Abstract
Soaring fuel costs and impending EU Emissions measures spell danger for the industry. Load factors are also slipping, as a ‘golden period’ of fleet expansion threatens to cause a state of ‘over-capacity’.
To maintain the cheap ticket model, carriers are going to have to drastically raise their ancillary revenues (in-flight sales, charges and add-ons) and increasingly expand into accommodation and transfer services, in order to cope with the economic and legislative storms they are flying towards.
Table of Contents
- Issues in the Market
- Main issues
- Definitions
- Abbreviations
- Market In Brief
- No frills, no change
- Sitting comfortably, but sales vulnerable
- Irish Tiger
- We wanna get loaded
- The battle for incremental revenue
- A low cost to the environment
- Eastern promise
- America...the land of the free thinking
- Blood on the tracks
- Triple trouble
- Internal Market Environment
- Key points:
- Fuel for thought
- Stansted Excess
- Storm clouds of clean air on the horizon
- Rail, rail, rail against the flying of the flight
- Britain takes off
- Figure 1: Domestic and overseas holidays, by volume, 2002-07
- No-frills take bills overseas
- Figure 2: Domestic and overseas holidays expenditure, 2002-07
- Figure 3: Average spend per trip, 2002-07
- Spain and Italy open up
- Figure 4: Top 20 destinations, by number of visits, 2002-05
- Holiday multipacks
- Figure 5: Percentage of adults booking UK and overseas holidays, 2002-06
- Getting on board for homes abroad
- The EU spreads its wings
- Broader Market Environment
- Key points:
- Travel at all costs
- New blood and old heads
- Socio-economic population
- Lifestage heading
- Internet penetration
- Consumer spending priorities
- Figure 6: UK spending priorities, January 2007
- Exchange rates
- Competitive Context
- Figure 7: Scheduled passengers carried, 2002-06
- Load capacity
- Figure 8: UK scheduled load capacity (seat km used as part of seat km available), 2002 and 2006
- Strengths and Weaknesses in the Market
- Strengths
- Weaknesses
- Market Size and Forecast
- Key points:
- Massive millennial growth...
- Figure 9: Scheduled passengers carried by main low-cost airlines, 2002-06
- ...but load factors raise fears
- Figure 10: Ryanair load factors, 2006 and 2007
- Figure 11: easyJet load factors, 2006 and 2007
- Future outlook
- Passenger growth rates slowing
- Figure 12: Passengers of four major low cost carriers Easyjet, Ryanair, Flybe & Bmibaby
- Taxation and trains
- Factors used in the forecast
- Segment Performance
- Key points:
- Regionalisation of airport usage
- Figure 13: Airports used in the last 12 months, 2002-06
- Figure 14: Passenger movements (scheduled and chartered) at UK airports, 2000-05
- How much and how close?
- Figure 15: Most important factor when choosing which airline to fly with on holiday, 2002-06
- Figure 16: Most important factor when choosing which airline to fly with on business, 2002-06
- Market Share
- Key points:
- Figure 17: Number of active aircraft, July 2007
- Airline capacity
- Figure 18: UK scheduled airline capacity statistics, 2002 and 2006
- Companies and Products
- Key points:
- UK-based carriers
- bmibaby
- Figure 19: bmibaby statistics, 2007
- Background
- Strategy
- easyJet
- Figure 20: easyJet statistics, 2007
- Background
- Performance
- Figure 21: easyJet financial year performance, 2006 and 2007
- Figure 22: easyJet full-year performance, 2005 and 2006
- Figure 23: easyJet half-year performance, 2006 and 2007
- Figure 24: easyJet 12-month performance, 2006 and 2007
- Chasing ancillary revenues
- Figure 25: easyJet ancillary revenues, 2005 and 2006
- Strategy and recent activity
- Orange as the new green
- Outlook
- Flybe
- Figure 26: Flybe statistics, 2007
- Background
- French frills
- Recent activity
- Acquisition of BA Connect
- Flybe Green
- Outlook
- Jet2
- Figure 27: Jet2 statistics, 2007
- Monarch
- Figure 28: Monarch statistics, 2007
- Background
- Performance
- Strategy
- Zoom Airlines
- Figure 29: Zoom statistics, 2007
- Overseas-based carriers
- Air Berlin
