Airlines - US

Published by: Mintel International Group Ltd.

Published: Nov. 1, 2007

Table of Contents

Scope and Themes

What you need to know

Definition

Resources used for consumer sections

Abbreviations and terms

Abbreviations

Terms

Executive Summary

Airline industry still continuing its recovery after 9/11

Revenue driven by strength of economy; profitability dependent on managing costs and upgrading the ATC system

U.S. carriers return to profitability; customer service problems rise dramatically

Southwest outspends all other airlines on media

Consumers fly, but do not always enjoy it

Market Drivers and Future Trends

Fuel cost increases limit profitability

Figure 1: Airline fuel costs per gallon, at current and constant prices, 2002-07

Future trend

Air traffic control system needs overhaul—flight delays and crowded planes tarnish air travel’s image

Figure 2: Airline on-time performance, 2002-07 (YTD January-August)

Figure 3: Reasons for air traffic delays in percent of total delayed minutes, 2003-07

Planes are full

Figure 4: Total U.S. passengers emplaned, 2002-07

Future trend

GDP growth influences airline revenue

Figure 5: Total U.S. Real GDP and scheduled airline passenger revenue relationship, 1975-2000

Figure 6: Total U.S. GDP and scheduled airline passenger revenue relationship, 2002-07*

Distribution of income

Figure 7: Per capita disposable personal income, at current and chained 2000 dollars, 2000-06

Figure 8: Distribution of U.S. households, by income, 1999 and 2004

A la carte travel on the rise

Market Size and Forecast

Market size

Figure 9: Total operating revenue of U.S. passenger, cargo, charter and other airline, at current and constant prices, 2002-07

Figure 10: Total operating profit/loss of U.S. passenger, cargo, charter and other airline, at current and constant prices, 2002-07

Passenger airlines

Figure 11: Total operating revenue of U.S. passenger airlines, at current and constant prices, 2002-07

Figure 12: Total U.S. passengers emplaned, 2002-07

Forecast of U.S. passenger, cargo, charter, and other airline operating revenue

Figure 13: Forecast of total operating revenue of U.S. passenger, cargo, charter, and other airlines, at current and constant prices, 2007-12

U.S. passenger airline operating revenue

Figure 14: Forecast of operating revenue of U.S. passenger airlines, at current and constant prices, 2007-12

Forecast factors

Supply Structure

Key points

Operating revenue increased by 19.3% during 2004-06

All major airlines returned to profitability in first half of 2007

Leading airlines carried 3.6% more passengers in 2006

Performance benchmarks

Companies and brands

Figure 15: Passenger operating revenue of U.S. airlines, 2004 and 2006

Figure 16: Operating profit/loss by U.S. carrier, 2004 and 2006 and first-half 2007

Figure 17: U.S. airlines ranked by number of passengers, 2004 and 2006

Comparative analysis of major airlines by key performance indicators

On-time performance by carrier

Figure 18: U.S. leading airlines, ranked by on-time performance, 12-months ending August 2007

Mishandled baggage complaints by carrier

Figure 19: U.S. leading airlines, ranked by mishandled baggage reports filed by passengers, January-June 2006 & 2007

Consumer complaints by carrier

Figure 20: U.S. leading airlines, ranked by consumer complaints, January-June 2006 & 2007

Advertising and Promotion

Key points

Introduction

Figure 21: Television spot, “Saving On Room Service,” March 2007

Figure 22: Television spot, “Sincerely, Billy Doyle,” June 2007

Figure 23: Television spot, “First Glimpse Of Hawaii,” March 2007

Figure 24: Television spot, “Little Bob,” May 2007

Figure 25: Television spot, “Business Travellers/Advantage Awards,” March 2007

Companies and brands

Figure 26: Media expenditures for leading airlines, 2005-06

Advertising profiles

American Airlines

Figure 27: Television spot, “Business Travellers/Advantage Awards,” March 2007

Figure 28: Television spot, “We know why you fly/little girl talks to dad,” March 2007

AirTran Airways

Figure 29: Television spot, “Employee thinks boss is on conference call,” September 2007

