                        • Market Segmentation

                                                          • Transport; air travel increases its market share
                                                              • Figure 16: Overseas trips taken by UK residents, by mode of transport, 2014-16
                                                            • Holiday flights account for two thirds of overseas trips, but VFR presents opportunities
                                                              • Figure 17: Purpose of overseas trips, by air, 2015 vs 2016
                                                            • A third of flights are taken between July and September
                                                              • Figure 18: Number of trips by air, by quarter, 2015 vs 2016
                                                            • Spain the top destination for passengers by some margin
                                                              • Figure 19: Top 10 countries visited by UK residents, by air travel, 2015 vs 2016
                                                              • Figure 20: Top 10 countries visited by UK residents, by all modes of transport, 2015 vs 2017
                                                            • North African and Turkish markets suffering; but expansion suggests an improvement
                                                            • Market Drivers

                                                              • The weak Pound – Positives for exports, negatives for holidaymakers
                                                                • Figure 21: Pound Sterling versus euro and US Dollar, January 2016-August 2017
                                                              • Low oil prices have benefited airlines but a rise may be on the cards
                                                                  • Figure 22: Europe Brent Spot Price FOB* (Dollars per Barrel), J 2014-May 2017
                                                                • British Airways to impose GDS fees and to focus on NDC
                                                                  • Ryanair promises lower fares for consumers
                                                                  • Brexit and the Airline Industry

                                                                    • A bumpy ride ahead for UK airlines?
                                                                      • Airlines could face problems over ownership
                                                                        • Overseas segment – Denied Boarding Regulation could be called into question
                                                                        • Companies and Brands – What You Need to Know

                                                                          • Traxo collects and updates travel data in real time
                                                                            • Start-up Volantio can help with the overbooking problem
                                                                              • Top three airlines see growth in passenger uplift
                                                                                • British Airways’ reputation takes a hit following the scaling back of onboard services
                                                                                • Launch Activity and Innovation

                                                                                  • Traxo collects and updates travel data in real time
                                                                                    • Lufthansa flight information is now searchable via Google Home
                                                                                      • Start-up Volantio can help with the overbooking problem
                                                                                        • Figure 23: Compensation for overbooked flights, July 2017
                                                                                      • KLM Royal Dutch Airlines allows users to query with emoji
                                                                                        • One-click payments can help boost chatbots…
                                                                                        • Brand Research

                                                                                            • Brands covered
                                                                                              • Full-service airlines
                                                                                                • British Airways
                                                                                                  • Virgin Atlantic
                                                                                                    • Charter airlines
                                                                                                      • Thomson Airways
                                                                                                        • Thomas Cook
                                                                                                          • Low-cost carriers
                                                                                                            • easyJet
                                                                                                              • Ryanair
                                                                                                                • Brand map
                                                                                                                  • Figure 24: Attitudes towards and usage of selected brands, July 2017
                                                                                                                • Key brand metrics
                                                                                                                  • Figure 25: Key metrics for selected brands, July 2017
                                                                                                                • British Airways and Virgin Atlantic brands associated with high quality
                                                                                                                  • Figure 26: Attitudes, by brand, July 2017
                                                                                                                • Brand personality: Low-cost carrier easyJet seen as most accessible brand, while Ryanair viewed in a negative light
                                                                                                                  • Figure 27: Brand personality – Macro image, July 2017
                                                                                                                • Thomson Airways and Thomas Cook’s family-friendly services viewed as welcoming and friendly
                                                                                                                  • Figure 28: Brand personality – Micro image, July 2017
                                                                                                                • Brand analysis
                                                                                                                  • British Airways’ reputation takes a hit following the scale back of onboard services
                                                                                                                    • Figure 29: User profile of British Airways, July 2017
                                                                                                                  • Virgin Atlantic positioned to win disgruntled British Airways customers over
                                                                                                                    • Figure 30: User profile of Virgin Atlantic, July 2017
                                                                                                                  • Users of Thomson Airways most likely to recommend it to friends
                                                                                                                    • Figure 31: User profile of Thomson Airways, July 2017
                                                                                                                  • Thomas Cook viewed as safe, fun and vibrant
                                                                                                                    • Figure 32: User profile of Thomas Cook Airlines, July 2017
                                                                                                                  • easyJet remains the most popular budget carrier
                                                                                                                    • Figure 33: User profile of easyJet, July 2017
                                                                                                                  • Ryanair’s negative reputation does nothing to dampen its passenger uplift
                                                                                                                    • Figure 34: User profile of Ryanair, July 2017
                                                                                                                • Market Share

                                                                                                                  • Top three airlines see growth in passenger uplift
                                                                                                                      • Figure 35: Top 10 UK-based airlines, by passenger numbers uplifted globally, 2011-16
                                                                                                                  • The Consumer – What You Need to Know

                                                                                                                    • No change in the proportion of consumers taking flights
                                                                                                                      • Are 25-34s eschewing cattle class for a better in-flight experience?
                                                                                                                        • Budget carriers benefit from short-haul volume
                                                                                                                          • The battle between low-cost carriers and full-service carriers
                                                                                                                            • Premium economy offers a more affordable alternative to business class
                                                                                                                              • Paying for ancillaries; just under a fifth of passengers buy add-ons
                                                                                                                                • Parents of under-16s open to paying for long-haul extras
                                                                                                                                  • Locking in a fare at today’s price for a later booking
                                                                                                                                  • Flights Taken