- Figure 30: Air Berlin statistics, 2007
- Background
- Performance
- Figure 31: Air Berlin performance, 2005 and 2006
- Strategy
- Figure 32: Air Berlin revenue contribution from additional products and services, 2006
- Outlook
- Brussels Airlines
- Figure 33: Brussels Airlines statistics, 2007
- Background
- Norwegian
- Figure 34: Norwegian statistics, 2007
- Figure 35: Norwegian performance, 2004-06
- Ryanair
- Figure 36: Ryanair statistics, 2007
- ' Lowest fare wins'
- Soaraway success, but still passenger-dependent
- Figure 37: Ryanair performance, 2003-06
- Figure 38: Ryanair financial performance, 2006 and 2007
- Figure 39: Ryanair bases and routes, 2007
- Figure 40: Ryanair table of fees, 2007
- The Ryanair passenger
- Figure 41: Ryanair passenger profile, 2007
- The world' s most/least favourite airline
- Conservative in old age
- Figure 42: Ryanair passenger forecast, 2007-12
- Flying billboards
- Aer Lingus merger
- Outlook
- SkyEurope
- Figure 43: SkyEurope statistics, 2007
- Figure 44: SkyEurope performance, 2006 and 2007
- Smart Wings
- Figure 45: Smart Wings statistics, 2007
- Transavia
- Figure 46: Transavia statistics, 2007
- Background
- Performance
- Figure 47: Transavia performance, 2002/03-2006/07
- Strategy
- Wizz Air
- Figure 48: Wizz Air statistics, 2007
- Background
- Other carriers
- JetBlue
- Figure 49: JetBlue statistics, 2007
- Background
- JetBluesky thinking
- Southwest Airlines
- Figure 50: Southwest Airlines statistics, 2007
- Background
- Leading by example
- Virgin Blue, Pacific Blue and Polynesian Blue
- Figure 51: Statistics, 2007
- Background
- Strategy
- Distribution
- Key points:
- Figure 62: Selected online sales statistics, 2007
- Use of Low-cost Airlines
- Key points:
- Figure 63: Low-cost airline flying experience, March 2007
- Flying by demographics
- Demographics: No frills; no change
- Who are the low-cost passengers?
- Passengers fly high and low
- Low-cost Flying Habits
- Key points:
- Figure 64: Flying habits of low-cost airline passengers, March 2007
- Spinning a bigger Web
- EasyShop
- Smile high club
- Habits by demographics
- Eat, drink and be ancillary
- Routes to revenue
- Appendix: Database
- Broader Market Environment data
- Figure 67: Trends in personal disposable income and consumer expenditure, 2002-12
- Figure 68: Trends in the age structure of the UK population, by gender, 2002-12
- Figure 69: Forecast adult population trends, by socio-economic group, 2002-12
- Figure 70: Forecast adult population trends, by lifestage, 2002-12
- Figure 71: Internet penetration, by gender, socio-economic group and age, 2002-06
- Figure 72: Annual average exchange rates for Sterling against the euro and US Dollar, 2002-06
- Consumer Demographics
- Figure 73: Low-cost flying experience, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, household income, tenure, region, ACORN category, media usage, TV reception, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education age, March 2007
- Figure 74: Further low-cost flying experience, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, household income, tenure, region, ACORN category, media usage, TV reception, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education age, March 2007
- Figure 75: Habits of low-cost airline passengers, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, household income, tenure, region, ACORN category, media usage, TV reception, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education age, March 2007
- Figure 76: Most popular attitudes towards low-cost airlines, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, household income, tenure, region, ACORN category, media usage, TV reception, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education age, March 2007
- Figure 77: Further attitudes towards low-cost airlines, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, household income, tenure, region, ACORN category, media usage, TV reception, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education age, March 2007
- Figure 78: Scheduled airlines brand map, May 2007
