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Airlines in the United KingdomEuromonitor InternationalSeptember 2019A I R L I N E S I N T H E U N I T E D K I N G D O M P a s s p o r t i© E u r o m o n i t o r I n t e r n a t i o n a lLIST OF CONTENTS AND TABLESHeadlines ……………………………………………………………………………………………………………………. 1Prospects ……………………………………………………………………………………………………………………. 1Heathrow Expansion: Mixed Prospects for Project Feasibility ………………………………………….. 1the Fall of Domestic Flights ………………………………………………………………………………………… 1Airlines Embrace Technology To Boost the Customer Journey………………………………………… 2Category Data ……………………………………………………………………………………………………………… 2Table 1 Airlines Sales: Value 2014-2019 ………………………………………………………… 2Table 2 Airlines Online Sales: Value 2014-2019………………………………………………. 3Table 3 Airlines: Passengers Carried 2014-2019……………………………………………… 3Table 4 Airlines NBO Company Shares: % Value 2015-2019…………………………….. 3Table 5 Charter Airlines Brands by Key Performance Indicators 2019 ………………… 4Table 6 Low Cost Carriers Airlines Brands by Key Performance Indicators2019………………………………………………………………………………………………. 4Table 7 Scheduled Airlines Brands by Key Performance Indicators 2019 ……………. 4Table 8 Forecast Airlines Sales: Value 2019-2024 …………………………………………… 5Table 9 Forecast Airlines Online Sales: Value 2019-2024 …………………………………. 5A I R L I N E S I N T H E U N I T E D K I N G D O M P a s s p o r t 1© E u r o m o n i t o r I n t e r n a t i o n a lAIRLINES IN THE UNITED KINGDOMHEADLINES▪ In 2019, airlines total sales grow by 2% in current value terms to reach GBP15 billion▪ Technology and sustainability shape the airlines industry▪ Airlines is expected to record a 3% current value CAGR (1% 2019 constant value CAGR)over 2019-2024PROSPECTSHeathrow Expansion: Mixed Prospects for Project FeasibilityIn 2016, the UK government approved the construction of a third runway at Heathrow Airport.In June 2019, Heathrow published the project for the expansion, outlining that the third runwaywill be built by 2026 and that expansion will be completed by 2050. The plan, which would beopen for public consultation until 13 September 2019, entails rerouting roads around the airportthrough the construction of underground tunnels, as well as diverting rivers. During the pastthree years, the expansion plan has attracted a considerable level of resistance from localconstituencies, activists and politicians, as the expansion plan is likely to have a strong,negative impact on the surrounding environment and local communities.On the bright side, if the expansion plan goes through, the UK will become an internationalhub connecting Western Europe to the rest of the world. At present, Heathrow is penalised bythe proximity of Amsterdam’s Schiphol airport, which is connected to more European andinternational destinations thanks to the largest presence of low cost carriers, as well as moreconnecting flights towards other continents. The construction of the third runway at Heathrowwill boost the airport’s connectivity to both Europe and the world, making the airport cover aprominent position in Europe’s aviation. This will boost the supply chain of the airport itself,generating additional jobs for the local community. The expansion will also have beneficialeffects on inbound tourism flows, as more tourists will visit London and the UK in general.the Fall of Domestic FlightsAccording to the Civil Aviation Authority, the number of UK flights has fallen by almost 20% inthe last 10 years. The UK has the highest rate of aviation taxes in the world, and airlines in thecountry are not finding it profitable to operate domestic routes. As competition among low costcarriers is becoming extremely strong, prices and margins on domestic flights are shrinking anddo not allow airlines to cover fixed costs. The regional airline Flybe, which operated routesconnecting cities within the UK and Ireland, was acquired by Connect Airways in July 2019 afterit saw a considerable drop in profit. The commitment of the UK aviation to respect the CarbonOffsetting and Reduction Scheme for International Aviation (CORSIA) issued in 2018 imposesthat airlines report their carbon emissions annually and that emissions in the future will notincrease over the 2020 levels. In light of this constraint, the UK aviation industry started toreduce its CO2 emissions level by cutting some domestic routes.In addition, competition from private cars increased during the review period. After