Dauntless: Week 1 - current climate

Key Issues and discoveries

Assessing the current climate of budget airlines today and what trends may dictate and change in the future.

From the evidence gathered from the Civil Aviation Authority (CAA), Climate on Climate Change (CCC), Research and Innovation Technology Administration (RITA) and Bureau of Transportation Statistics (BTS).

Average incomes is directly proportional to the demand for air travel
leisure passengers have increases the most by 185%
business passengers have increased the least by 70%
150% increase in avg. income could increase air travel by 200%, but the two main constraints are runway capacity and increasing carbon prices (£200/tCO2)

Larger countries such as USA are highly dependant on air travel with 642 million passengers annually. Projected prices show that the average air fare could reach $1000 by 2050.
Decrease in run-way capacity mean a decrease in supply, and higher incomes will increase demand.

Flybe majority operates in UK, but because of recent trends, they are now extending their services to Europe.
Flybe blames Air Passenger Duty in UK is devastating for its business as other airlines operate a greater proportion outside of the UK pay less.
Flybe pays 18% of its ticket revenues to APD, other airlines pay less than 6%
Domestic flights consist of about 18% of total, whilst flights to Europe are about 60%.
The total passenger share is clear majority of about 60% in the London region.

From the evidence above, it seems the current trend for the future would be that air travel will always increase, no matter what cost cutting measures are in place due to the inherent fundamental costs involved; APD, fuel prices, carbon emissions.

I have some suggestions for possible directions budget airlines may have to venture towards in the near future. APD is the tax which is taken by revenue of the ticket fares. Therefore, I can imagine airlines shifting the costs of air travel from air fares onto compulsory extras as they are currently doing. These extras would be prices for in-flight meals, extra baggage allowance, blankets, headsets etc. which otherwise be a included on standard flights.

For this, a 'trim level' could be purchased along side the ticket fare such as Economy, First class, Business class etc. But with sub categories which may be Economy – basic, standard.

Economically speaking, the future definetly is looking towards more expensive fares. Therefore, I would expect that fliying would become a luxury, and therefore, when they do fly, they would intend to spend a little more as the proportion of cost going to luxuries will be negligible. For example, when prices become so high that it would cost £1500 to fly, airlines would be willing and able to provide better service and products as the cost of those will only be a small percentage of the £1500.

Another view is that air travel for leisure would decrease dramatically, but business travel would still be important. Therefore, air travel for business class may end up becoming more like economy class. What would the challenges be then for these customers?

Estimated average airline fares for the US market in 2050: $548