January 2010 | Looking forward to what will be another challenging year for the airline industry, here are 10 quote that sum up what’s on the horizon for 2010. From increased awareness of security to legacy-low cost convergence, the real-time web and business as unusual.
1. The State of the Airline Industry. “Following a decline of 4.1% in 2009, passenger traffic is expected to grow by 4.5% in 2010. A total of 2.28 billion people are expected to fly in 2010. Industry revenues are expected to rise 4.9% to USD478 billion in 2010. However, revenues remain 11% below the peak of USD535 billion in 2008 and 6% below 2007 when passenger traffic was at similar levels to what is expected in 2010. Airlines will remain firmly in the red in 2010 with USD5.6 billion in losses. In 2009, passenger yields plummeted by 12% (the world’s airlines will lose USD11.0 billion in 2009) […] and are not expected to improve. This is being driven by two factors: excess capacity in the market and reduced corporate travel budgets. […] For 2010, some key statistics are moving in the right direction. Demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs by 1.3%. But fuel costs are rising and yields are a continuing disaster. […] The industry is structurally out of balance. The precipitous fall in yields will likely never be fully recovered” (IATA Industrial Forecast 2010).
2. Economic Growth in 2010. “Economic growth has been stimulated by government programmes and central bank action aimed at boosting domestic spending. The revival of world trade and cross-border transactions has been slower than in past recovery phases. As a result business travel has not rebounded from recession as vigorously as in previous cycles. It has turned up in the past few months but remains 16% or so below early 2008 levels. Moreover, forecasts for world trade growth in 2010 are around 5% or lower suggesting that it could take several years before premium passenger numbers regain their early 2008 levels” (IATA Industrial Outlook 2010).
3. Security. “Just when it looked like the skies were smoothing out for air travelers, the Pants Bomber ignited more turbulence. […] Now security hassles are back in force, throwing airlines’ economic recovery into doubt. For airlines, long lines and invasive searches can drive customers away. For passengers, travel has suddenly become more unpredictable and less efficient. You have to arrive at the airport earlier, particularly for international trips, and long delays are more likely. […] It’s clear after several attacks that terrorists prefer to carry explosives on their bodies rather than in their bags. The reason is obvious: The bag gets X-rayed and the body doesn’t.” – Scott McCartney: ‘A Flier’s Wish List for 2010 (in Wall Street Journal).
4. Reading the Fine Print. “The recession has created a broad class of consumers who are willing to put real time and energy into their purchases. In the next year, watch for this reading of the fine print, to extend beyond securing the best values to learning more about nutrition, environmental impact and ethical business practices. What’s driving this trend are a few factors: First, today’s consumers have grown more skeptical and distrustful in an era when big institutions from Wall Street to China’s dairy producers have failed them; they’re growing more apt to question claims, scrutinize labels, conduct online research or consult friends. Second, ailing service industries like banks and airlines are imposing a complex raft of fees and conditions on customers; failure to pay close attention can be costly. Third, advocacy groups are urging consumers to avoid an array of offending products or ingredients. And fourth, consumers are overloaded with more products and more information than ever, from calorie counts to carbon emissions to everything in between.” – Ann Mack, director of trendspotting at JWT (in Media Life Magazine).
5. Legacy-LCC Convergence. “There is only one major trend in the airline industry today—survival. […] Most product innovation has been frozen. […] And we’re seeing traditional airlines restructure and streamline operations to further reduce expenses. In this way they’re becoming more similar to the low-cost carriers, which until now have enjoyed growth at the expense of the larger airlines. However, the passenger benefits provided by major carriers remain largely intact, making them a more attractive choice for many travelers. – Peter Knapp, creative director Landor (in Landor’s 2010 Trends Forecast).
6. Airline Subscriptions. “United’s new USD249 annual fee for checked luggage locks in flyers and streamlines the check-in procedure. With profits down across the industry, expect other airlines to follow suit. Lounges, food and concierge services could all become subscription benefits” (JWT’s 100 Things to Watch in 2010).
7. Rise of the Real-time Web. “In the still rapidly expanding online world, instant gratification is even easier to obtain: ‘Digital’ has become synonymous with ‘instant,’ ” says Reinier Evers of the trend tracking site trendwatching.com. With nearly half of U.S. adults using social networking sites, expect more time-sensitive ‘flash sales’ offered via Facebook or Twitter, more real-time postings of travel experiences, and faster response from companies and institutions fearful that negative opinions will go viral.” – ‘The top ten travel trends for 2010’ (in USA Today).
8. Techie Travelling. Forget about switching off when you travel: we now expect to be able to connect to anyone, anywhere, at any time. Connectivity on planes will be the next big thing. iPhone apps are also proliferating — you can download one that predicts flight delays (flightcaster.com) and even use Twitter to call a London cab (greentomatocars.com). – ‘Top travel trends for 2010’ (in BA High Life Magazine).
8. Appetite for Apps. Thanks to a global rollout of high-speed data networks and robust sales of GPS-enabled smartphones, look for an explosion of travel-related apps for everything from airport security (On the Spot System’s new iPhone app lets users rate TSA screening checkpoints) to ordering hotel room service before you check in (just-released apps for Hilton, Embassy Suites and Doubletree).”Traditional travel services will meet geo-location and social networking to make travelers’ lives easier,” predicts Alan Warms of review site Appolicious.com. – ‘The top ten travel trends for 2010’ (in USA Today)
9. New Age Travellers. Travel, rather than gardening, is what baby boomers worldwide are looking forward to in retirement. Tours, particularly historical and health packages, are being tailored to suit older explorers. Singles are the other big group to watch. Expect special lone travellers solutions through 2010, from single-parent holidays to packages without single supplements and more glam solo travel. – ‘Top travel trends for 2010’ (in BA High Life Magazine).
10. Business as Unusual. This year, prepare for ‘business as unusual’. For the first time, there’s a global understanding, if not a feeling of urgency that sustainability, in every possible meaning of the word, is the only way forward. How that should or shouldn’t impact consumer societies is of course still part of a raging debate, but at least there is a debate. Meanwhile, in mature consumer societies, companies will have to do more than just embrace the notion of being a good corporate citizen. To truly prosper, they will have to ‘move with the culture’. This may mean displaying greater transparency and honesty, or having conversations as opposed to one-way advertising, or championing collaboration instead of an us-them mentality. Or, it could be intrinsically about generosity versus greed, or being a bit edgy and daring as opposed to safe and bland. – trendwatching.com’s ‘10 crucial consumer trends for 2010’