the Brexitvote, consumers’ uncertainty over their spending pushed them to favour the cheapest traveloptions, which, in the case of short distances, is the private car. Domestic flights have also beenexperiencing increasing competition from rail in recent years. Rail travel in the UK has long beenpenalised by the highest train fares in the world and by the complexity of the booking system.A I R L I N E S I N T H E U N I T E D K I N G D O M P a s s p o r t 2© E u r o m o n i t o r I n t e r n a t i o n a lHowever, new technologies are emerging that make it possible for customers to compare pricesand find the cheapest bargains. An example is the Trainpal app, launched in the UK in 2018 bythe Chinese travel agency Ctrip. The app uses a unique algorithm to offer flexible split ticketing.This means that customers can book an entire return journey as a combination of multiple fares,which usually results in a cheaper final price. In addition, Eurostar improved the rail connectionsbetween London and major European capitals, opening a new route to Amsterdam in 2018 andadding additional trains on existing routes. The total journey time is below one hour and 30minutes to most destinations, and customers prefer the fast train over flights as they can avoidthe waiting time at the airport.In the next five years, domestic flights are likely to continue to shrink. As the uncertainty overthe post-Brexit UK economy continues, customers will choose options that allow them to savemoney. In addition, the rising attention to environmental sustainability and, especially carbonemissions, will continue to push consumers to use different, less polluting means of transportwhen they must travel short distances. New rail services between UK cities, such as thoseoffered by Virgin Trains between London and the north of the UK, will likely be a valuablealternative to flying.Airlines Embrace Technology To Boost the Customer JourneyAll sectors of the travel industry, including airlines, are looking for ways to implementtechnologies in their strategies with the aim to offer remarkable experiences to their customers.International Airlines Group (IAG), British Airways’s parent company, has implemented anaccelerator programme for technology start-ups called Hangar 51, with a yearly call forapplications. The initiative has the goal to establish partnerships that can improve thecompany’s operations through technology. In 2019, British Airways trialled technologies thathelp the airline to minimise delays, and to prevent food waste. In particular, the airline usedintelligent software capturing all the activities performed on the aircraft from landing untildeparture in order to identify outliers and anticipate delays, and it is trialling a computer systemthat looks at the Global Air Traffic Control database and suggests faster routes to pilots in orderto minimise delays. British Airways also rolled out a biometric boarding system. Previouslytested on domestic flights departing from Heathrow Terminal 5, the service was expanded tointernational flights to and from Los Angeles, New York JFK and Orlando, and will soon startworking for all the airline’s flights. The biometric technology removes the need for customers topresent their passport and boarding pass at the departure gate. Instead, the gate will verify theperson’s biometrics and allow them to board the aircraft.In the next five years, technology will become a key point of differentiation for airlines.Eliminating queues at the gates and luggage drop points, and minimising delays are likely to bethe main focus areas to provide a seamless passenger experience.CATEGORY DATATable 1 Airlines Sales: Value 2014-2019GBP million2014 2015 2016 2017 2018 2019 CharterLow Cost CarriersScheduled AirlinesAirlines OfflineAirlines Online1,477.83,788.36,999.1654.511,610.81,202.54,416.47,208.8594.112,233.51,167.55,024.47,435.2546.813,080.21,158.75,207.07,985.7508.213,843.21,145.95,392.18,177.4437.114,278.21,126.05,548.48,300.0319.014,655.5 A I R L I N E S I N T H E U N I T E D K I N G D O M P a s s p o r t 3© E u r o m o n i t o r I n t e r n a t i o n a lAirlines 12,265.2 12,827.6 13,627.0 14,351.3 14,715.4 14,974.4 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sourcesAirlines is the sum of charter, low cost carriers and schedule or the sum of online and offline salesNote: Table 2 Airlines Online Sales: Value 2014-2019GBP million2014 2015 2016 2017 2018 2019 Air DirectAir IntermediariesAirlines