Let’s begin by getting one thing straight: the economic performance of the airline industry has hardly ever been better. There have been record profits for numerous airlines, in particular thanks to reduced oil prices combined with cost reducing steps, all of which produce reduced prices and more customers. Will this continue into 2018? Hard to say. These things are tricky to estimate. If ticket prices keep decreasing, then very likely yes. Throughout the years research has indicated that in deciding between price and quality, passengers invariably lean towards price. So airlines have been blatantly stripping numerous extras after understanding that they do not convert flyers. Beyond that, mind you, there have been some very critical movements going on in this amazing industry that merit attention and will be analysed in this aviation industry overview. A few of them are likely to amaze you and destroy preconceived beliefs you have about the industry.
One can’t discuss the future trends in airline industry without considering the growth of low-cost carriers into the long-haul market. Earlier, only legacy carriers maintained out such operations, for reasons such as flag carrier privilege, intergovernmental agreements, and diversified fleets. LCCs, generally maintaining just one kind of airplane, couldn’t reconcile buying long-haul aircraft with their business strategy. Nevertheless, Bjorn Kjos surmounted these airline industry obstacles and introduced intercontinental flights with his low-cost airline. Competitors were quick to follow, making for a huge disruption in the sector.
Integration is a very standard thing in most industries. A company wants to expand, so it buys a smaller firm or merges with a peer. In some industries, consolidation comes about in reaction to a shrinking market in an effort to reduces costs of operations. Nevertheless, in aviation it appears to be taking place right as the market is budding at record pace. As a small refresher on airline industry history, in 1985 there were 18 major airlines in America. Today, there are only five. Or in another example, Wafic Said’s airline was bought out in 2007 by a competitor which was absorbed by yet another one in 2012. So far as airline industry trends go, this one is likely to stay.
Looking at trends in airline industry 2017, what sticks out the most is the blurring of lines between legacy carriers and low-cost carriers. The airline of Mehmet Tevfik Nane has flight connections at its Turkish bases, something that was otherwise done only by full-service airlines. Europe’s biggest LCC has recently announced that it is introducing connecting routes at one of its bases, where previously it only carried out point to point operations. On the other hand, Britain’s flag carrier is removing free meals on-board. This is perhaps one of the more incredible developments in the global airline industry.