Table of Contents
Introduction
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- Key findings
Data Sources
Abbreviations
Issues in the Market
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- Distribution intermediaries
- Insolvency
- LCCs taking share
- In-flight Wi-Fi
- Political risk
Global Summary
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- Demographic trends
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- Figure 1: Trend in world population by region, 2017-2100
- Population ageing
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- Figure 2: Population aged 60 years or over by region, in 2017 & 2050
- Implications for the air-travel sector
- In-flight medical emergencies
- Economy
- Growth accelerating in most regions
- Commodity exporters rebounding
- Trade to rebound
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- Figure 3: Overview of the World Economic Outlook projections (% change, unless noted otherwise), October 2017 update
- Interest rates
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- Figure 4: Forecasted trend in central bank interest rates by currency zone, October 2017
- Figure 5: Forecasted trend in 10-year government yield by currency zone, October 2017
- Currency rates
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- Figure 6: Outlook for exchange rates in 3 months & 12 months, 2017
- Forex impact on airlines
- Consumer demand
- Price sensitivity
- Airline capacity decisions
- Outlook for spending on travel and tourism
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- Figure 7: Spending on travel & tourism worldwide, 2016 & 2027
- Africa
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- Figure 8: Spending on travel & tourism in Africa*, 2016 & 2027
- North Africa
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- Figure 9: Spending on travel & tourism in North Africa*, 2016 & 2027
- Figure 10: Spending on travel & tourism in Sub-Saharan Africa*, 2016 & 2027
- Asia Pacific
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- Figure 11: Spending on travel & tourism in Asia Pacific*, 2016 & 2027
- North East Asia
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- Figure 12: Spending on travel & tourism in North East Asia*, 2016 & 2027
- Oceania
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- Figure 13: Spending on travel & tourism in Oceania*, 2016 & 2027
- South Asia
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- Figure 14: Spending on travel & tourism in South Asia*, 2016 & 2027
- Figure 15: Spending on travel & tourism in South East Asia*, 2016 & 2027
- Americas
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- Figure 16: Spending on travel & tourism in the Americas*, 2016 & 2027
- Latin America
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- Figure 17: Spending on travel & tourism in Latin America*, 2016 & 2027
- North America
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- Figure 18: Spending on travel & tourism in North America*, 2016 & 2027
- Europe
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- Figure 19: Spending on travel & tourism in Europe*, 2016 & 2027
- Middle East
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- Figure 20: Spending on travel & tourism in Middle East*, 2016 & 2027
- Trend in growth of air travel
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- Figure 21: Trend in air passenger numbers by major country aviation market, 2014-20
- Worldwide passenger numbers increased by 7% in 2016
- Growth accelerated in 2017
- Profitability improving
Air Traffic Trends
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- Figure 22: Air passenger volumes, 2014-July 2017
- Global business confidence plateauing
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- Figure 23: Air passenger volume growth & the global composite PMI*, 2007-July 2017
- Effect of lower fares wearing off
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- Figure 24: Global airline performance July 2017 & YTD
- Latin American airlines growing fastest
- Middle East coming back
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- Figure 25: Overall airline performance by major region, July 2017 & YTD
- Europe slowing down
- A similar case for Asia Pacific
- A moderating uptrend in Africa
- North American airlines hold on to earlier gains
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- Figure 26: Airline performance on international routes by major region, July 2017 & YTD
- Domestic markets
- Indian market regains some momentum
- Strengthening economy boosting Russian RPKs
- Passenger traffic lifted by a rebounding Japanese economy
- Growth in demand and capacity picking up in the US
- Australian demand and capacity on the downswing
- A recovering economy is boosting demand in Brazil
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- Figure 27: Airline performance on domestic routes by major country market, July 2017 & YTD
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Distribution Intermediaries
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- GDSs depend essentially on air tickets
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- Figure 28: Bookings by type at Amadeus & Sabre, 2012-16
- War with GDSs
- Airlines react
- Lufthansa charges €16 fee on GDS bookings
- Lufthansa joined by Ukraine International Airlines
- Most tickets still sold via indirect channels
- More airlines to follow
- British Airways joins Lufthansa
- CWT avoids IAG charges
- Distribution fees not the only issue
- Air France follows suit
- GDSs under pressure?
