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Airlines - UK - August 2018

“Airlines face some challenging times over the next few years as Brexit approaches and fuel costs rise. While businesses are cutting back on travel, consumers are still hungry for holidays. However, they will be keeping an eye on spending as the Pound remains weak. Airlines that help consumers manage their spending will stand out from the crowd.”
– Fergal McGivney, Senior Travel Analyst

This Report looks at the following areas:

  • Opportunities to develop on-board catering
  • The rise in smartphone bookings is down to a mobile-first approach

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Table of contents

  1. Overview

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

          • The market
            • Near-term outlook is bright but airlines face uncertainty going forwards
              • Figure 1: International passenger numbers uplifted at UK airports, 2013-23
              • Figure 2: Domestic passenger numbers uplifted from UK airports, 2013-23
            • Companies and brands
              • Brand research; Norwegian may need to boost awareness
                • Figure 3: Key metrics for selected brands, June 2018
                • Figure 4: Top 10 UK-based* airlines, by passenger numbers uplifted globally, 2017
              • The consumer
                • Proportion of UK consumers taking flights remains flat
                  • Figure 5: Flights taken, June 2018
                • Consumers may cut back on long-haul travel
                  • Figure 6: Flight length, June 2018
                • Budget versus full-service airlines
                  • Figure 7: Types of airlines flown with, June 2018
                • The growth of premium economy
                  • Figure 8: Types of class flown, June 2018
                • Attitudes towards paying for on-board food and drink
                  • Figure 9: Types of class(es) flown, June 2018
                • Boosting food and drink bookings using a pre-order discounted app
                  • Figure 10: Attitudes towards buying pre-ordering food via an app, June 2018
                • Smartphone usage on the rise
                  • Figure 11: smartphone bookings for flights, June 2018
                • Passengers are most willing to pay for legroom, Wi-Fi, and seat reservation
                  • Figure 12: Paying for on-board services, June 2018
                • What we think
                • Issues and Insights

                  • Opportunities to develop on-board catering
                    • The facts
                      • The implications
                        • The rise in smartphone bookings is down to a mobile-first approach
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • Passenger uplift grew substantially over the past five years
                                • Holiday volume finally passes the 45.5 million mark
                                  • Price will be an even more important driver in 2018
                                    • Slowdown in international passenger uplift forecast over the next five years
                                      • Wages have begun to grow faster than inflation
                                        • Rising fuel costs will pose a problem for airlines over the next few years
                                          • The EU’s Open Skies Agreement must be addressed in the Brexit negotiations
                                          • Market Size and Forecast

                                            • Near-term outlook is bright but airlines face uncertainty going forwards
                                              • Holiday intentions remain robust but Open Skies Agreement is crucial to market performance
                                                • Figure 13: Passenger numbers uplifted at UK airports, 2013-23
                                                • Figure 14: International passenger numbers uplifted at UK airports, 2013-23
                                                • Figure 15: Domestic passenger numbers uplifted from UK airports, 2013-23
                                                • Figure 16: Total passenger numbers uplifted at UK airports, 2013-23
                                              • Forecast methodology
                                              • Market Segmentation

                                                • Air travel continues to increase its market share
                                                  • Figure 17: Overseas trips taken by UK residents, by mode of transport, 2015-17
                                                • Overseas business travel hit by cut backs
                                                  • Figure 18: Purpose of overseas trips, by air, 2016 and 2017
                                                • Fall in flights to the US
                                                  • Figure 19: Top 10 countries visited by UK residents, by air travel, 2016 and 2017
                                              • Market Drivers

