The Airline Industry: Trends, Challenges, Strategies
THE AIRLINE INDUSTRY: Trends, Challenges, Strategies
John Wensveen, Ph.D.
Dean, School of Aviation Dowling College New York, USA www.dowling.edu President, Airline Visions www.airlinevisions.com
The University of Sydney Faculty of Economics and Business Leadership and Policy Seminar Series Sydney, Australia 23 February 2010
Presentation Objectives
• Provide background on the global industry • Present a regional analysis • Discuss current and future evolvement of the industry (trends) • Discuss challenges and strategies impacting the industry • Discuss the new breed of airlines • Discuss why airlines fail and how to achieve success
Background Section
3 Stages of Development Impacting the Airline Industry
• • • • Regulation Liberalization Deregulation “Re-regulation”
Phases of Industry Restructuring (resulting from Deregulation / Liberalization)
• Expansion • Consolidation • Concentration
Past, Present and Future Trends
The Global Airline Industry
2012 2010 2008 Time 2006 2004 2002 2000 1998 Survive Adapt Recover Rethink State of Industry
“Scenarios”
• • • • • SARS 9/11 War Financial Crisis of 2008, 2009, 2010… What to prepare for…
– – – – Globalization Change in international political landscape Distribution of natural resources (oil, gas, water) Internal conflicts (shifts in power) and unintended consequences and unintended consequences of good intentions Public and international perception War Terrorism Continued financial issues
– – – –
Top 5 Frustrations in Aviation
1. 2. 3. 4. 5. Fuel/oil Pollution control Personnel cutbacks Global economic woes Recurring safety lapses
Top 3 Costs for Airlines (in any order)
1. Fuel* 2. Labor 3. Maintenance
*40% for US airlines in 2009: 13-40% of costs in 7 years
Typical Airline Operating Expenses
Landing & Associated Airport Charges (4.1%) Depreciation & Amortization (7%) Enroute Facility Charges (2.4%) Station Expenses (10.8%) Passenger Services (10.5%) Maintenance &
John Wensveen, Ph.D.
Dean, School of Aviation Dowling College New York, USA www.dowling.edu President, Airline Visions www.airlinevisions.com
The University of Sydney Faculty of Economics and Business Leadership and Policy Seminar Series Sydney, Australia 23 February 2010
Presentation Objectives
• Provide background on the global industry • Present a regional analysis • Discuss current and future evolvement of the industry (trends) • Discuss challenges and strategies impacting the industry • Discuss the new breed of airlines • Discuss why airlines fail and how to achieve success
Background Section
3 Stages of Development Impacting the Airline Industry
• • • • Regulation Liberalization Deregulation “Re-regulation”
Phases of Industry Restructuring (resulting from Deregulation / Liberalization)
• Expansion • Consolidation • Concentration
Past, Present and Future Trends
The Global Airline Industry
2012 2010 2008 Time 2006 2004 2002 2000 1998 Survive Adapt Recover Rethink State of Industry
“Scenarios”
• • • • • SARS 9/11 War Financial Crisis of 2008, 2009, 2010… What to prepare for…
– – – – Globalization Change in international political landscape Distribution of natural resources (oil, gas, water) Internal conflicts (shifts in power) and unintended consequences and unintended consequences of good intentions Public and international perception War Terrorism Continued financial issues
– – – –
Top 5 Frustrations in Aviation
1. 2. 3. 4. 5. Fuel/oil Pollution control Personnel cutbacks Global economic woes Recurring safety lapses
Top 3 Costs for Airlines (in any order)
1. Fuel* 2. Labor 3. Maintenance
*40% for US airlines in 2009: 13-40% of costs in 7 years
Typical Airline Operating Expenses
Landing & Associated Airport Charges (4.1%) Depreciation & Amortization (7%) Enroute Facility Charges (2.4%) Station Expenses (10.8%) Passenger Services (10.5%) Maintenance &