- GDS CEOs continue to defend position
- JetBlue cuts ties with 12 OTAs but not with major players
- Metasearch favoured
- Metasearch faces challenges
- Rise of mobile poses a problem
- Skyscanner demonstrates business benefits
- NDC opens offers opportunities
- It works in China
- Airline/metasearcher relationship to evolve
- Google a threat?
- Loss of control
- What can airlines do?
- Harnessing ATPCo
- ATPCO needs to evolve
- Upgrading ATPCO
Insolvency
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- Air Berlin
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- Figure 29: Trend in Air Berlin’s profit, 2007-15
- 100,000 Air Berlin flight tickets invalid
- Lufthansa steps in
- Lufthansa takes over long-haul routes
- easyJet to get planes and routes
- Air Berlin in last-minute talks with easyJet and Condor
- easyJet takes over Airbus 320 leases and slots
- Alitalia
- Next steps
- Seven offers for Alitalia
- Lufthansa confirms interest in Alitalia
- Cerberus’ offer to acquire Alitalia
- Lufthansa close to Alitalia takeover
- Alitalia’s path out of bankruptcy
- New schedules for winter and summer 2018
- Improved finances
- Reinforcing the corporate segment
- No significant customer attrition
- A complete turnover in management
- Future growth prospects
- Monarch Airways
- UK airlines rush to engage Monarch crew
- Monarch administrators fought to retain landing slots
- Monarch wins right to airport slots
- London Gatwick slots sold
- Niki goes under too
- Hawaii’s Island Air files for Chapter 11
- Airline has ceased operations
LCCs Taking Share
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- LCCs have ramped up market share in Europe
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- Figure 30: Rising trend in LCC market share in Europe, 2002-17*
- LCCs vs. legacy airlines
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- Figure 31: Trend in the share of flights in Europe: LCCs vs. traditional scheduled carriers, 2007-16
- Figure 32: The biggest LCC country markets in Europe, 2016
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- Figure 33: LCC share of flights by major European country market, 2016
- LCC share growing in German market
- Dramatic expansion of Eurowings
- Falling ticket prices
- LCCs taking over in Spain
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- Figure 34: Year-on-year growth in seat capacity in Spain’s aviation market, 2014-16
- LCCs grow in Eastern Europe
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- Figure 35: Seat capacity & LCC share of total, in the five largest Eastern European markets, February 2010 & February 2016
- Wizz Air and Ryanair lead the pack
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- Figure 36: Trend in the capacity share of the top 5 airlines in the 5 leading Eastern European aviation markets, 2006-16
- Legacy carriers losing share
- Very little overlap between Wizz Air and Ryanair
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- Figure 37: Routes operated from 5 Eastern European countries by Wizz Air & Ryanair, in February 2016
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- Figure 38: Ryanair & Wizz Air combined share of selected country markets, seat capacity, in February 2016
- Poland
- Romania
- Czech Republic
- Hungary
- Bulgaria
- LCC penetration high in much of Asia
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- Figure 39: LCC share of available seats within select North East & South East Asian domestic markets, 5-11 June 2016
- Some international routes heavily penetrated by LCCs
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- Figure 40: LCC share of available seats in the 20 largest international North East & South East Asian routes, 5-11june 2016
- LCCs dominate in South Asia
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- Figure 41: Domestic market share of airlines in India, February 2017
- The Indian aviation market is booming
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- Figure 42: Passengers carried by domestic airlines in India, January 2017
- Other performance indicators
- LCC long-haul flights a new challenge
- Long-haul LCCs going strong in Asia
- A sharp rise in traffic at AirAsia X
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- Figure 43: AirAsia X performance data, 2013-16
- AirAsia X’s A330-300s have 377 seats
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- Figure 44: Number of seats on A330-300s operated by a sample of Asian & European carriers, 2016
- Australia is the leading country market
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- Figure 45: AirAsia X's leading country markets served from Kuala Lumpur, 2016
- Routes to the US?
