Airlines

Published by: Key Note Publications Ltd

Published: Jul. 1, 2009 - 134 Pages

Table of Contents

Executive Summary

1. Market Definition

REPORT COVERAGE

MARKET SECTORS

MARKET TRENDS

Economic Recession Affects Airline Sector

Regulator Orders Sale of Airport

Air Passenger Duty Increases Again

International Scheduled Flights Continue to be a Growth Sector

Percentage of Adult Residents of Great Britain

Consumer Price Index for Air Transport

Table 1.1: Consumer Price Indices for Transport Services (%), Year Ending December 2008

ECONOMIC TRENDS

Gross Domestic Product

Table 1.2: UK Gross Domestic Product at Current and Annual Chain-Linked Prices (£m), 2004-2008

Population

Table 1.3: UK Resident Population Estimates by Sex (000), Mid-Years 2004-2008

Inflation

Unemployment

Table 1.5: Actual Number of Unemployed Persons in the UK (million), 2004-2008

Household Disposable Income

Table 1.6: UK Household Disposable Income Per Capita (£), 2004-2008

MARKET POSITION

Great Britain

Table 1.7: Use of Passenger Transport Within Great Britain by Mode (billion passenger kilometres and %), 2004-2008

UK Passenger Movements

Table 1.8: Passenger Movements into and out of the UK by Air and Sea (000 and %), 2006-2008

Overseas

Table 1.9: World and UK Scheduled Air Services by Passengers Carried (million and %), 2004-2008

Leading Tourist Destinations

Table 1.10: The World's Top Ten Tourism Destinations by International Tourist Arrivals (million and %), 2006 and 2007

2. Market Size

THE TOTAL MARKET

Table 2.1: The Total UK Air Travel Market by Value and Volume (£m, 000, million kilometres and million tonne kilometres), 2004-2008

Figure 2.1: The Total UK Air Travel Market by Value (£m), 2004-2008

Figure 2.2: The Total UK Air Travel Market by Volume (million kilometres and million tonne kilometres), 2004-2008

BY MARKET SECTOR

By Type of Service

Table 2.2: The Total UK Air Travel Market by Type of Service by Operating Revenue (£m and %), 2004-2008

Passengers Uplifted, Seat Kilometres Used and Freight Kilometres Used

Table 2.3: Passengers Uplifted, Seat Kilometres Used and Freight Kilometres Used by UK Airlines on Scheduled and Non-Scheduled Services (000, million kilometres, million tonne kilometres and %), 2004-2008

Scheduled Services

Table 2.4: Scheduled Services of UK Airlines by Passengers Uplifted, Passenger Kilometres Used and Freight Kilometres Used by International and Domestic Markets (000, million kilometres and million tonne kilometres), 2004-2008

Non-Scheduled Services

Table 2.5: Non-Scheduled Services of UK Airlines by Passengers Uplifted, Seat Kilometres Used and Freight Kilometres Used by International and Domestic Markets (000, million kilometres and million tonne kilometres), 2005-2008

By Nationality of Airline

Table 2.6: Terminal Passenger Numbers† at UK Airports by Type of Service by Nationality of Airline (000), 2004-2008

By Origin of Traveller

Table 2.7: Overseas Residents' Visits to the UK by Air by Travellers' Country of Residence (000), 2006-2008

By Destination of Traveller

Table 2.8: UK Residents' Visits Overseas by Air by Country Visited (000), 2006-2008

3. Industry Background

RECENT HISTORY

NUMBER OF COMPANIES

Table 3.1: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in Scheduled and Non-Scheduled Passenger Air Transport, 2004-2008

Table 3.2: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in the Scheduled Air-Passenger Transport Sector by Turnover Sizeband (£000), 2004-2008

Table 3.3: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in the Non-Scheduled Air-Passenger Transport Sector by Turnover Sizeband (£000), 2004-2008

EMPLOYMENT

Table 3.4: Number of People Employed in the Scheduled and Non-Scheduled Air Transport Industry in the UK (000), 2004-2008

Table 3.5: Total Number of Employees of Major UK Airlines, 2003/2004-2007/2008

Regional Variations in the Marketplace

Table 3.6: Airport Terminal Passenger Numbers in the UK by Region (000 and %), 2008

Table 3.7: Number of Local Units in VAT- and/or PAYE-Based Enterprises Engaged in Scheduled and Non-Scheduled Passenger Air Transport by Government Office Region, 2008

DISTRIBUTION

HOW ROBUST IS THE MARKET?

