KN62004

KEY NOTE AIRLINES : September 2004

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This report covers: airlines, scheduled passenger, scheduled cargo, mail, non-scheduled services, passenger kilometres, cargo tonne kilometres, charter, available seat kilometres, ASK, revenue passenger kilometres, RPK, available tonne kilometres, ATK, revenue tonne kilometres, RTK, passenger air transport, cargo air transport, overseas visits

Companies covered include: British Airways, Virgin Atlantic Airways, Virgin Express, Britannia Airways, British Midland Airways, UK, easyJet Airline Company, JMC, Ryanair Holdings, First Choice Airways, Monarch, Airlines, MyTravel, Ryanair, Holdings, Thomas Cook,

EXECUTIVE SUMMARY

In 2003, the revenue generated by UK airlines reached £13.5bn, a rise of 6.3% on 2002. Overall, between 1999 and 2003, revenue grew by 3.1%. This compares with an 18.8% increase in the number of passengers at UK airports over this 5-year period. Scheduled passenger revenue is the most important stream for UK-registered airlines and, in 2003, accounted for 69.6% of total revenue. The slow growth in operating revenues experienced between 1999 and 2003 is reflected in the slight increase of 1.1% in scheduled passenger revenues. Although the rise in non-scheduled flights was higher over this period, it was considerably below normal growth rates. In 2001, growth rates in UK airline revenues — along with other areas of the travel industry — were devastated by the events of 11th September. This had an impact predominantly on long-haul flights to North America and had little effect on short-haul flights. In addition, domestic flights were hardly affected. As a result, the share of UK airline activity accounted for by international services fell between 2000 and 2003. This impact was more severe for airlines that concentrate on long-haul business travel. While the effects of extraneous events such as 11th September 2001, foot-and-mouth disease in the UK and severe acute respiratory syndrome (SARS) were felt more by long-haul, business travel-orientated airlines, the short-haul leisure market has been driven by the dramatic rise and consolidation in the low-cost airline sector. Low-cost airlines have continued to expand and, coupled with the penetration of the Internet to search for suitable holiday accommodation, have led to the rise in the proportion of independent leisure travellers. However, this trend has been detrimental to seat-only charter flights. Key Note forecasts that, between 2004 and 2008, the number of UK passengers travelling both into and out of the UK will increase by 13.3%. Traditional long-haul airlines are beginning to return to pre-2001 levels, while independent travellers are embracing the low-cost short-haul option with regional departures. The airline industry is in a favourable position to take advantage of the expected return to normal growth rates. However, this might be restricted by a possible increase in aviation fuel prices.

TABLE OF CONTENTS

Text © 2004 Key Note

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Last updated by Amanda Porteous November 2004