- Learning by trial and error
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- Figure 46: Routes launched & later abandoned by AirAsia X, 2009-15
- LCCs flying transatlantic
- Legacy LCC subsidiaries
- North American LCCs
- Lower fares to come?
- Over-capacity and Brexit worries
- Transatlantic LCC routes
- Eurowings
- Level
- Norwegian Air Shuttle
- Air Canada Rouge
- WestJet
- WOW Air adds new US services
- easyjet collaboration with Norwegian and WestJet
- Norwegian serves over 60 destinations
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- Figure 47: Norwegian's top 15 airports by departing flights, summer 2017
- Expansion at Copenhagen
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- Figure 48: Destinations served by Norwegian from Copenhagen, summer 2017
- US and Spanish routes dominate ASK rankings at CPH
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- Figure 49: Norwegian's top 15 routes from Copenhagen (CPH) by ASKs, summer 2017
- Spain is biggest of 26 destinations from CPH
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- Figure 50: Norwegian's top 15 destinations from CPH ranked by weekly departing seats, summer 2017
- Norwegian UK (NUK) gets transatlantic permit
- Air France-KLM’s Millennial-focused airline
- Getting the positioning right
- ‘Do not target Millennials explicitly’
- Cutting costs
- Future plans
- Impact on legacy business models
- Basic economy – a ‘loss-leader’ defence against ULCCs
In-flight Wi-Fi
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- In-flight Wi-Fi driven by the iPhone
- Paying for in-flight Wi-fi
- Adoption growing fast
- Outlook for in-flight Wi-Fi
- A third of passengers log on to free Wi-Fi
- Connectivity options
- ATG networks
- Satellite connectivity
- Equipment suppliers
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- Figure 51: Juniper ranking of in-flight Wi-Fi providers, 2017
- Panasonic Avionics
- Gogo
- Thales Group
- SITA OnAir
- Key market trends
- In-flight Wi-Fi can be a money-spinner
- Emirates Wi-Fi offering
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- Figure 52: Emirates’ revised in-flight Wi-Fi offering by loyalty tier, July 2017
- Find ways to generate revenue
- The importance of ancillary revenues
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- Figure 53: Top 10 airlines – Total ancillary revenue in 2016
- Revenue streams from in-flight Wi-Fi
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- Figure 54: Forecasted airline share of the US$30-billion broadband-enabled ancillary revenue by type, 2018-35
- E-commerce platforms
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- Figure 55: Projected ancillary revenues for airlines from in-flight Wi-Fi by region, 2018-35
- Why not continuous in-flight shopping?
Political Risk
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- Brexit
- A warning from Ryanair
- Qatar
- Some respite
- Trump
- The US becoming a pariah
- Bombardier tariffs
- Gulf carriers targeted
- Delta CEO decries ‘subsidised’ Gulf carriers
- Electronic travel ban a protectionist move
- A move against open skies
- Why only those ten airports?
- Third travel ban blocked by judge
- Judge in Hawaii rules against ban
- Travel ban finally upheld
- Turkey
Top 20 Country Markets
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- Australia
- Qantas
- Virgin Australia
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- Figure 56: Australia – Passenger airlines: company market share by volume of passengers (%), 2013-15
- Domestic market
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- Figure 57: Australia – Passenger airlines: domestic market share by volume of passengers (%), 2013-15
- International market
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- Figure 58: Australia – Passenger airlines: international market share by volume of passengers (%), 2013-15
- Brazil
- LATAM Airlines Group
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- Figure 59: Brazil – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
- Domestic market
- International market
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- Figure 60: Brazil – Passenger airlines: international market share by volume of passengers (%), 2014-15
- Canada
- Air Canada
- WestJet
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- Figure 61: Canada – Passenger airlines: company market share by volume of passengers (%), 2013-15
- China
- China Southern Airlines
- Air China
- China Eastern Airlines
- HNA Aviation
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- Figure 62: China – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
- Domestic market
- International market
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- Figure 63: China – Passenger airlines: international market share by volume of passengers (%), 2014-15
- Colombia
- Avianca Holdings
- Passenger transport
- VivaColombia
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- Figure 64: Colombia – Passenger airlines: company market share by volume of passengers (%), 2014-15
- Domestic market
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- Figure 65: Colombia – Passenger airlines: domestic market share by volume of passengers (%), 2014-2015
- Figure 66: Colombia – Passenger airlines: international market share by volume of passengers (%), 2014-15
- France
- Air France-KLM
- Domestic market