Online5,347.36,263.511,610.85,569.06,664.512,233.56,098.56,981.713,080.26,451.37,391.913,843.26,580.37,697.914,278.2 6,693.67,961.914,655.5 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sources Table 3 Airlines: Passengers Carried 2014-2019‘000 persons2014 2015 2016 2017 2018 2019 CharterLow Cost CarriersScheduled AirlinesAirlines10,710.457,453.927,231.295,395.58,139.566,585.828,089.4102,814.78,299.678,092.028,961.5115,353.18,352.279,759.031,002.9119,114.08,366.481,593.431,529.9121,489.7 8,341.382,817.331,876.8123,035.4 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sources Table 4 Airlines NBO Company Shares: % Value 2015-2019% retail value rspCompany 2015 2016 2017 2018 2019 British Airways PlceasyJet Airline Co LtdRyanair Holdings PlcThomson Airways LtdQatar Airways Group PlcVirgin Atlantic Airways34.116.97.95.93.25.433.416.710.05.53.34.734.216.59.35.23.84.433.617.18.95.04.44.133.117.98.64.84.74.3LtdNorwegian Air UK LtdAir France-KLM Group SADeutsche Lufthansa AGThomas Cook Airlines LtdCathay Pacific Airways1.13.52.82.91.81.43.32.62.71.91.63.12.52.51.82.83.02.42.42.03.22.92.42.42.1LtdEtihad Airways PJSCFlybe LtdWizz Air Hungary LtdJet2.com LtdEmirates Group PlcSingapore Airlines Ltd(SIA)Monarch Airlines Ltd1.71.51.01.11.30.81.81.61.11.21.30.82.01.71.31.21.50.92.01.71.51.51.50.92.11.71.71.61.50.91.61.50.9––British Midland Airways––––– A I R L I N E S I N T H E U N I T E D K I N G D O M P a s s p o r t 4© E u r o m o n i t o r I n t e r n a t i o n a lLtd OthersTotal5.5100.05.2100.05.5100.05.1100.0 4.0100.0 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sources Table 5 Charter Airlines Brands by Key Performance Indicators 2019 LBN (NBO)% AverageAverageNumber ofLoad FactorPrice PerPeople (‘000) Passenger(Localcurrency) Thomas Cook (Thomas Cook Airlines Ltd)Thomson Airways (Thomson Airways Ltd)Others89.893.5–117.8143.8–Total–– 2,994.04,975.0372.38,341.3 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sources Table 6 Low Cost Carriers Airlines Brands by Key Performance Indicators 2019 LBN (NBO)% AverageAverageNumber ofLoad FactorPrice PerPeople (‘000) Passenger(Localcurrency) easyJet (easyJet Airline Co Ltd)Flybe (Flybe Ltd)Jet2 (Jet2.com Ltd)Norwegian Airlines (Norwegian Air UKLtd)Ryanair (Ryanair Holdings Plc)Wizz Air (Wizz Air Hungary Ltd)Others90.271.590.877.473.048.061.9113.790.988.5–57.459.2–Total–– 36,748.05,360.93,958.94,256.922,443.34,257.75,791.782,817.3 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sources Table 7 Scheduled Airlines Brands by Key Performance Indicators 2019 LBN (NBO)% AverageAverageNumber ofLoad FactorPrice PerPeople (‘000) Passenger(Localcurrency) Air France (Air France-KLM Group SA)BA CityFlyer (British Airways Plc)British Airways (British Airways Plc)Cathay Pacific (Cathay Pacific AirwaysLtd)Emirates Airlines (Emirates Group Plc)90.274.281.379.0260.697.3265.9454.81,685.82,307.417,807.1700.378.0229.4974.5 A I R L I N E S I N T H E U N I T E D K I N G D O M P a s s p o r t 5© E u r o m o n i t o r I n t e r n a t i o n a l Etihad Airways (Etihad Airways PJSC)Lufthansa (Deutsche Lufthansa AG)Qatar Airways (Qatar Airways Group Plc)Singapore Airlines (Singapore AirlinesLtd (SIA))Virgin Atlantic (Virgin AtlanticAirways Ltd)Others78.886.680.880.0328.0184.1508.2383.079.7398.4––Total–– 936.91,939.61,388.9369.21,615.82,151.331,876.8 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sources Table 8 Forecast Airlines Sales: Value 2019-2024GBP million2019 2020 2021 2022 2023 2024 CharterLow Cost CarriersScheduled AirlinesAirlines OfflineAirlines OnlineAirlines1,126.05,548.48,300.0319.014,655.514,974.41,115.95,599.18,474.3273.314,916.015,189.31,106.75,678.18,601.4190.115,196.215,386.31,101.15,777.98,696.1185.815,389.215,575.01,097.85,891.38,714.2170.715,532.515,703.3 1,096.76,018.48,680.0154.915,640.115,795.1 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sourcesAirlines is the sum of charter, low cost carriers and schedule or the sum of online and offline salesNote: Table 9 Forecast Airlines Online Sales: Value 2019-2024GBP million2019 2020 2021 2022 2023 2024 Air DirectAir IntermediariesAirlines Online6,693.67,961.914,655.56,789.68,126.414,916.06,862.18,334.115,196.26,989.48,399.815,389.27,099.38,433.315,532.5 7,203.78,436.515,640.1 Source:Euromonitor International from official statistics, trade associations, trade press, company research,trade interviews, trade sources

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