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Long-haul Holidays - UK - March 2014

“Full-service airlines will ultimately be forced to react to compete by launching their own no-frills fares, as a number such as BA and Air France have already done in the short-haul market, or in emulating the bundled fare options offered by American Airlines. Such a move would allow full-service airlines to capitalise on stronger reputations and brand heritage, while retaining a foothold on the first page of comparison websites.”

– Harry Segal, Research Analyst

Some questions answered in this report include:

  • How will no-frills, long-haul airfares impact the market?
  • How can airlines react to shifting consumer expectations?
The long-haul holiday market contracted significantly during the recession, as the impact of squeezed household finances was exacerbated by inflated airfares due to high fuel costs and increases to the rate that Air Passenger Duty is charged at. Economic recovery in the UK provides brands with a range of opportunities for growth, but established key players will face a range of challenges, particularly from the entrance of the no-frills airline model into the transatlantic market.
Consumer demand for in-flight connectivity is set to increase, providing an opportunity for brands to differentiate by offering streaming to personal devices or a fast, stable Wi-Fi network.
 
There is also an opportunity for airlines to cut costs and shed weight by doing away with the traditional seat-back entertainment systems.
 
This report examines holidays outside of Europe taken by UK residents, and explores consumer experience of and attitudes towards long-haul holidays. The report also provides a five-year volume and value forecast for the long-haul holiday market, investigates core drivers behind changes in the market and explores the challenges and opportunities that brands will face in 2014. The report also explores consumer attitudes towards flying long-haul and examines consumer demand for in-flight features.
 
This report examines the habits and attitudes of British holidaymakers concerning long-haul holidays. Long-haul refers to all holidays outside Europe, including holidays involving cruises. A holiday must constitute at least one overnight stay. The business travel market is not reviewed in this report. An adult, for the purposes of Mintel’s research, is anyone aged 16 or over.
 
The standard travel and tourism definitions used in the terminology of this report are as followsTourism is any travel which involves at least one overnight stay away from home. A holiday is a subjectively defined form of tourism, as defined by the tourist in response to surveys such as the IPS. A holiday can be distinguished from other leisure travel such as visits to friends and relatives (VFR) or shopping trips. Short-haul refers destinations within Europe.
 
The following destinations are considered to be short-haul: Austria, Belgium, Bulgaria, Croatia, Cyprus EU, Cyprus Non-EU, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Irish Republic, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and Other Europe. Long-haul refers to destinations outside of Europe. The Canaries are included as a part of the Spanish market, and Madeira and the Azores are included as part of the Portuguese market.
 
A package holiday is defined as the simultaneous sale of at least two elements of a holiday to the traveller: fares on public transport (eg flights) and commercial accommodation (eg hotel or self-catering apartment). Other elements, such as meals or excursions, are not essential to the definition of an inclusive tour.
 
The term ‘all-inclusive’ is used to describe a special type of resort holiday in which food, drink, excursions and other services are provided as part of the total holiday cost. An independent holiday is one in which the traveller organises and books transport and accommodation from separate sources (eg a Channel ferry crossing and a caravan site in France).

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Volume set to grow 14% over the next five years
                • Figure 1: Forecast volume of long-haul holidays taken by UK residents, 2008-18
              • Lower cost of entry will see value grow at a slower rate
                • Figure 2: Forecast value of long-haul holidays taken by UK residents, 2008-18
              • Market factors
                • No-frills, long-haul airfares should increase accessibility in 2014
                  • Fuel prices remain high but airlines are investing in more efficient planes
                    • APD increases continue to inflate the cost of flying
                      • Pound performs well against most key long-haul currencies
                        • Only one ABTA member still levies a surcharge
                          • Companies, brands and innovation
                            • Virgin Atlantic seeks to differentiate by showcasing wearable tech
                              • Virgin America launches in-flight social network
                                • American Express partners with TripAdvisor
                                  • Virgin Australia introduces Bring your own device wireless in-flight entertainment
                                    • American Airlines offers bundled fare options
                                      • The consumer
                                        • Over half of adults have taken a long-haul holiday in the last five years
                                          • Figure 3: Long-haul holidays taken in the last five years, January 2014
                                        • Full-service airlines dominate the long-haul market
                                          • Figure 4: Transport used on last long-haul holiday, January 2014
                                        • High airfares are a key barrier to growth
                                          • Figure 5: Attitudes towards long-haul holidays, January 2014
                                        • Airline reputation and in-flight experience outweigh demand for low price
                                          • Figure 6: Attitudes towards flying long-haul, January 2014
                                        • Legroom is the primary demand for long-distance flights
                                          • Figure 7: Demand for in-flight features, January 2014
                                        • What we think
                                        • Issues and Insights