Continental Airlines

Figure 30: Television spot, “Flight attendants say goodbye,” March 2007

Delta Airlines

Figure 31: Television spot, “Deserted airport,” May 2007

Figure 32: Television spot, “More flights and entertainment,” May 2007

Figure 33: Television spot, “Gold Delta SkyMiles credit card,” June 2007

JetBlue

Figure 34: Television spot, “Sincerely, Mark Adleman,” September 2007

Southwest Airlines

Figure 35: Television spot, “Man loses neighbours' pets,” September 2007

Figure 36: Television spot, “Woman won't stop elevator,” August 2007

Figure 37: Television spot, “Airplane spinning wheel,” September 2007

United Airlines

The Consumer: Travel Profile

Summary

Domestic travel is popular

Most travelers make their own travel arrangements

Profile of domestic travelers

Figure 38: Profile of domestic travelers, May 2006-June 2007

Profile of air travelers

Figure 39: Profile of domestic air travelers, May 2006-June 2007

Personal or vacation trips by plane

Figure 40: Frequency of vacation/personal travel, by gender, May 2006-June 2007

Figure 41: Frequency of personal/vacation travel, by age, May 2006-June 2007

Figure 42: Frequency of personal/vacation travel, by household income, May 2006-June 2007

Business travel by plane

Figure 43: Frequency of business travel, by gender, May 2006-June 2007

Figure 44: Frequency of business travel, by age, May 2006-June 2007

Figure 45: Frequency of business travel, by household income, May 2006-June 2007

Airlines flown in the past year

Figure 46: Airlines flown in the past year, by age, October 2007

Type of traveler

Figure 47: Type of traveler, by gender, October 2007

Figure 48: Type of traveler, by age, October 2007

Flight arrangements

Figure 49: Who makes flight arrangments, by gender, October 2007

Figure 50: Who makes flight arrangements, by age, October 2007

Figure 51: Who makes flight arrangements, by race/ethnicity, October 2007

Business travel arrangements

Figure 52: Who makes business flight arrangments, by gender, October 2007

The Consumer: Foreign Travelers

Summary

One in five adults took a foreign trip by plane in the past three years

Most foreign trips are taken for vacation purposes

U.S.-based carriers are most popular for foreign travel

Profile of foreign travelers

Figure 53: Profile of foreign travelers, May 2006-June 2007

Profile of foreign air travelers

Figure 54: Profile of foreign air travelers, May 2006-June 2007

Reason for foreign trips

Figure 55: Reason for taking a foreign trip, by gender, May 2006-June 2007

Figure 56: Reason for taking a foreign trip, by age, May 2006-June 2007

Figure 57: Reason for taking a foreign trip, by race/ethnicity, May 2006-June 2007

Number of foreign trips

Figure 58: Number of foreign trips taken in past 3 years, by gender, May 2006-June 2007

Figure 59: Number of foreign trips taken in past 3 years, by age, May 2006-June 2007

Airline preferences for foreign travel

Figure 60: Airline preferences for foreign travel, by household income, May 2006-June 2007

Figure 61: Airline preferences for foreign travel, by race/ethnicity, May 2006-June 2007

The Consumer: Air Travel Experiences and Attitudes

Summary

Consumers have mixed feelings about air travel

Most air travelers are price-sensitive

Experiences with air travel

Figure 62: Experiences with air travel, by gender, October 2007

Figure 63: Experiences with air travel, by household income, October 2007

Attitudes toward air travel

Figure 64: Attitudes toward air travel, by gender, October 2007

Figure 65: Attitudes toward air travel, by age, October 2007

Figure 66: Attitudes toward air travel, by household income, October 2007

Fear of flying

Figure 67: Fear of flying, demographic profile, October 2007

Willingness to alter air travel plans

Figure 68: Rescheduling reservations, by age, October 2007

Figure 69: Rescheduling reservations, by household income, October 2007

Appendix: Trade Associations

Appendix: Simmons Cohorts

Figure 70: Married couples cohorts

Figure 71: Single women cohorts

Figure 72: Single men cohorts

Abstract

After several years of losses, the U.S. airline industry has returned to profitability. In this report, Mintel traces how it happened and provides insight into the important issues affecting the airline market:

• What actions have airlines taken to improve sales and customer satisfaction?
• What factors, positive or negative, are impacting growth?
• Why are the highest income travelers least satisfied with service?
• Which airlines are performing well? Which are leading in consumer complaints?
• How will air traffic safety be addressed to allow for long-term growth?
• How much do the leading airlines spend on advertising and what are the major advertising themes and programs?
• What is the demographic profile of an air traveler? What influences a traveler’s decision in choosing a flight or airline?

Passenger operating revenues, profits, and passenger growth are provided, as are sales by leading airline.

Mintel defines the airline market as ticket sales of U.S.-based commercial scheduled passenger airlines. Cargo and foreign airlines are not the subject of this report, nor are unscheduled or chartered passenger flights. This report focuses on airlines based in the U.S., but also covers international flights booked on U.S. carriers; it excludes activity by U.S. nationals on foreign carriers.

This report contains US IRI InfoScan data.

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