5 aviation predictions for 2018
2018 is at the beginning, and the aviation industry is dynamic and ever-changing. Nigel Mayes, senior vice president, consulting & product development at ASM, wrote several predictions for aviation for 2018.
We don't know what 2018 is reserving for us yet, though Nigel Mayes makes 5 forecasts on the aviation market, from mergers to the emergence of new airlines.
1. Consolidations in the European market
2017 also brought two historic bankruptcies - Monarch Airlines and Air Berlin / Niki. This while the big low-cost players, among them RYANAIR and easyJet, have consolidated their positions in the European market. The low price of fuel has helped keep prices low on air tickets, while profit margins are lower.
The market in Europe remains fragmented, and the airlines in a continuous competition. The first 5 airline operators (by capacity) in Europe have a market share of 29.8%. While the first 5 operators in the United States have 71.5% of the market.
What to expect in 2018 on the European market? We expect new airline alliances, mergers, joint ventures and maybe even bankruptcy of some airlines. In a competitive market, some will grow and consolidate their position in Europe, others will go bankrupt.
2. A huge merger
Over the past 10 years, the airline industry has experienced a number of major mergers, particularly in North America. Here we mention Delta-Northwest, United-Continental and American-US Airways. Who's next?
He stays in North America, and Nigel Mayes predicts the merger between Spirit and Frontier. It is possible that the merger will result in the 4 the largest air operator in the region.
It's to be followed, too norwegian, which has great plans for the future. It has launched an expansion on long-haul flights and is even planning to start operations in Argentina. In 2017 it has entered into an agreement with easyJet to increase the passenger collection area through the common hubs.
We expect that in Europe we will also witness a mammoth merger between 2 low-cost or low-cost operators and full service. Remains to be seen!
3. Emirates targets single-aisle aircraft
2018 could be the turning year for Emirates. The large Arab carrier has a fleet of 269 widebody, A380 and B777 aircraft. Other 246 aircraft are custom made, including 40 Boeing 787-10 Dreamliner aircraft. He recently even signed an agreement for another 36 of A380 aircraft.
During this time, the company began to record decreases in profit. During the 2016-2017 period, profit fell by 82%, to 340 million dollars. This is also due to the low degree of loading of the aircraft, which decreased to 75.1%.
Thus, it is possible for Emirates to merge with FlyDubai, the 2 airlines being state-owned and currently having multiple codeshare agreements on multiple routes. Currently, FlyDubai flies to smaller, secondary airports, while Emirates flies to large, major, multiple connections airports. So the 2 are complete!
At the same time, Emirates has considered ordering Boeing 737 MAX or A320neo aircraft. Internal sources say that Emirates is beginning to suffer financially after these years of expansion. He has flown with A380 to many destinations in Europe, Asia, the United States, even in the Middle East. We remind you that it works shortest flight with A380, on the Dubai - Kuwait route. And these flights have a satisfactory degree of loading, but not good. There is a need for narrow-body aircraft.
4. More low-cost companies
While the Ryanair, Norwegian, WOW Air, Wizz Air, easyJet (plus many other low-cost companies) have continued to aggressively develop their networks, other new companies have made their debut in the aeronautical market.
LEVEL, a low-cost long-haul flight from the IAG group, started flying in June, launching its base in Barcelona, and in November it opened its base in Paris Orly.
Joon, the low-cost subsidiary Air France, was launched in December. Westjet subsidiary, on her behalf Swoop, was announced in September 2017, but will operate flights starting June 2018. Let's not forget about flyBondi, the first low-cost company in Argentina.
Don't imagine everything is pink on the low-cost market, but there are many LCC airlines that have proven that they can. Some examples globally: Scoot (Singapore Airline), Jetstar (Qantas) and Eurowings (Lufthansa). To succeed, a low-cost operator must be really low-cost. Do not lie to passengers with names.
5. Next generation in airlines
The next level in aviation is very much about digitalization, computer technology. The technology will help to optimize operations and reduce costs, while increasing the quality of services.
Many airlines, which have inherited rudimentary systems, will need time to keep up with the latest technology.
Will we see new airlines built around tech businesses that know how to unite people?
Amazon Air / Prime Air is the airline developed by Amazon to carry its cargo. It is a big loss for the specialized courier companies and for the specialized freight airlines. They lost a great customer.
Amazon plans to invest 1.5 billion to develop a hub at Cincinnati / Northern Kentucky International Airport.
As you can see, an exciting 2018 year awaits us in the world of commercial aviation. At the national level, we don't have much to say. We expect new routes to be announced and eventually to see new air carriers on the Romanian market. As you know, 2018 will bring the first direct routes between Romania and Canada.
What aviation predictions do you have for 2018?