2018 Airline Industry Outlook

With 2019 just around the corner, let’s have a look back at the aviation industry in 2018

  1. Airline Industry Overview
  • The airline industry is key to the advent of globalization because it facilitates global trade, tourism and economic growth. However, it is a cyclical and volatile industry due to its susceptibility to political, economic and social factors
  1. Global Market Overview
  • Passenger numbers were expected to rise by 6% in 2018, from 4.1 billion to 4.3 billion
  • Revenue was expected to rise by 9.4% in 2018, from $754 billion to $824 billion
  • Global Airline Industry net profits in 2018 were expected to reach $38.4 billion in 2018 from $34.5 billion in 2017
  1. Regional Market Overview
  • Americas (North & South) 45.17%
  • Europe 30.03%
  • Asia Pacific 23.50%
  • Middle East & Africa 1.31%
  1. North America
  • Profits for North American airlines were expected to reach $16.4 billion in 2018
  • Top Airlines (2017): American Airlines, Delta Air Lines, Southwest Airlines
  • Top Airport (2017): Atlanta Hartsfield-Jackson
  • Challenges: Rising fuel and labour costs
  1. Europe
  • Profits for European airlines were expected to reach $11.5 billion in 2018
  • Top Airline / Airline Group (2017): Lufthansa Group, Ryanair, International Airlines Group (IAG)
  • Top Airports (2017): Heathrow Airport, Charles de Gaulle Airport, Amsterdam Airport Schiphol
  • Challenges: A few airlines had ceased their operations in 2017 due to competition and the ever-evolving business models of low-cost airlines. It was predicted that more airlines would follow suit
  1. Asia Pacific
  • Profits for Asia Pacific airlines were expected to reach $9 billion in 2018
  • Top Airlines (2017): China Southern Airlines, China Eastern Airlines, Air China
  • Top Airports (2017): Beijing Capital International Airport, Tokyo Haneda Airport, Hong Kong International Airport
  • Challenges: The region is lacking in terms of infrastructure, some airports are due for major upgrades. Plus, major markets are struggling with air traffic management which leads to problematic flight delays
  1. Latin America
  • Profits for Latin American airlines were expected to reach $900 million in 2018
  • Top Airlines / Airline Group (2017): LATAM, Gol Transportes Aéreos, Avianca Holdings
  • Top Airports (2017): Guarulhos International Airport, El Dorado International Airport, Congonhas Airport
  • Challenges: The region has poor infrastructure and regulatory challenges which is problematic, considering the growing demand
  1. Middle East
  • Profits for Middle East carriers were expected to reach $600 million in 2018
  • Top Airlines (2017): Emirates Airlines, Saudia, Qatar Airways
  • Top Airports (2017): Dubai International Airport, Hamad International Airport, King Abdulaziz International Airport
  • Challenges: The Middle Eastern airline market has had some downfalls due to regional conflicts between several Arab countries in 2017
  1. Africa
  • African airlines were expected to make a loss of $100 million in 2018
  • Top Airlines (2017): EgyptAir, South African Airways, Royal Air Maroc
  • Top Airports (2017): R. Tambo International Airport, Cape Town International Airport, Mohammed V International Airport
  • Challenge: Slow economic growth in Africa affects the airlines in the region
  1. Market Drivers
  • Strengthening global economy
  • Low-cost carriers are increasing, allowing more people to fly
  • Booming e-commerce results in growing air cargo market
  1. Challenges
  • Jet fuels are expected to average at $81.6/barrel
  • Labour costs constitutes more than fuel costs and has been rising
  • Regional and political instabilities
  1. Trends
  • Big data and analytics are increasing in popularity in the airline industry as a means of measuring internal performance and external factors
  • Airlines and airports are planning to use Artificial Intelligence (AI) in various forms
  • Biometrics and Radio Frequency Identification (RFID) are being used for self check-ins, passport control, baggage tracking and security
  • Airlines are looking into blockchain technology and are finding ways to utilize it
  1. Threat of Substitutes
  • Air transportation is the only viable mode of transportation for long distances but high-speed railway networks could pose a threat in the future
  1. Suppliers’ Bargaining Power
  • The Aviation industry generates a multi-billion revenue which majorly consists of civil aircraft, engines, equipment and parts
  1. Buyers’ Bargaining Power
  • Buyers used to have low bargaining power in this industry but nowadays, technology and the internet has increased bargaining power as third-part-meta-search flight comparison websites makes it easy for consumers to buy cheaper airfare




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