                                                • The weak Pound is making trips abroad more expensive
                                                  • Figure 20: Pound sterling versus euro and US dollar, June 2016-18
                                                • Rising fuel costs putting pressure on airlines’ operational costs
                                                  • Figure 21: Europe Brent Spot Price FOB* (Dollars per Barrel), July 2013-May 2018
                                                • Airlines turn to surcharges for flights booked via GDS
                                                  • Brexit; the government must address the EU’s Open Skies Agreement
                                                    • Brexit; airlines could face problems over ownership
                                                      • Brexit; denied Boarding Regulation could be called into question
                                                        • Consumer confidence on the increase
                                                          • Figure 22: Trends in how respondents would describe their financial situation, February 2009-June 2018
                                                          • Figure 23: Trends in how respondents would describe their financial situation, by age, June 2018
                                                          • Figure 24: Trends in consumer sentiment for the coming year, June 2018
                                                      • Companies and Brands – What You Need to Know

                                                        • The big two budget carriers continue to see strong growth
                                                          • IAG bids for low-cost long-haul Norwegian
                                                            • Brand research; Norwegian could benefit from boosting awareness
                                                              • Brand research; Jet2 has impressive experience ratings
                                                                • Lumo uses machine learning to predict flight destructions
                                                                  • British Airways launch new seating plan
                                                                    • Ryanair cuts adspend to focus on customer service
                                                                    • Market Share

                                                                      • The big two budget carriers continue to see strong growth
                                                                        • Figure 25: Top 10 UK-based* airlines, by passenger numbers uplifted globally, 2011-17
                                                                        • Figure 26: Top 10 companies in terms of passengers licensed under ATOL protection, 2018
                                                                      • IAG looking to acquire low-cost long-haul carrier Norwegian
                                                                        • Struggling Monarch collapses
                                                                        • Brand Research

                                                                            • Figure 27: Attitudes towards and usage of selected brands, June 2018
                                                                          • Key brand metrics
                                                                            • Figure 28: Key metrics for selected brands, June 2018
                                                                          • Brand attitudes: British Airways is regarded as highly trustworthy
                                                                            • Figure 29: Attitudes, by brand, June 2018
                                                                          • Brand personality: consumers see Virgin Atlantic and British Airways as exclusive
                                                                            • Figure 30: Brand personality – Macro image, June 2018
                                                                          • easyJet seen as basic but functional
                                                                            • Figure 31: Brand personality – Micro image, June 2018
                                                                          • Brand analysis
                                                                            • Virgin Atlantic achieves the highest experience rating
                                                                              • Figure 32: User profile of Virgin Atlantic, June 2018
                                                                            • British Airways remains the UK’s favourite airline brand
                                                                              • Figure 33: User profile of British Airways, June 2018
                                                                            • Jet2 has an impressive experience rating
                                                                              • Figure 34: User profile of Jet2, June 2018
                                                                            • easyJet is perceived to be better value than Ryanair
                                                                              • Figure 35: User profile of easyJet, June 2018
                                                                            • Norwegian needs to boost awareness
                                                                              • Figure 36: User profile of Norwegian, June 2018
                                                                            • Ryanair’s reputation continues to struggle but it’s not hurting sales
                                                                                • Figure 37: User profile of Ryanair, June 2018
                                                                            • Launch Activity and Innovation

                                                                              • Qantas plans to launch direct flights from London to Sydney by 2020
                                                                                • Figure 38: The Boeing 787 Dreamliner
                                                                              • British Airways launches new seating plan
                                                                                • JetBlue launches Private Jet services for the masses
                                                                                  • British Airways adds Santiago and Washington DC routes
                                                                                    • Lumo uses machine learning to predict flight disruptions
                                                                                      • Figure 39: Lumo’s flight prediction tool
                                                                                    • Flio helps travellers navigate airports
                                                                                      • Figure 40: The Flio app offers airport maps and discounts amongst other services
                                                                                  • Advertising and Marketing Activity

                                                                                    • Ryanair plans to cut adspend to focus on customer service
                                                                                        • Figure 41: Total above-the line, online display and direct mail advertising expenditure on ads, 2014-17
                                                                                      • Nielsen Ad Intel coverage
                                                                                      • The Consumer – What You Need to Know

