Abstract
About this report
The boom in air travel witnessed until the second half of 2008 was fuelled by short-haul airlines. The rise of the low-cost providers opened up the market to consumers who had previously been unable to afford flights, while many with greater means reacted by increasing their overseas travel. European destinations received visitors in ever-greater numbers, and the continuing expansion of the airlines and their routes opened up new areas of the continent to the travel-hungry British.
However the third quarter of 2008 saw the recession hit travel hard. Passenger numbers fell, holidays were reduced, and – as the majority segment of air travel – short-haul was severely impacted. Fuel prices, exchange rates and falling consumer confidence all played a part in the first reduction for years in passenger numbers flying to Europe. And despite some pressures easing – oil prices, for example, have fallen significantly since 2008 – these have been replaced by new concerns including charges (Air Passenger Duty is set to rise in November 2009 and November 2010), disease, with swine flu declared a global pandemic, and the increasing viability of international rail travel, thanks to ventures such as the Railteam Alliance and the looming end to Eurostar’s monopoly.
This report examines these issues and more, and looks at whether the full-service short-haul model has a future in the face of increasing competition from low-cost airlines and continuing consumer trends (in light of the recession) towards choosing cheaper options. It considers developments that are having significant impact in the short-haul airlines marketplace, consumer trends, and provides an overview of the market.
Key issues:
- How are short-haul airlines performing in the recession? How is short-haul air travel doing in competition with alternative methods of travel (including sea and tunnel)?
- Who are the key short-haul airline consumers, and what is the demographic future of the market?
- What does the future hold for full-service short-haul airlines? How are low-cost/no-frills airlines doing in comparison – are people ‘trading down’ from full-service to low-cost? Are any short-haul airlines moving into long-haul, and if so, what are the implications?
- What are the long-term trends in short-haul air travel, and will these tougher economic times change consumer behaviour? Do people choose their short-haul flight provider based on price alone?
- How do people book short-haul air travel? Is this changing?
- What do people think makes for a good short-haul airline? Which companies provide this? Does the ‘optional’ costs model that low-cost airlines adopt deter people from using them?
- Is Europe becoming prohibitively expensive as a destination? How are short-haul airlines combating this perception, if it exists?
Table of Contents
- Issues in the Market
- Key issues:
- Definitions
- Abbreviations
- Future Opportunities
- Bargain hunting
- Smart Shopping Gets Smarter
- Value vs perceived value
- Flight-only
- Simplicity and Convenience
- Get on board
- Market in Brief
- Past, present and future
- The wider picture
- Flying and paying
- Competition on track
- Footfall and class
- The price battleground drives innovation
- Internal Market Environment
- Key points
- Holidays fall
- Figure 1: Domestic and overseas holiday volumes, 2004-09
- The charges against charges
- Where to?
- Figure 2: Overseas journeys (all visits), by region, 2004-08
- Figure 3: Overseas holidays, by region, 2004-08
- Figure 4: Top 15 destinations 2008, by estimated number of visits,
2004-08
- Low-cost vs full-service
- Flying high, feeling low
- Broader Market Environment
- Key points
- Cautious confidence
- Figure 5: GfK NOP Consumer Confidence Index, May 2008-May 2009
- Figure 6: Trends in personal disposable income and consumer expenditure,
2004-14
- Future fliers
- Figure 7: Forecast adult population trends, by socio-economic group,
2004-14
- Figure 8: Forecast adult population trends, by lifestage, 2004-14
- Age of flight
- Figure 9: Trends in the age structure of the UK population, by gender,
2004-14
- Online on board
- Figure 10: British internet penetration at home/work/place of study or
elsewhere, by gender, socio-economic group, age, region and working status,
2004-09
- Holding on to holidays
- Figure 11: Expenditure priorities for the year ahead, January 2009
- Exchange rates
- Figure 12: Sterling exchange rates at the beginning of each year, 2005-09
- Back to black gold
- Figure 13: Crude oil prices, 2004-09
- Competitive Context
- Key points
- How we go
- Figure 14: All short-haul visits by air and sea/tunnel -- volume 2004-09
- Figure 15: All short-haul holidays by air and sea/tunnel -- volume
2004-09
- The why of the way
- Strengths and Weaknesses
- Strengths
- Weaknesses
- Who' s Innovating?
