Overall Market

Global Overview

The airline industry has known several years of profound economic and technological changes, both internationally and nationally. Accidents, changes in oil prices are some factors that massively affected this sector.

Since 1970, air travel has been democratized, especially thanks to growth of “low cost” companies: global air traffic has increased tenfold, from $ 300 million to more than 3 billion passengers per year.

Here are some key figures that well represent this market:

29 200 000

A plane takes off every second around the world, representing 29.2 million flights per year .... around 80,000 commercial flights every day ... 200 million commercial flights are expected per year in 2020.

3,1 billions

This is the number of people who flew in 2014. 160 000 people travel each day by air.

1/4 passenger

is really stressed when it must fly

Despite the recent high profile crashes, such as the Germanwings crash in France and the Malaysia Airline disappearance, air travel is incredibly safe. To give you an example, a fully loaded 727 would have to crash every two days just to equal the same number of fatalities experienced in automobiles every year in the United States alone.

The main actors

Qatar Airways has been named the Best Airline in the World for 2015 by leading aviation consumer website Skytrax. This survey, which covered more than 245 airlines, measured 41 different parameters ranging from boarding procedures to seat comfort to the quality of service; this is obviously a good representation of the quality of the services proposed by these airlines.

Next to Qatar Airways, we can see at the second place Singapore Airlines, the third place is taken by Cathay Pacific Airways followed by Turkish Airlines and Emirates.

The performances of these companies can differ according to the strategy they decide to put in place toward their clients. Therefore, we can differentiate the premium companies (Qatar Airways or Emirates) towards low-cost companies like Ryanair or Southwest Airlines. They also differ regarding the type of segment they are focused on : long or short-haul.
These strategies can be be deployed through the services proposed on board, the hostesses, the different touch points, TV ads…

The market can be segmented this way:

Mains trends and challenges

Airline companies have to face with one main issue: the service they sell is vey complex

• On one hand, aircraft is considered as hard product, the upgrade of which is an expensive way of differentiation with a long pay-back.

• On the other hand, a soft product – intangible services entailed in on-board staff through a welcoming and seamless customer experience across all aspects of air travel, from reservation to touchdown.

People have grown accustomed to seeing significant improvements in their experiences with things they buy. Hence, airlines should be diversified to catch up with fast-growing consumers’ expectations as well as competition on the market. In response to these factors, we believe that airlines must take several specific measures to enhance competitiveness and increase consumer expectations which dictate the trends in current market

Nevertheless, the pressure on prices will remain rather intense: the airlines will have no other choice but to keep prices low by trying to improve their performance through higher fill rates. The positive aspect is that it forces companies to grow, as air transport is a volume activity which requires significant operating leverage.

This will inevitably lead to combinations, mergers, larger alliances, or even to international mergers as that of Air France and KLM in the last few years.

According to Olivier P. Müller, in charge of Consumer Goods & Research at Credit Suisse, there is three key success:

•  The tarification, with companies that will continue to charge supplementsSecond, they must keep costs down. 
• Their flexibility in this area is limited because the charges of fuel and personnel represent more than 50% of their costs.
• Finally, efficiency which is the biggest lever.

In our blog we will talk about the Singapore and Emirates airlines. With these both companies, the journey itself becomes an amazing experience: you will interact with attentive personnel, gourmet food treating all your senses, and comfortable seats, in-flight entertainment, and even flat-bed guarantees total relaxation. We invite you to enjoy the experience with Singapore and Emirates airlines and to discover the fascinating insights about these brands on our blog.

(Sources: http://www.investopedia.com/articles/personal-finance/043015/safest-way-travel-2015.asp ; http://uk.businessinsider.com/the-20-best-airlines-in-the-world-according-to-skytrax-2015-6?r=US&IR=T
Photo Credits : Qatar Airways Corporate Website )