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Viewing report
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Airlines Market Report 2010
Key Note Publications Ltd, June 2010, Pages: 134
The authors estimate that the operating revenue generated by UK airlines fell by around 5% in 2009, to £17.8bn. Falls were also recorded in the number of passengers uplifted by UK airlines (down to 124.7 million), the number of seat kilometres used (down to 297.4 billion) and the volume of cargo kilometres used (down to 7.56 billion).
Air-passenger transport is undertaken on both scheduled and non-scheduled services. The scheduled sector, which includes the low-cost carriers, is the larger and more dynamic of the two, although, in 2009, the impact of the recession contributed to the number of passengers uplifted on scheduled services falling by around 2.4%. Passenger numbers on non-scheduled flights, most of which are operated by the holiday charter airlines, have been falling for a number of years, reflecting a trend for air travellers to favour independent travel, rather than package, or inclusive, tours. In 2009, passengers carried on non-scheduled services fell by a further 15.7%.
The unprecedented closure of UK and European airspace for six consecutive days in April 2010, owing to the threat of volcanic ash dispersion, had a major impact on airlines and airports across Europe. It resulted in the total standstill of intra-European mobility by air, coupled with a huge ripple effect on long-haul aviation to the US, Asia and elsewhere. The cost of the closure for UK airlines was substantial. For example, easyJet estimated that the situation cost it between £50m and £75m, while the cost to British Airways was estimated at around £180m. Further costs are likely to be incurred as the volcanic ash continues to cause disruption.
The UK election of a Conservative/Liberal Democrat government is likely to have implications for the airline industry. In its election manifesto, the Conservative Party announced that it would block the building of a third runway at Heathrow Airport, as well as the building of further runways at Gatwick and Stansted airports. It also indicated that it planned to reform Air Passenger Duty (APD) — a levy that has resulted in the UK having the highest levels of aviation tax in Europe.
2010 is expected to be another challenging year for the airline industry. Passenger numbers in 2009 fell back to the level they were in 2004 and the pace of recovery continues to waiver. In addition to economic uncertainties, the potential for a volcanic ash resurgence remains, with no immediate end in sight. In light of these factors, it is likely that it will be a number of years before passenger numbers recover to their previous peak levels.
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