The aviation industry has seen a massive increase in recent years, with people flying now more than ever. But, like with all industries, it is sensitive to the ups and downs of the economy. So, airlines are increasingly finding themselves embracing a more financially driven corporate culture. Below are 5 key trends that will shape commercial airliners.
Capacity Management- With the objective of increasing the profitability per passenger, airlines will invest in right-sized aircraft based on market demands. Overcapacity reduces per-passenger yields. While serving a lot of passengers in one-go sounds attractive, filling seats on larger aircraft usually means selling aircraft seats at extremely discounted rates, leading to low-profit margins.
Intra-regional Routes- Intra-regional travel dominates the market and represents 80% of global air travel in 2016. But, they’re currently being serviced by older fleets and forfeiting potential per-passenger profits. By servicing these popular routes better accommodations, airliners can charge more per passenger, increasing profit margins.
Smaller Aircraft- Smaller aircraft are the key to unlocking new routes. There are many areas with vast potential for growth but have been ignored in favor of larger metropolitan hubs and coasts. For example, South Asian can develop new routes from 650 in 2006 to over 1,200 by 2026, tapping into new markets. It’s cheaper to maintain and service smaller aircraft, not to mention, they’re easier to fill.
Prioritizing Profit Per Passenger- Airline profitability will increase by prioritizing profit-per-passenger over cost-per-seat. Congestion and a focus on cost-per-seat generally leads to poor passenger experiences which leads to overall low-profit margins. Using right-sized aircraft will offer better pitch and seat width, allowing airliners to charge sustainable fares for improved and increased services.
Fleet Replacement- Replacing aging fleets with more modern, fuel-efficient, and right-sized aircraft will help airlines plan for long-term profitability. Fuel efficiency saves money as is, but right-sized aircraft will also allow airliners to penetrate the 100 to 150 seat segment.
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