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KN62007

KEY NOTE AIRLINES DECEMBER 1997

ISBN 1-85765-761-6

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Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

MARKET SECTORS

MARKET POSITION

MARKET TRENDS

Table 1: Gross Domestic Product of Key Sectors of the UK Economy at Current Factor Cost (£bn and percent), 1996

Table 2: Gross Domestic Product of Key Sectors of the UK Economy at Current Factor Cost (£bn), 1992-1996

Table 3: Relative Importance of the UK in the World Airline Industry by Sales ($bn), 1996

Table 4: Turnover of UK Airlines (£bn), 1992-1996

Market Size

THE TOTAL MARKET

MARKET SECTORS

FOREIGN TRADE

Table 5: Total UK Air Transport Market by Value (£m at current prices), 1992-1996

Table 6: Number of Visits Abroad by UK Residents and Overseas Visits to the UK by Market Segment (000 visits), 1992-1996

Table 7: Turnover of Major UK Airlines Market Sectors (£bn and percent), 1992-1996

Table 8: Relative Importance of Sectors of the UK Market for Passenger Transport by Air (000 passenger journeys and percent), 1996

Table 9: Relative Importance of Sectors of the UK Market for Cargo Transport by Air (000 tonnes and percent), 1996

Table 10: International Scheduled Services of UK Airlines (passengers, passenger kilometres and cargo tonne kilometres), 1992-1996

Table 11: Domestic Scheduled Services of UK Airlines (passengers, passenger kilometres and cargo tonne kilometres), 1992-1996

Table 12: Total Scheduled Services of UK Airlines (passengers, passenger kilometres and cargo tonne kilometres), 1992-1996

Table 13: Total Non-Scheduled Services of UK Airlines (tonne kilometres and passenger kilometres), 1992-1996

Table 14: Charter Penetration of Air Transport Markets (Passenger and Cargo) Served by UK Airlines (million ATKs, RTKs and percent), 1992-1996

Table 15: Charter Penetration of Air Passenger Markets Served by UK Airlines (ASKs, RPKs and percent), 1992-1996

Table 16: Passengers Carried by UK Airlines by Type of Fare (000 passengers and percent), 1996

Table 17: Overseas Visits to the UK by Air by Country of Residence (000 visits), 1992-1996

Table 18: Visits Abroad by Air by UK Residents by Country Visited (000 visits), 1992-1996

Industry Background

RECENT HISTORY

INDUSTRY CONCENTRATION

DISTRIBUTION

EMPLOYMENT

TRADE ASSOCIATIONS

Table 19: Number of Businesses in the UK Transport Sector by Turnover, 1996

Table 20: Personnel Employed in Air Transport in Great Britain (000 employees), March 1996 and 1997

Table 21: Personnel Employed in Air Transport Compared with Other Transport Sectors in Great Britain (000 employees), Year to March 1997

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING AND PROMOTION

Table 22: Turnover of Major UK Airlines (£m), 1996/1997

Table 23: International and Domestic Air Traffic at UK Airports by Nationality of Airline Operator (million passengers and 000 cargo tonnes), 1996

Table 24: Major UK Airlines and Their Roles in the Marketplace, 1997

Table 25: Main Media Advertising Expenditure on Airlines in the UK (£000), Year Ending September 1997

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

PURCHASERS OF AIR TRANSPORT

Table 26: Purchasers of Services Provided by UK Air Transport Industry by Purchasing Sector (£m and percent), 1996

Table 27: Number of Visits Abroad by UK Residents and Overseas Visits to the UK by Market Segment (000 visits and percent), 1996

Table 28: Number of Visits Abroad by UK Residents and Overseas Visits to the UK by Residence and Reason for Travel (000 visits), 1996

Table 29: Visits Abroad by Air by UK Residents by Travel Purpose (000 visits), 1992-1996

Table 30: Visits Abroad by UK Residents by Destination and Mode of Travel (million visits), 1992-1996

Table 31: UK Consumers' Expenditure on Visits Abroad by Sea and Air (000 visits, £m and £), 1995 and 1996

Table 32: Frequency of Flying by UK Air Travellers Over the Past 3 Years by Reason for Travel and Destination (000 travellers and percent), 1997

Outside Suppliers to the Industry

VALUE OF SECTORS SUPPLYING AIRLINES

AIRCRAFT AND COMPONENT MANUFACTURERS

PROVIDERS OF AIRPORT AND AIR TRAFFIC CONTROL SERVICES

Table 33: Suppliers of Services to the UK Air Transport Industry (£m and percent), 1996

Current Issues

AIRLINE PRODUCT DEVELOPMENT

DUTY-FREE SALES

DISTRIBUTION

COMPETITION

AIRLINE POPULARITY

AIRPORTS

AIR TRAFFIC CONTROL ISSUES

SAFETY ISSUES

FLIGHT DELAYS

THE IMPACT OF EUROPEAN MONETARY UNION

Forecasts

UK AIRLINE INDUSTRY PROSPECTS

FORECASTS 1997 TO 2001

Table 34: Number of Visits Abroad by UK Residents and Overseas Visits to the UK by Market Segment (000 visits),1997-2001

Table 35: Total UK Air Transport Market by Value (£m at current prices), 1997-2001

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

In 1996, the value of UK sales of transport and travel by air to, from and within the UK was estimated to have reached £9.85bn. Since the UK market for air transport is part of a wider international market and UK carriers have direct access to markets at the other end of the routes they serve, it is reasonable to regard these `export' markets as being more than usually accessible to UK airlines. Total air transport demand, calculated to include these export earnings, amounted to around £15bn in 1996.

Historically, this market has been particularly dependent on levels of economic activity in the UK, with business travel and air freight both closely related to growth in gross domestic product (GDP), and UK-originating leisure travel dependent on both disposable income and confidence levels. However, the industry was not particularly affected by the UK recession of the early 1990s and has recorded steady growth in subsequent years.

However, this does not mean that the sector has been unaffected by change. Regulatory change in particular has continued apace, with liberalisation of markets, particularly within the European Union (EU), leading to the emergence of new low-cost airlines able to compete effectively with formerly protected airlines. UK airlines, however, were among the first to face such changes, which took the form of exposure to economic deregulation, and in the case of British Airways (BA), to the additional disciplines imposed by privatisation. Hence, although such changes were not always welcome, they helped create a situation in which UK airlines were better able to compete than most.

Other competitive pressures led to continued efforts by airlines to establish global alliances, whereby carriers sought to secure the benefits of being able to offer potential passengers a connecting route network that spans the world, through a combination of their own services and those of their global partners. BA has been particularly active in this field, although it has yet to secure final approval for its alliance with American Airlines.

Future prospects for UK airlines look reasonably promising, driven by the prospect of steady, if not spectacular, growth in the UK and European economy. The UK air transport industry is forecast to be worth £13.89bn in the year 2001.

Text © 1997 Key Note

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