Airlines Worldwide - June 2011
- The sharp recovery in worldwide airline industry fortunes in 2010 came to at least a temporary halt in early 2011, due to the surge in the price of jet fuel, the political turmoil in the Middle East and North Africa (MENA) region and the earthquake/tsunami in Japan.
- Capacity is currently rebounding faster than demand, which is depressing load factors and yields.
- Airfares are rising on the back of higher fuel costs and should rise further in the European Union (EU), as a result of implementation of the latter’s Emissions Trading Scheme (EU ETS), which wil require all airlines flying in EU airspace to have their emissions covered by CO2 pollution permits as of 1 Janaury 2012.
- The fastest-growing markets for passenger traffic over the next three years should be China, Vietnam, South Africa, India and the Philippines.
- Horizontal integration continues apace as four major mergers have either been consummated recently or are on the way to completion, including: United Airlines and Continental Airlines (October 2010); British Airways and Iberia (January 2011); Southwest Airlines and AirTran; and LAN (May 2011), the leading Chilean carrier, and TAM, the Brazilian market leader, which has been delayed by a consumer-led antitrust investigation.
- Following the example of the big US LCCs like Southwest Airlines and JetBlue, the leading European LCCs like Ryanair and easyJet are adapting their services to target the business traveller market, through offering such amenities as reserved seating, flexible tickets, use of booking intermediaries and flights from first-tier airports.
- LCC growth has shifted from Europe, which is approaching saturation, to newer emerging markets such as Brazil, India, Mexico, Russia and South East Asia.
- There are still growth possibilities in the crowded US and Canadian LCC markets for small niche players who target specific market segments with well-defined offerings like point-to point travel between small cities.
- The dispute between major booking intermediaries, namely global distribution systems (GDSs) and online travel agents (OTAs) and a couple of large US carriers has spilled over into the courtroom, with American Airlines suing Travelport (the owner of Galileo, Worldspan, Orbitz and ebookers) and US Airways suing Sabre Holdings (the owner of the GDS Sabre, as well as Travelocity and Lastminute.com).
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