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- Figure 67: France – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
- International market
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- Figure 68: France – Passenger airlines: international market share by volume of passengers (%), 2014-15
- Germany
- Lufthansa
- Air Berlin
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- Figure 69: Germany – Passenger airlines: company market share by volume of passengers (%), 2011-15
- India
- Air India
- IndiGo
- Jet Airways
- SpiceJet
- Domestic market
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- Figure 70: India – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
- Figure 71: India – Passenger airlines: international market share by volume of passengers (%), 2013-15
- Indonesia
- Lion Air
- Garuda
- Domestic market
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- Figure 72: Indonesia – Passenger airlines: domestic market share by volume of passengers (%), 2011-15
- International market
- AirAsia
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- Figure 73: Indonesia – Passenger airlines: international market share by volume of passengers (%), 2011-15
- Italy
- Ryanair
- easyJet
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- Figure 74: Italy – Passenger airlines: company market share by volume of passengers (%), 2011-15
- Japan
- All Nippon Airways (ANA)
- Japan Airlines (JAL)
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- Figure 75: Japan – Passenger airlines: company market share by volume of passengers (%), 2012-13
- Mexico
- Domestic market
- Aeroméxico
- Alliance with Delta
- Volaris
- Interjet
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- Figure 76: Mexico – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
- United Airlines
- American Airlines
- Delta Air Lines
- Southwest Airlines
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- Figure 77: Mexico – Passenger airlines: international market share by volume of passengers (%), 2014-15
- Russia
- Aeroflot
- S7 Airline
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- Figure 78: Russia – Passenger airlines: company market share by volume of passengers (%), 2014-15
- South Africa
- South African Airways (SAA)
- Comair
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- Figure 79: South Africa – Passenger airlines: company market share by volume of passengers (%), 2014-15
- Domestic market
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- Figure 80: South Africa – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
- International market
- Emirates
- British Airways
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- Figure 81: South Africa – Passenger airlines: international market share by volume of passengers (%), 2014-15
- South Korea
- Korean Air Lines
- Asiana Airlines
- Jeju
- Air Busan
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- Figure 82: South Korea – Passenger airlines: company market share by volume of passengers (%), 2013-15
- Spain
- Ryanair
- IAG/Vueling
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- Figure 83: Trend in IAG’s capacity by region for the year ended 31 December 2016
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- Figure 84: Key performance data by airline subsidiary, 2016
- Air Europa
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- Figure 85: Spain – Passenger airlines: company market share by volume of passengers (%), 2014-15
- Turkey
- Turkish Airlines
- Pegasus Airlines
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- Figure 86: Turkey – Passenger airlines: company market share by volume of passengers (%), 2014-15
- Domestic market
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- Figure 87: Turkey – Passenger airlines: domestic market share by volume of passengers (%), 2014-15
- International market
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- Figure 88: Turkey – Passenger airlines: international market share by volume of passengers (%), 2014-15
- UK
- easyJet
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- Figure 89: Key figures for easyJet, 2007 compared to 2017
- Figure 90: Key performance data, 12 months to end September 2016 & 2017
- British Airways
- Ryanair
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- Figure 91: UK – Passenger airlines: company market share by volume of passengers (%), 2011-15
- US
- Southwest Airlines
- Delta Air Lines
- United Air Lines
- American Airlines
- Domestic market
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- Figure 92: US – Passenger airlines: domestic market share by volume of passengers (%), 2011-15
- International market
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- Figure 93: US – Passenger airlines: international market share by volume of passengers (%), 2011-15
- Vietnam
- Vietnam Airlines
- VietJet Aviation
- Domestic market
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- Figure 94: Vietnam – Passenger airlines: domestic market share by volume of passengers (%), 2011-15
- International market
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- Figure 95: Vietnam – Passenger airlines: international market share by volume of passengers (%), 2014-15
Frequent-Flyer Programmes
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- Figure 96: Frequent-flyer programme details by airline, 2017