Table 3.8: Seat Kilometres Available and Seat Kilometres Used on Scheduled and Non-Scheduled Services (million kilometres and %), 2004-2008

Table 3.9: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in UK Scheduled and Non-Scheduled Passenger Air Transport by Age of Business (number of years and %), 2008

LEGISLATION

KEY TRADE ASSOCIATIONs

Air Transport Users Council

Association of European Airlines

British Air Transport Association

Civil Aviation Authority

European Low Fares Airlines Association

The European Regions Airline Association

International Air Transport Association

International Civil Aviation Organization

4. Competitor Analysis

THE MARKETPLACE

Passengers Uplifted

Table 4.1: Total Number of Scheduled and Non-Scheduled Passengers Uplifted by UK Airlines (000), 2004-2008

Table 4.2: Total Number of Scheduled and Non-Scheduled Passengers Uplifted by UK Airlines (% of total), 2004-2008

Seat Kilometres Used

Table 4.3: Seat Kilometres Used by UK Airlines (million kilometres), 2004-2008

MARKET LEADERS

Table 4.4: Selected Major UK Airlines by Turnover (£m), 2004/2005-2008/2009

British Airways PLC

Company Structure

Current and Future Developments

Financial Results

British Midland Airways Ltd (bmi)

Company Structure

Current and Future Developments

Financial Results

easyjet Airline Company Ltd

Company Structure

Current and Future Developments

Financial Results

Flybe Group Ltd

Company Structure

Current and Future Developments

Financial Results

Jet2.com Ltd

Company Structure

Current and Future Developments

Financial Results

Monarch Airlines Ltd

Company Structure

Current and Future Developments

Financial Results

Ryanair Holdings PLC

Company Structure

Current and Future Developments

Financial Results

Thomas Cook Airlines UK Ltd

Company Structure

Current and Future Developments

Financial Results

Thomson Airways Ltd

Company Structure

Current and Future Developments

Financial Results

Virgin Atlantic Airways Ltd

Company Structure

Current and Future Developments

Financial Results

OUTSIDE SUPPLIERS

Airports

Table 4.5: Terminal Passengers at Major UK Airports (000 and %), 2004-2008

Aircraft and Component Manufacturers

MARKETING ACTIVITY

Table 4.6: Main Media Advertising Expenditure by Type of Flight (£000 and %), Year Ending March 2009

Table 4.7: Main Media Advertising Expenditure by Airlines Long Haul (£000), Year Ending March 2009

Table 4.8: Main Media Advertising Expenditure by Airlines Short-Haul Exclusive (£000), Year Ending March 2009

Table 4.9: Main Media Advertising Expenditure by Airlines — Domestic and Short Haul (£000), Year Ending March 2009

Table 4.10: Main Media Advertising Expenditure by Airlines Short- and Long-Haul Mix (£000), Year Ending March 2009

Table 4.11: Main Media Advertising Expenditure by Airlines UK Domestic Routes (£000), Year Ending March 2009

EXHIBITIONS

5. Strengths, Weaknesses, Opportunities and Threats

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

6. Buying Behaviour

INTRODUCTION

Air Travellers in Great Britain

Table 6.1: Residents of Great Britain Residents Who Have Travelled by Air in the Last 12 Months (% of adults), 2004-2008

Table 6.2: Penetration of Air Travel Among British Residents in the Last 12 Months by Number of Flights Taken (% of adults), 2008

Table 6.3: Profile of British Residents Who Had Travelled by Air in the Last 12 Months by Sex, Age and Social Grade (% of adults), 2004-2008

Reason for Air Travel: Holiday/Personal or Business

Table 6.4: Penetration of Air Travel Among British Residents in the Last 12 Months For Holiday/Personal Reasons and for Business by Sex, Age, Social Grade and Region (% of adults), 2008

The Most Popular Destinations

Table 6.5: Percentage of British Adults Who Had Taken At Least One Flight in the Last 12 Months by Selected Destination by Sex, Age, Social Grade and Region (% of adults), 2008

THE INTERNATIONAL AIR TRAVEL MARKET

Table 6.6: Total UK and Overseas Residents' Visits by Air To and From the UK (000 and %), 2004-2008

MAIN PURPOSE OF VISIT

Table 6.7: Total UK and Overseas Residents' Visits by Air by Destination and Main Purpose of Visit (000 and %), 2004-2008

UK RESIDENTS' VISITS OVERSEAS

Table 6.8: UK Residents' Visits Overseas by Air by Destination and Main Purpose of Visit (000 and %), 2004-2008

Table 6.9: UK Residents' Share of the Total UK and Overseas Residents' Visits by Air by Destination and Main Purpose of Visit (%), 2004-2008

Overseas Destination by Mode of Travel

Table 6.10: UK Residents' Visits Overseas by Destination by Main Mode of Travel (000), 2004-2008

UK Residents' Visits Overseas by Air by Purpose of Visit

Table 6.11: UK Residents' Visits Overseas by Purpose of Visit (000 and %), 2004-2008

OVERSEAS RESIDENTS' VISIT TO THE UK

Table 6.12: Overseas Residents' Visits to the UK by Air by Origin and Main Purpose of Visit (000 and %), 2004-2008

