4Hoteliers
SEARCH
SHARE THIS PAGE
NEWSLETTERS
CONTACT US
SUBMIT CONTENT
ADVERTISING
Airlines: Unprecedented levels of fleet replacement may lead to lower airline ticket prices
Monday, 24th March 2014
Source : KPMG
Airlines worldwide are replacing their ageing fleet at unprecedented levels with capacity expansion may soon outstrip demand and low-cost carriers are expanding their fleet more aggressively than full-service airlines.
 
Increased competition among airlines due to continuing capacity growth may lead to lower airline ticket prices in the coming months and years, according to KPMG's Transport Tracker, a new quarterly publication which looks at the latest market indicators and trends.

Airlines worldwide are currently replacing their ageing fleet at unprecedented levels. According to the report, full-service airlines currently have 5,168 aircraft on order and low-cost carriers 3,582.* Aircraft manufacturers Airbus and Boeing have also published record levels of order backlogs.

At the end of 2013, Airbus had orders for 5,559 aircraft (representing more than eight years of sustained production), and Boeing had 5,080 unfulfilled orders in its backlog.** 

And although airlines continue to carefully manage capacity (with the growth in the number of seats available currently tracking marginally behind passenger demand) *** the capacity expansion (if the order book translates to delivery) may soon outstrip demand:

James Stamp, KPMG's Global Head of Aviation comments: "Airlines around the globe are currently replacing their fleet at unprecedented levels. Much of the order activity by legacy airlines is driven by the desire to cut operating costs. With fuel costs continuing to be at record levels and a new aircraft generation on the market which is up to 20 percent more fuel efficient, this trend should not come as a surprise.
 
"Assuming that the orders are fulfilled, and this is a major if, the increase in capacity, even allowing for replacement of aging fleet, would be significant. In this case, falling operating costs and competition to fill capacity would result in further downward pressure on ticket prices, which would be good news for airline passengers."
 
According to the study, low-cost carriers are expanding their fleet more aggressively than full-service airlines and are now having almost as many aircraft on order as they are currently operating. And while delivery of aircraft for full-service airlines will decline from 2015, deliveries for low-cost carrier are projected to stay at current levels until 2021. This suggests low cost carriers worldwide may further extend their market share.

The report also finds that low-cost carriers continued to outperform full-service airlines in 2013. A look at last year's share price performance showed a rapid divergence in relative performance between low-cost and legacy carriers in April last year, which continued until the end of 2013.
 
Considering the continued regulatory and foreign investment constraints that deter traditional M&A based consolidation in the sector, one of the key trends for 2014 will be further sector consolidation in the form of global alliances (including "equity alliances") and joint ventures, the report predicts.

4Hoteliers Image Library

4Hoteliers Image Library

4Hoteliers Image Library
Katrin Boettger, KPMG Press Office
Katrin.boettger@kpmg.co.uk
Phone/Direct Line: 02078964232
Mobile:07824475168
Tel:  +44 (0) 207 694 8773
 
About KPMG
 
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.
 Latest News  (Click title to read article)




 Latest Articles  (Click title to read)




 Most Read Articles  (Click title to read)




~ Important Notice ~
Articles appearing on 4Hoteliers contain copyright material. They are meant for your personal use and may not be reproduced or redistributed. While 4Hoteliers makes every effort to ensure accuracy, we can not be held responsible for the content nor the views expressed, which may not necessarily be those of either the original author or 4Hoteliers or its agents.
© Copyright 4Hoteliers 2001-2024 ~ unless stated otherwise, all rights reserved.
You can read more about 4Hoteliers and our company here
Use of this web site is subject to our
terms & conditions of service and privacy policy