                                            • How will no-frills, long-haul airfares impact the market?
                                              • The facts
                                                • The implications
                                                  • How can airlines react to shifting consumer expectations?
                                                    • The facts
                                                      • The implications
                                                      • Trend Application

                                                          • Transumers
                                                            • Guiding Choice
                                                              • Mintel Futures: Generation Next
                                                              • Market Drivers

                                                                • Key points
                                                                  • No-frills, long-haul airfares should increase accessibility in 2014
                                                                    • Fuel prices remain high but airlines are investing in more efficient planes
                                                                      • Figure 8: Jet fuel prices, GBP per gallon, January 2009-December 2013
                                                                    • APD increases continue to inflate the cost of flying
                                                                      • Figure 9: Air passenger duty rates, 2012-14
                                                                    • Pound performs well against most key long-haul currencies
                                                                      • Figure 10: Foreign exchange rate index, GBP against key long-haul destination currencies, 2012-14
                                                                    • Demand for Vietnamese Dong doubled in 2013
                                                                      • Figure 11: Post Office 10 fastest-growing tourist currencies, 2013
                                                                    • Australia and New Zealand show the highest holiday costs
                                                                      • Figure 12: Post Office worldwide holiday costs barometer, January 2014
                                                                    • Only one ABTA member still levies a surcharge
                                                                    • Who's Innovating?

                                                                      • Key points
                                                                        • Virgin Atlantic seeks to differentiate by showcasing wearable tech
                                                                          • Virgin America launches in-flight social network
                                                                            • American Express partners with TripAdvisor
                                                                              • Virgin Australia introduces BYOD wireless in-flight entertainment
                                                                                • American Airlines offers bundled fare options
                                                                                  • WestJet Christmas video goes viral
                                                                                  • Market Size and Forecast

                                                                                    • Key points
                                                                                      • Market volume is down 19% since 2008
                                                                                        • Figure 13: Forecast volume and value of long-haul holidays taken by UK residents, 2008-18
                                                                                      • Volume set to grow 14% over the next five years
                                                                                        • Figure 14: Forecast volume of long-haul holidays taken by UK residents, 2008-18
                                                                                      • Lower cost to entry will see value grow at a slower rate
                                                                                        • Figure 15: Forecast value of long-haul holidays taken by UK residents, 2008-18
                                                                                      • Forecast methodology
                                                                                      • Segment Performance

                                                                                        • Key points
                                                                                          • Independent segment returned to growth in 2013
                                                                                            • Figure 16: Independent vs. non-independent long-haul holidays, by volume, 2008-13
                                                                                          • Long-haul flight holidays grew 2% in 2013
                                                                                            • Figure 17: Long-haul holiday trips taken, by transport type, 2008-13
                                                                                          • US dominance continues, but underperforms the wider market
                                                                                            • Figure 18: Top 10 long-haul holiday destinations, by volume, years ended 30 September 2012 and 2013
                                                                                          • Spending in US accounts for 30% of total long-haul expenditure
                                                                                            • Figure 19: Top 10 long-haul holiday destinations, by value, years ended 30 September 2012 and 2013
                                                                                          • Unrest in Thailand could dampen tourist demand
                                                                                            • Mexico was the strongest growth destination in 2013
                                                                                              • Figure 20: Best- and worst-performing destinations, by volume change, years ended 30 September 2012 and 2013
                                                                                            • Egyptian tourism industry continues to suffer
                                                                                              • India’s visa-on-arrival scheme could boost tourist interest
                                                                                              • The Consumer – Long-haul Holidays Taken in the Last Five Years