- Key points
- Technology
- Phones
- Internet booking
- Check in
- Revenue streams
- Promotions
- Operations
- Environmental
- Market Size and Forecast
- Key points
- Figure 16: Passengers uplifted -- all (international) vs short-haul,
2004-14
- Past
- Present
- Future
- Factors used in the forecast
- Segment Performance
- Key points
- Holidays hit
- Figure 17: Main method of travel for last/last but one holiday using
short-haul air, 2004-08
- Figure 18: All short-haul passengers uplifted by UK airlines,
non-scheduled vs scheduled, 2004-09
- Fly away (from) home
- Figure 19: Passenger movement (scheduled and non-scheduled) at UK
airports, 2004-08
- Figure 20: Airports used for short-haul flights in the last 12 months,
2004-08
- What matters
- Figure 21: Most important factor when choosing which airline to fly with
on holiday, 2004-08
- The business of economy
- Market Share
- Key points
- British Airways bowed
- Figure 22: Passengers uplifted to EEA by selected airlines, 2004-08
- Figure 23: Number of active aircraft, 2008
- Companies and Products
- Key points
- British Airways
- bmibaby
- easyJet
- Flybe
- Jet2.com
- Monarch
- Ryanair
- Thomas Cook Airlines
- Thomson Airways
- Distribution
- Key points
- Click and go
- Figure 34: Method used to book last holiday overseas by those who flew
short-haul, 2004-08
- Website woes
- What do Holidaymakers Look For?
- Key points
- Sit back as the sun shines
- Figure 35: Factors looked for in a holiday, April 2009
- Atmosphere/engagement-agers
- Oversea seekers
- Who Flies Short-haul?
- Key points
- Figure 36: Flights taken in the past three years, April 2009
- Short-haul, long appeal
- Charting success
- Never say never
- Attitudes Towards Short-haul Airlines
- Key points
- Figure 37: Attitudes towards short-haul airlines, April 2009
- Low (cost) expectations
- Time to go
- Help the ageing
- Targeting Opportunities
- Key points
- Target groups
- Figure 38: Short-haul airlines target groups, April 2009
- Full-service Fans (19% of adults aged 15+ or 9.7 million adults)
- Demographic profile
- Marketing message
- Pragmatists (19% of adults aged 15+ or 9.7 million adults)
- Demographic profile
- Marketing message
- Low-cost Lovers (29% of adults aged 15+ or 14.8 million adults)
- Demographic profile
- Marketing message
- Short-shrifters (33% of adults aged 15+ or 16.9 million adults)
- Demographic profile
- Marketing message
- Schedule a break
- Figure 39: Overseas flights taken in the past three years, by target
groups, April 2009
- Factorisation
- Figure 40: Factors looked for in a holiday, by target groups, April 2009
- Appendix -- What do Holidaymakers Look For?
- Figure 41: Most popular factors looked for in a holiday, by
demographics, April 2009
- Figure 42: Next most popular factors looked for in a holiday, by
demographics, April 2009
- Figure 43: Other factors looked for in a holiday, by demographics, April
2009
- Appendix -- Who Flies Short-Haul?
- Figure 44: Most popular flights taken in the past three years, by
demographics, April 2009
- Figure 45: Next most popular flights taken in the past three years, by
demographics, April 2009
- Appendix -- Attitudes Toward Short-Haul Airlines
- Figure 46: Most popular attitudes towards short-haul airlines, by
demographics, April 2009
- Figure 47: Next most popular attitudes towards short-haul airlines, by
demographics, April 2009
- Appendix -- Targeting Opportunities
- Figure 48: Target groups, by demographics
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