World airline key trends and strategies explained

 
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Global Airline Industry

 

The global airline industry expanded by 12% in 2010 to generate revenue of more than $501 billion. MarketLine predicts the industry will be worth almost $714 billion in 2015, representing 42% growth in five years. In terms of volume, the global airline industry grew 6% in 2010 to reach almost 2.4 billion passengers; this figure is forecast to climb more than 28% by 2015 to exceed 3 billion passengers.

 

Domestic demand represents the leading market segment within the global airline industry, accounting for almost 65% of the overall industry in terms of volume. Regionally, the Americas hold almost 45% of the industry in terms of value.

 

Obstacles faced by airline operators include uncertain economic climate, slow economic growth and climbing crude oil prices, reports Global Industry Analysts. The economic recession took its toll on the industry as air travel plunged despite falling oil prices. As consumers cut back on non-essential spending, such as travel and holidays, due to falling levels of disposable income, rising unemployment and economic volatility, the global transport industry saw revenue fall.

 

Apart from declining passenger numbers, airports also saw cargo volumes fall significantly in 2008 and 2009 as demand for goods declined, dragging down cargo volume shipments and pushing the airfreight industry into a turbulent period.

 

In 2010, a rise in air traffic served well for the global airline industry, though climbing fuel prices have boosted costs of operations, putting a dent in industry profit. Other negative factors facing industry players include raised concern over security, unstable exchange rates, political unrest and natural disasters.

 

Regional Market Share

 

  • The EU airline industry generated almost $166 billion in 2010, having maintained yearly growth of 5% for the four preceding years, according to research from MarketLine. In the four-year period ending 2010, industry volumes witnessed close to 3% yearly growth to exceed 745 million passengers. Market growth is predicted to accelerate to a yearly rate of almost 9% between 2010 and 2015, which will see the industry exceed $251 billion.

 

  • Asia Pacific’s airline sector was worth close to $90 billion in 2010. MarketLine estimates the region’s yearly growth in the sector exceeded 3% between 2006 and 2010. In terms of industry volume, annual growth over the same period reached almost 6% to exceed 600 million passengers in 2010. Growth in the Asia Pacific airline sector is predicted to exceed a yearly rate of 7% for the five-year period ending 2015, bringing the overall industry value to more than $126 billion.

 

 

Market Outlook

 

The global airline industry has had to change its strategic approach in a bid to limit the damage incurred due to the global economic downturn. Such changes include making airfare more accessible to passengers to boost numbers, consolidation within the industry and capacity rationalization, reports Global Industry Analysts.

 

Consolidation has played a central role in the global airline industry over recent years and has helped it remain afloat despite falling passenger numbers and declining cargo volume shipments. Industry players have tried to make operations more efficient and boost profitability through consolidation. One way of boosting airline efficiency has involved the acquisition of new aircrafts, which has allowed airlines to better manage their costs and streamline operations.

 

Growing popularity of low-cost carriers constitutes a trend that began in recent years and continues to prevail. Passengers with lower levels of disposable income who still decide to travel despite the effects of the economic downturn have sought a compromise by continuing to travel, but with low-cost carriers.

 

Over coming years, economic growth in developing regions is set to continue making air travel more affordable, with demand expected to increase for air travel. Industry level demand for new airplanes is predicted to rise in tandem with emerging market demand for air travel. Acquisitions of new aircraft will allow airline operators to cater to rising passenger traffic and also allow them to opt for more fuel-efficient aircraft. New routes will also open thanks to liberalization of air travel between nations, further fuelling demand.

 

 

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