                                                                                        • The proportion of UK consumers taking flights remains flat
                                                                                          • Consumers could cut back on long-haul flights
                                                                                            • Budget carriers dominate over full-service
                                                                                              • Nearly a fifth of passengers flew premium economy in the past year
                                                                                                • Airlines are considering unbundling fares
                                                                                                  • Smartphone usage on the rise
                                                                                                    • Passengers most willing to pay for legroom, Wi-Fi, and seat reservations
                                                                                                    • Flights Taken

                                                                                                      • Proportion of UK consumers taking flights remains flat
                                                                                                        • Figure 42: Flights taken, June 2018
                                                                                                      • Business trips expected to decline in 2018
                                                                                                        • London could be boosted by expansion of third runway
                                                                                                          • Encouraging visits to friends and relatives
                                                                                                              • Figure 43: Top 10 nations with citizens living in the UK, 2015
                                                                                                          • Length of Flight and Classes Flown

                                                                                                            • Consumers may cut back on long-haul travel
                                                                                                              • Figure 44: Flight length, June 2018
                                                                                                            • Budget versus full-service airlines
                                                                                                              • Figure 45: Types of airlines flown, June 2018
                                                                                                            • Charter airlines primarily favoured by older consumers
                                                                                                              • Affluent parents can be key targets for premium economy
                                                                                                                  • Figure 46: Types of class flown, June 2018
                                                                                                              • Food Services on Flights

                                                                                                                • Attitudes towards paying for aboard food and drink
                                                                                                                  • Figure 47: On-board food and drink preferences, June 2018
                                                                                                                • Boosting food and drink bookings using a pre-order discounted app
                                                                                                                  • Figure 48: Attitudes towards pre-ordering food via an app, June 2018
                                                                                                                • Short-haul; families are key targets for on-board food and drink on short-haul flights
                                                                                                                  • Long-haul; age and gender bias for self-catering on flights
                                                                                                                    • Full-service carriers recognise the value of free food and drink
                                                                                                                        • Figure 49: Providing free food, budget versus full-service airlines, June 2018
                                                                                                                        • Figure 50: Important factors for purchasing food, June 2018
                                                                                                                    • Consumer Behaviours Related to Airlines

                                                                                                                      • Smartphone usage on the rise
                                                                                                                          • Figure 51: Behaviours related to flights, June 2018
                                                                                                                        • The rise in smartphone bookings is down to a mobile-first approach
                                                                                                                          • Responsive Web Design (RWD)
                                                                                                                            • Progressive advancement
                                                                                                                              • Passengers are most willing to pay for legroom, Wi-Fi, and seat reservation
                                                                                                                                  • Figure 52: Paying for on-board services, June 2018
                                                                                                                                • Distinct age bias when it comes to stopovers
                                                                                                                                    • Figure 53: Choosing direct flights versus stopovers, June 2018
                                                                                                                                    • Figure 54: Choosing airports further away from destination, June 2018
                                                                                                                                  • Young parents are key targets for loyalty schemes
                                                                                                                                      • Figure 55: Target group for airline loyalty schemes – CHAID – Tree output, May 2018
                                                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                      • Abbreviations
                                                                                                                                        • Consumer research methodology
                                                                                                                                          • CHAID analysis methodology
                                                                                                                                            • Figure 56: Target groups based on statements about airlines – CHAID – Table output, May 2018
                                                                                                                                        • Appendix – Market Size and Forecast

                                                                                                                                          • Forecast methodology
                                                                                                                                              • Figure 57: Best- and worst-case forecast for international UK passenger uplift, 2018-23
                                                                                                                                              • Figure 58: Best- and worst-case forecast for domestic UK passenger uplift, 2018-23
                                                                                                                                              • Figure 59: Best- and worst-case forecast for total UK passenger uplift, 2018-23

                                                                                                                                          Airlines - UK - August 2018

                                                                                                                                          US $2,552.20 (Excl.Tax)