Some insights into the current and future economic state of airlines

High fuel prices and stretched balance sheets but more people than ever are flying. Here are some insights into the current and future economic state of airlines.

View from the Heathrow Airport (London) Observation Desk
View from the Heathrow Airport (London) Observation Desk

Industry-wide revenue passenger kilometres (RPKs) have more than doubled in the last decade,

airline business cycle growth

And there is a lot of potential for growth,

airline trip frequency by country

India and Indonesia are set to grow the most for aviation in the next two decades,

top 10 airline markets

But yields are falling,

airline yields

As oil prices rise,

Oil and Jet fuel prices 2011 to 2018

The biggest markets for International air travel by continent and country are not what you think,

International air traffic by continent International air traffic by country

Long term, airlines have only been profitable in the past decade after years of losses,

Global airline industry financial performance

Ancillary revenues for airlines are growing at a rapid pace,

airline revenue breakup tickets cargo and ancillaries

Airline cost varies across different key markets and continents,

airlines key cost by region

Passenger demand is continuing to trend upwards in seasonally adjusted terms at a slightly faster rate than capacity,

airline passenger and cargo volumes airline passenger and cargo capacity

Fuel prices (and slightly excessive short-term capacity) is squeezing airlines currently. The final airline financial data for Q2 2018 confirm the decline in profitability compared with the performance of a year ago. The EBIT margin for our sample of 99 airlines dipped to 7.8% in Q2 2018, from 10.3% a year ago while net post-tax profits are around $2.3bn lower.

The dip in EBIT margin is broad-based, across all regions, as airlines confront ongoing increases in several key input costs. The largest impact on industry-wide profits is coming from North America and the Asia Pacific, although the EBIT margin of airlines in the former region remains robust.

Airlines Q2 results

Finally, here are multi-year statistics,

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