                                                                                                • Key points
                                                                                                  • Over half of adults have taken a long-haul holiday in the last five years
                                                                                                    • Figure 21: Long-haul holidays taken in the last five years, January 2014
                                                                                                  • All-inclusive and beach holidays are the dominant long-haul holiday types
                                                                                                    • Under-35s are a key demographic for the long-haul market
                                                                                                      • Families are also key, but the nuclear family is no longer the norm
                                                                                                      • The Consumer – Transport Used on Last Long-haul Holiday

                                                                                                        • Key points
                                                                                                          • Full-service airlines dominate the long-haul market
                                                                                                            • Figure 22: Transport used on last long-haul holiday, January 2014
                                                                                                          • Under-35s are key for the burgeoning low-cost, long-haul model
                                                                                                            • ABs are the most likely to have flown full-service
                                                                                                            • The Consumer – Attitudes towards Long-haul Holidays

                                                                                                              • Key points
                                                                                                                • High airfares are a key barrier to growth
                                                                                                                  • Figure 23: Attitudes towards long-haul holidays, January 2014
                                                                                                                • Bullish attitudes support the case for a sustained recovery…
                                                                                                                  • …but financial barriers will continue to impede growth
                                                                                                                    • Influence of under-35s threatens to disrupt the traditional long-haul market
                                                                                                                      • Outlook for the low-cost, long-haul model is mixed
                                                                                                                      • The Consumer – Attitudes towards Flying Long-haul

                                                                                                                        • Key points
                                                                                                                          • Airline reputation and in-flight experience outweigh demand for low price
                                                                                                                            • Figure 24: Attitudes towards flying long-haul, January 2014
                                                                                                                          • Older people are the least likely to accept the low-cost, long-haul model
                                                                                                                            • Low-cost flyers provide a solid base for new budget brands to expand
                                                                                                                              • Lower earners less likely to value in-flight experience and airline reputation
                                                                                                                              • The Consumer – Demand for In-flight Features

                                                                                                                                • Key points
                                                                                                                                  • Legroom is the primary demand for long-distance flights
                                                                                                                                    • Figure 25: Demand for in-flight features, January 2014
                                                                                                                                  • Entertainment provides an opportunity to integrate and differentiate
                                                                                                                                    • Airlines can cut costs by targeting BYOD generation
                                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                                        • Figure 26: Forecast volume of long-haul holidays taken, by UK residents, 2013-18
                                                                                                                                        • Figure 27: Forecast value of long-haul holidays taken, by UK residents, 2013-18
                                                                                                                                    • Appendix – The Consumer – Long-haul Holidays Taken in the Last Five Years

                                                                                                                                        • Figure 28: Long-haul holidays taken in the last five years, January 2014
                                                                                                                                        • Figure 29: Long-haul holidays taken in the last five years, by demographics, January 2014
                                                                                                                                        • Figure 30: Long-haul holidays taken in the last five years, by demographics, January 2014 (continued)
                                                                                                                                        • Figure 31: Long-haul holidays taken in the last five years, by demographics, January 2014 (continued)
                                                                                                                                        • Figure 32: Last long-haul holiday taken, by demographics, January 2014
                                                                                                                                        • Figure 33: Last long-haul holiday taken, by demographics, January 2014 (continued)
                                                                                                                                        • Figure 34: Last long-haul holiday taken, by demographics, January 2014 (continued)
                                                                                                                                    • Appendix – The Consumer – Transport Used on Last Long-haul Holiday

                                                                                                                                        • Figure 35: Transport used on last long-haul holiday, January 2014
                                                                                                                                        • Figure 36: Transport used on last long-haul holiday, by demographics, January 2014
                                                                                                                                        • Figure 37: Transport used on last long-haul holiday, by last long-haul holiday taken, January 2014
                                                                                                                                        • Figure 38: Long-haul holidays taken in the last five years, by transport used on last long-haul holiday, January 2014
                                                                                                                                    • Appendix – The Consumer – Attitudes towards Long-haul Holidays