7. Current Issues

EUROPE

Europe To Probe Airlines On Competition Fears

European Airlines Hail the Single Sky

Airlines Welcome Proposal on Airport Slots

INTERNATIONAL

GOVERNMENT

BA and Virgin Passengers Set For Price-Fix Refund

The Regulator Orders Sale of BAA Airports

Review of UK Airport Economic Regulation

Air Passenger Duty

HEALTH SCARES

IMPACT OF RECESSION ON SUPPLIERS

Boeing to Cut Plane Output

Downturn Hits Regional Airports

CORPORATE ACTIVITY

ENVIRONMENT

EU Emissions Trading Scheme

BA and Virgin Propose Carbon Trading For Airlines

8. The Global Market

TOTAL MARKET SIZE

By Volume

Table 8.1: World Scheduled Revenue Traffic by Passengers Carried and Passenger Kilometres Performed (million and billion kilometres), 2004-2008

EUROPEAN MARKET

Table 8.2: Number of Air Transport Passengers and Passenger Kilometres Travelled by Association of European Airlines' Members on Scheduled Services (million and billion kilometres), 2004-2008

Table 8.3: Number of Air Transport Passengers of Association of European Airlines' Members by International Short/Medium-Haul Domestic and Long-Haul Scheduled Flights (million and %), 2008

Number of Passengers Carried by Airline

Table 8.4: Passengers Carried on Scheduled Services by Association of European Airlines Members (million and %), 2007 and 2008

Medium-Term Traffic Forecast

Table 8.5: Preliminary and Forecast Regional Growth in Passenger Kilometres Performed (%), 2009-2011

9. Forecasts

INTRODUCTION

The Economy

Gross Domestic Product

Table 9.1: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2009-2013

Inflation

Table 9.2: Forecast UK Rate of Inflation (%), 2009-2013

Unemployment

Table 9.3: Forecast Actual Number of Unemployed Persons in the UK (million), 2009-2013

Population

Table 9.4: Forecast UK Resident Population by Sex (000), Mid-Years 2009-2013

FORECASTS 2009 to 2013

Table 9.5: Forecast Number of Passengers Uplifted by UK Airlines on Scheduled and Non-Scheduled Services (000), 2009-2013

Market Growth

Figure 9.1: Market Growth in Forecast Number of Passengers Uplifted by UK Airlines on Scheduled and Non-Scheduled Services (000), 2004-2013

FUTURE TRENDS

Airlines' Profitability Likely to be Affected

Airlines Continue Cost-Cutting Measures

Sale of BAA Airports Should Lead to Increased Competition

Long-Term Forecasts for Air Passenger Growth

10. Company Profiles

British Airways PLC

British midland Airways Ltd

easyjet airline company ltd

Flybe Group Ltd

Monarch Airlines Ltd

Thomas Cook Airlines UK Ltd

Thomson Airways Ltd

VIRGIN ATLANTIC AIRWAYS LTD

11. Further Sources

Associations

General Sources

Government Publications

Other Sources

Key Note Sources

Abstract

The operating revenue generated by UK airlines is estimated to have increased by 6% in 2008 to £18.25bn. Falls were recorded, however, in: the number of passengers uplifted by UK airlines in 2008 — down to 131.1 million; the number of seat kilometres (km) used — down to 314.3 billion; and in the volume of freight kilometres used — down to 8.32 billion.

Air-passenger transport is undertaken on both scheduled and non-scheduled services. The scheduled sector, which includes the low-cost carriers, is the larger of the two and the one which continues to show growth. Passenger numbers on non-scheduled flights, which are mostly operated by the holiday charter airlines, have been falling for a number of years due to air travellers preferring to travel independently rather than on package or inclusive tours. The fastest-growing and largest segment of the market overall is scheduled, international flights.

The airline sector is currently experiencing its worst ever trading environment. Following the impact of high oil prices in the first half of 2008, which had a serious effect on airlines' operating costs and caused some operators to cease trading, the global recession is now having a significant impact on passenger numbers. The airlines have responded to the situation by cutting capacity, abandoning unprofitable routes and imposing a pay freeze on employees. The downturn means that the profitability of UK airlines is likely to come under severe pressure in 2009 as the combination of falling passenger numbers, higher costs and a fall in the value of sterling takes its toll.

The Government has confirmed that Air Passenger Duty (APD, which is a passenger-based tax charged to the aircraft operator and based on the number of passengers, destination and class of travel) will rise significantly in 2010. The tax paid on departing flights will now fall into four bands, with passengers being charged according to how far they fly. The increases, planned for November 2009 and November 2010, will hit medium-haul and long-haul travellers the hardest. The restructuring of the APD means that British holidaymakers will now be taxed more than any other travellers, with taxes and charges on some flights costing much more than the fare itself.

UK airlines face a difficult 2009 with the global recession expected to depress demand. Key Note forecasts that the numbers of passengers uplifted on UK airlines will fall in 2009 with the numbers travelling on both scheduled and non-scheduled flights falling. The numbers of passengers travelling on scheduled services may recover a little in 2010, although the non-scheduled flight sector may remain a little weak.

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