Sector Insight: airlines

Recent BA campaign
Recent BA campaign

Consumers favour budget carriers in a sector hit hard by rising fuel costs

Five Key Trends

Flyers cutting back. About a quarter of flyers over the past three years have made cutbacks in air travel because of rising costs and 17% have reduced the number of flights they've taken.

 Ancillary revenues. Global airline ancillary revenues almost doubled between 2009 and 2011 but negative media coverage and consumer bodies' criticism has been rife. After an OFT investigation 12 airlines agreed to include debit card surcharges in their headline prices.

 Price. This remains the top reason for consumers picking a specific airline, followed by flight times, destination and departure airports.

 Budget. The most popular type of airline choice is budget airlines chosen by 42% of air travellers for their last trip compared with 35% opting for full-service.

 Fuel costs. The rising cost of fuel has hit all airlines, it now accounts for about a third of global airline operating costs compared with only 13% a decade ago.

 Passenger flights. Between 2007 and 2010 there was an 11.2% drop in the number of passengers uplifted at UK airports. It recovered in 2011 with a 4.5% rise and a small growth of 1.5% is expected in 2012.

Source: Mintel

Top 10 UK-based airlines, by passengers uplifted globally, 2006-11

* easyJet also operates a subsidiary company easJjet Switzerland, whose passenger figures (approx. 7 million in 2011) are not included in the above table.
** excludes BA CityFlyer
*** includes BMI Regional and BMI Baby

Source: CAA/Company information/Mintel

Visits abroad by UK residents (000s), 2006-11

Source: Office for National Statistics, IPS/Mintel

The Industry's Main Players

Frank van der Post, managing director, brands and customer experience, British Airways

He joined BA in January 2011 and is also an executive director of the board. Van der Post previously worked for the hotel and resort Jumeirah Group, ultimately as chief operating officer. The first 21 years of his career were with InterContinental Hotels Group in Europe and North America.

Simon Lloyd, marketing director Virgin Atlantic

Lloyd just took up the Virgin Atlantic role in July reporting to chief commercial officer, Julie Southern. He replaced Paul Dickinson who left the airline in January. Lloyd was most recently director of media engagement, marketing and audiences at the BBC handling marketing content across all platforms. Before joining the BBC he held marketing and commercial positions at Palm, 118118 and Nokia.

Peter Duffy, marketing director, easyJet

Duffy joined easyJet in February 2011 as marketing director having previously held the same post at Audi in the UK. At easyJet he sits on the airline management board and leads all easyJet's marketing activity across Europe.

Winners and Losers in the airlines sector

easyJet. Remains the leading UK-based airline in terms of global passengers and the only UK carrier to grow every year since 2006 (12% passenger growth in 2011, Mintel).

BA. After passenger decreases between 2007 and 2010 it pulled back in 2011 with 11% passenger growth (Mintel). Its London 2012 Olympic sponsorship has been a major brand boost. However its parent company IAG reported £306m losses for the first half of this year and said job losses were inevitable, mainly because of problems with Spanish airline Iberia.

Own-label. Remains minor compared with strength of brands in this market and accounts for less than 10% of value sales in take-home market.

Source: Mintel

Discussion

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now

Latest

Center Parcs ad banned for encouraging parents to take kids out of school
Coca-Cola, Cadbury and Amazon named top brands for targeting youth market
Leaked document shows Nokia to be rebranded as Microsoft Mobile
Nike lays-off hardware staff in move that casts doubt on future of FuelBand
Greenpeace says save the bees or humans will die
What brands need to know about changes to VAT and online downloads in 2015
Jimmy Savile victims urged to claim compensation in new ad campaign
UKIP launches biggest  ad campaign and stirs up 'racist' accusations
Apple boss Tim Cook provides voiceover on ad touting firm's renewed green commitments
John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message
Lynx unleashes £9m 'Peace invasion' campaign
Social Brands 100 Youth: Pizza Hut most social youth brand in UK
Cheryl Cole is wild and arresting in new L'Oreal work
Morrisons told not to show alcohol ads during YouTube nursery rhymes
O2 head of brand Shadi Halliwell departs after 23 years at company in restructure
Tesco hit by further sales decline as it turns to digital Clubcard and social network