Industry Analysis & Industry Trends
The Global Airlines industry has taken off after suffering massive losses during the global economic downturn. Despite the large decline in revenue at the beginning of the period, industry revenue is estimated to increase at an annualized rate of 2.9% over the five years to 2013. A sense of normality has returned to the industry and revenue growth is expected to be more stable in 2013, increasing 2.8% to $711.0 billion.
Conditions have greatly improved since 2009, which was the industry's worst year in at least two decades. The easing of average airfares and declining passenger numbers during the recession resulted in decreasing revenue. The total number of global tourist arrivals declined 3.8% in 2009, with a stronger decline in international flights compared with domestic... read more
The Global Airlines industry is sensitive to economic activity, per capita disposable income, the price of crude oil and tourism levels. When worldwide economic conditions are positive, individuals tend to increase spending on leisure activities, such as vacations and visiting relatives and friends. Strong economic conditions also coincide with high business sentiment, which increases demand for business-related air travel. A rising crude oil price generally has a negative effect on the industry because competition limits the ability of airlines to pass the full increase in fuel costs to consumers. Once airlines can no longer absorb high fuel prices, they raise ticket prices. However, higher prices slow demand for air travel and thus hinder industry revenue... read more