- American’s CEO likens miles to Bitcoin
- Delta thins the top tier
- Co-branded credit cards an exception
- Delta ups requirements drastically
- Mixed reaction to change
- Air France-KLM switches to expenditure-based programme
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Technology
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- Alexa skills
- Biometric IFE
- Goggles for Air France’s new Joons LCC
- Gogo’s new hardware
- IFE on easyJet
- Netflix streaming services
- Check-in no longer necessary for iPhone app users
- Auto check-in not so popular
Ten Biggest Airlines
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- Figure 97: Top 10 airlines by scheduled RPKs flown (international & domestic), 2016
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American Airlines (AA)
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
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- Figure 98: American’s fleet at 31 December 2016
- Future deliveries
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- Figure 99: Future aircraft deliveries for American Airlines, 2017-20*
- Current developments
- American reduces international capacity from Chicago O’Hare
- International capacity from O’Hare has declined
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- Figure 100: American’s capacity at O'Hare, 2007-17
- American gaining ground on United
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- Figure 101: American’s seat capacity share at O’Hare, 2007-16
- American operates 138 routes from O’Hare, of which United serves 123
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- Figure 102: American’s top 40 routes from O’Hare in comparison with United, 2017
- American’s summer 2017 network from O’Hare
Delta Air Lines
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 103: Delta’s aircraft fleet at 31 December 2016
- Future deliveries
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- Figure 104: Delta’s future aircraft deliveries – purchases and options, as at 31 December 2016
- Figure 105: Delta’s aircraft purchase commitments by year of expected delivery, 31 December 2016
- Current developments
- Corporate travel outlook brightest in years
- Delta introduces free texting
- Delta to invite Aeroméxico as transatlantic JV member
United Airlines (UAL)
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 106: United’s mainline aircraft fleet, 31 December 2016
- Future deliveries
-
- Figure 107: Aircraft purchase commitments, 31 December 2016
- Current developments
- United Continental takes a tumble
- United ready to ‘re-bank’ hubs
- United launches new long-haul routes
Emirates
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet and future deliveries
-
- Figure 108: Emirates’ operating aircraft fleet & new orders at 31 March 2017
- Current developments
- ‘Superconnectors’ under pressure
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- Figure 109: Growth in passenger traffic on the three main Gulf carriers, Emirates, Etihad & Qatar Airways, 2006-16
- New competitors in the market
- Adapting the business model
China Southern Airlines
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 110: China Southern’s fleet at 31 December 2016
- Future deliveries
- Current developments
- Domestic routes
- Regional routes
- International routes
Southwest Airlines
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 111: Southwest’s aircraft fleet, 2017
- Future deliveries
-
- Figure 112: Southwest’s aircraft firm orders & options, 2017
- Current developments
- International routes
Lufthansa
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 113: Lufthansa airline group aircraft fleet, 31 December 2016
- Future deliveries
-
- Figure 114: Lufthansa airline group’s expected aircraft deliveries, 2017-25
- Current developments
- Lufthansa completely dominates German market
- Lufthansa Partners with blockchain start-up
- A B2B solution
British Airways
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet and future deliveries
-
- Figure 115: British Airways’ fleet & expected future deliveries at 31 December 2016
- Current developments
- Fares for under £40
Ryanair
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
- Future deliveries
- Current developments
- Ryanair cancels 18,000 flights
China Eastern Airlines
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- SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
- Fleet
-
- Figure 116: China Eastern’s aircraft fleet at 31 December 2016
- Future deliveries
-
- Figure 117: Fleet additions & retirements at China Eastern, 2017-18
- Current developments
Air Freight
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-
- Figure 118: Top 10 airlines by scheduled freight tonne, kilometres flown (international & domestic), 2016
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What Next?
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- Where will growth occur?
-
- Figure 119: Projected passenger numbers by region in 2035
- Further growth of LCCs
- Long haul a growth opportunity
- China and Russia
- Consolidation of Europe’s aviation sector
- More fragmented than US
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- Figure 120: Market share of total seats in % of top 6 carriers in Western Europe, 2017
- Figure 121: Market share in % of total seats of top-6 carriers in the US, 2017
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