                                                                                                                                        • Figure 39: Attitudes towards long-haul holidays, January 2014
                                                                                                                                        • Figure 40: Attitudes towards long-haul holidays, by demographics, January 2014
                                                                                                                                        • Figure 41: Attitudes towards long-haul holidays, by demographics, January 2014 (continued)
                                                                                                                                        • Figure 42: Attitudes towards long-haul holidays, by long-haul holidays taken in the last five years, January 2014
                                                                                                                                        • Figure 43: Attitudes towards long-haul holidays, by long-haul holidays taken in the last five years, January 2014 (continued)
                                                                                                                                        • Figure 44: Attitudes towards long-haul holidays, by long-haul holidays taken in the last five years, January 2014 (continued)
                                                                                                                                        • Figure 45: Long-haul holidays taken in the last five years, by attitudes towards long-haul holidays, January 2014
                                                                                                                                        • Figure 46: Long-haul holidays taken in the last five years, by attitudes towards long-haul holidays, January 2014 (continued)
                                                                                                                                        • Figure 47: Attitudes towards flying long-haul, by attitudes towards long-haul holidays, January 2014
                                                                                                                                        • Figure 48: Attitudes towards flying long-haul, by attitudes towards long-haul holidays, January 2014 (continued)
                                                                                                                                    • Appendix – The Consumer – Attitudes towards Flying Long-haul

                                                                                                                                        • Figure 49: Attitudes towards flying long-haul, January 2014
                                                                                                                                        • Figure 50: Attitudes towards flying long-haul, by demographics, January 2014
                                                                                                                                        • Figure 51: Attitudes towards flying long-haul, by demographics, January 2014 (continued)
                                                                                                                                        • Figure 52: Attitudes towards flying long-haul, by transport used on last long-haul holiday, January 2014
                                                                                                                                        • Figure 53: Transport used on last long-haul holiday, by attitudes towards flying long-haul, January 2014
                                                                                                                                        • Figure 54: Transport used on last long-haul holiday, by attitudes towards flying long-haul, January 2014 (continued)
                                                                                                                                    • Appendix – The Consumer – Demand for In-flight Features

                                                                                                                                        • Figure 55: Demand for in-flight features, January 2014
                                                                                                                                        • Figure 56: Demand for in-flight features, by demographics, January 2014
                                                                                                                                        • Figure 57: Demand for in-flight features, by demographics, January 2014 (continued)
                                                                                                                                        • Figure 58: Demand for in-flight features, by long-haul holidays taken in the last five years, January 2014
                                                                                                                                        • Figure 59: Demand for in-flight features, by long-haul holidays taken in the last five years, January 2014 (continued)
                                                                                                                                        • Figure 60: Demand for in-flight features, by long-haul holidays taken in the last five years, January 2014 (continued)
                                                                                                                                        • Figure 61: Attitudes towards flying long-haul, by demand for in-flight features, January 2014
                                                                                                                                        • Figure 62: Attitudes towards flying long-haul, by demand for in-flight features, January 2014 (continued)
                                                                                                                                        • Figure 63: Demand for in-flight features, by attitudes towards flying long-haul, January 2014
                                                                                                                                        • Figure 64: Demand for in-flight features, by attitudes towards flying long-haul, January 2014 (continued)
                                                                                                                                        • Figure 65: Demand for in-flight features, by transport used on last long-haul holiday, January 2014

                                                                                                                                    Companies Covered

                                                                                                                                    • American Express Company (The)
                                                                                                                                    • American Express UK
                                                                                                                                    • AMR Corporation (American Airlines)
                                                                                                                                    • Apple Computer UK Ltd
                                                                                                                                    • Facebook, Inc.
                                                                                                                                    • Google UK
                                                                                                                                    • Google, Inc.
                                                                                                                                    • LinkedIn
                                                                                                                                    • TripAdvisor LLC
                                                                                                                                    • Twitter, Inc.
                                                                                                                                    • Virgin Atlantic Airways Limited
                                                                                                                                    • YouTube, Inc.

                                                                                                                                    Long-haul Holidays - UK - March 2014

                                                                                                                                    US $2,478.79 (Excl.Tax)