                                                                                                                                    • No change in the proportion of consumers taking flights
                                                                                                                                      • Are 25-34s eschewing cattle class for a better in-flight experience?
                                                                                                                                          • Figure 36: Flight types taken, June 2016 and June 2017
                                                                                                                                      • Flight Length

                                                                                                                                        • Budget carriers benefit from short-haul volume
                                                                                                                                            • Figure 37: Flight length, June 2017
                                                                                                                                        • Low-cost vs Full-service

                                                                                                                                          • The battle between low-cost carriers and full-service carriers
                                                                                                                                            • Figure 38: Airline types flown in the last 12 months, June 2016 and June 2017
                                                                                                                                            • Figure 39: Total passenger numbers uplifted worldwide by UK airlines, low-cost* and full-service**, 2011-15
                                                                                                                                          • Full-service carriers still dominate long-haul markets…
                                                                                                                                            • Figure 40: Direct connectivity outside of Europe, full-service versus low-cost carrier, 2007 and 2017
                                                                                                                                          • …but low-cost carriers are gaining a small foothold
                                                                                                                                            • Consumers will have to put up with the negatives of flying low-cost long-haul
                                                                                                                                                • Figure 41: Total passenger numbers uplifted worldwide by UK airlines, low-cost* and full-service**, 2011-15
                                                                                                                                            • Classes Flown

                                                                                                                                              • Premium economy offers a more affordable alternative to business class
                                                                                                                                                • Figure 42: Classes flown, June 2017
                                                                                                                                              • Premium versus Standard Economy
                                                                                                                                                  • Figure 43: British Airways Premium Economy vs Ryanair Business Plus
                                                                                                                                                • The rise of low-cost long-haul services
                                                                                                                                                  • Figure 44: A comparison between Premium Economy on a Boeing 787-9, full-service carrier British Airways vs low-cost long-haul carrier Norwegian, May 2017
                                                                                                                                                • Encouraging leisure travellers to fly premium economy
                                                                                                                                                  • Figure 45: Attitudes towards premium economy, June 2017
                                                                                                                                                  • Figure 46: Price difference for a flight from London Heathrow to New York on Tuesday 18 July 2017, by Economy, Premium Economy and Business Class
                                                                                                                                              • Flight Behaviours

                                                                                                                                                • Paying for ancillaries; just under a fifth of passengers buy add-ons
                                                                                                                                                  • Figure 47: Flight behaviours, June 2017
                                                                                                                                                • Domestic business travellers spending on ancillaries; but possible market contraction on the horizon
                                                                                                                                                  • Figure 48: Passengers who paid for extra services on a short-haul flight, July 2017
                                                                                                                                                • Nearly a quarter of long-haul passengers have paid for extras
                                                                                                                                                  • Figure 49: Passengers who paid for extra services on a short-haul flight, July 2017
                                                                                                                                                  • Figure 50: Attitudes towards paying for extra comfort on a long-haul flight, July 2017
                                                                                                                                                  • Figure 51: Willingness to pay for extra services on a long-haul flight, July 2017
                                                                                                                                                • Google Flights usage is still small
                                                                                                                                                  • Industry players voice concerns over Google
                                                                                                                                                  • Attitudes towards Flight Services I

                                                                                                                                                    • Parents of under-16s open to paying for long-haul extras
                                                                                                                                                      • Figure 52: Attitudes towards flight services I, June 2017
                                                                                                                                                    • Passengers open to using mobile airport apps
                                                                                                                                                        • Figure 53: Attitudes towards flight services I, June 2017
                                                                                                                                                    • Attitudes towards Flight Services II

                                                                                                                                                      • Locking in a fare at today’s price for a later booking
                                                                                                                                                        • Figure 54: Attitudes towards flight services II, June 2017
                                                                                                                                                      • Smart technology for dealing with delays and cancellations
                                                                                                                                                        • Hassle of claiming for compensation opens up doors for tech companies that automate the process
                                                                                                                                                          • Figure 55: Attitudes towards flight services II, June 2017
                                                                                                                                                      • CHAID Analysis – Airlines

                                                                                                                                                        • Methodology
                                                                                                                                                          • Parents of under-16s most open to paying for long-haul extras
                                                                                                                                                            • Figure 56: Target groups based on statements about airlines – CHAID – Tree output, June 2017
                                                                                                                                                            • Figure 57: Target groups based on statements about airlines – CHAID – Table output, June 2017
                                                                                                                                                        • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                            • Abbreviations
                                                                                                                                                              • Consumer research methodology
                                                                                                                                                                • Definitions
                                                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                                                  • Forecast methodology
                                                                                                                                                                      • Figure 58: Best- and worst-case forecast for total UK passenger uplift, 2017-22
                                                                                                                                                                      • Figure 59: Best- and worst-case forecast for international UK passenger uplift, 2017-22
                                                                                                                                                                      • Figure 60: Best- and worst-case forecast for domestic UK passenger uplift, 2017-22

                                                                                                                                                                  Companies Covered

                                                                                                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                                                                                                  Airlines - UK - August 2017

                                                                                                                                                                  US $2,570.96 (Excl.Tax)