#3 Industry Analysis
Global Airline Size
The 2013 global passenger airline industry is estimated to be a $539 billion industry with an additional $68 billion generated by these same firms through cargo transport9. The key measure of units for the industry is expressed as revenue passenger kilometer or RPK. This is defined as the actual kilometers flown by revenue paying passengers 10 and is estimated to be approximately 5.6 trillion for 20136. A final primary measure of the industry size is scheduled number of passengers. This is forecasted to be 3.1 billion9. These passengers are carried through more than 2000 airlines utilizing over 23,000 aircraft to complete more than 28 million flights to over 3700 locations 9. Global Airline Performance and Growth
The industry will transform this $539 billion into $22.3 billion of operating profit (3.3%) and $10.6 billion in net profit (1.6%)9. An additional measure of efficiency performance is passenger load factor or PLF. This is the measure of % of available seats used (in kilometers). The 2012 global PLF was 79.1% which is a result of a continued steady improvement in efficiency for the past five years (2008 = 75.0%)2. The industry has grown steadily in RPK at a CAGR of 4.7% over the past 20 years6 and 5.1% over the past five years9. As population, air travel per capita and globalization continues, the industry is forecasted to double in RPK over the next 15 years 6,8. Total revenue growth for the past 10 years has been steady at 7.6%, outpacing general GDP, while net profits are highly varied year over year, ranging from net losses to returns of 4.0%9. The most significant drivers to profitability are cost side elements and specifically jet fuel costs. As industry has become both more efficient in general costs and more effective at hedging variable fuel...
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