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Looking Beyond Airline Industry Growth Projections: What To Expect

Looking Beyond Airline Industry Growth Projections: What To Expect

Let us begin by getting one thing straight: the economic performance of the airline industry has seldom been better. There have been record profits for many airlines, in particular as a consequence of lowered oil prices mixed with cost reducing strategies, all of which produce lower prices and larger numbers of passengers. Will this keep up into 2018? Hard to say. These things are hard to predict. If rates keep dropping, then very likely yes. For many years research has indicated that in picking between price and quality, passengers inevitably lean in the direction of price. So airlines have been blatantly removing many benefits after realising that they don’t convert flyers. Beyond that, however, there have been some super big things going on in this vivacious industry that merit attention and will be discussed in this aviation industry overview. Some of them are bound to amaze you and destroy preconceived ideas you have about the sector.

Consolidation is a very regular thing in the majority of industries. A firm wants to grow, so it procures a smaller organisation or combines with a peer. In some industries, consolidation comes about in response to a dwindling market in an effort to improve operations. Nonetheless, in aviation it is apparently happening right as the market is budding at unprecedented rates. As a quick reminder on airline industry history, thirty years ago there were eighteen significant airline carriers in the United States. These days, there are only 5. As a more specific illustration, Wafic Said’s airline was acquired in 2007 by a competitor which was absorbed by yet another one in 2012. So far as airline industry trends go, this one is probably here to stay.

One can't look at the future trends in airline industry without considering the expansion of low-cost carriers into the long-haul market. In the past, only legacy carriers carried out such operations, for reasons such as flag carrier privilege, bilateral agreements, and diversified fleets. LCCs, generally managing just one kind of airplane, could reconcile buying long-haul aircraft with their business strategy. Nonetheless, Bjorn Kjos surmounted these airline industry challenges and launched intercontinental flights with his low-cost airline. Competitors were hasty to follow, making for a big disruption in the sector.

Looking at trends in airline industry 2017, what jumps out the most is the obscuring of lines between full-service carriers and low-cost carriers. The airline of Mehmet Tevfik Nane has layovers at its Turkish bases, something that was otherwise offered only by full-service airlines. Europe’s largest LCC has recently announced that it is introducing connecting flights at one of its bases, where otherwise it only carried out point-to-point operations. On the other hand, the UK’s flag carrier is eliminating free meals on-board. This is likely among the most amazing developments in the global airline industry.



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