Flying High International Airlines In

Los Angeles, CA July 31, 2012

The International Airlines industry has experienced its share of ups and downs during the past five years. Between 2007 and 2008, airlines experienced sustained growth on the back of rising air travel rates. In 2009, though, international airlines experienced one of their worst years, with revenue dropping 20.6%, pressured by a collapse in demand, capacity cuts and plummeting prices. ?Fortunately, airlines were able to turn the corner in 2010 and 2011, thanks to hefty cost-cutting measures and an increase in travel demand,? says IBISWorld industry analyst Nima Samadi. Because of the roller-coaster performance, he estimates revenue will grow at an annualized rate of 0.8% to $ 55.7 billion over the five years to 2012. During 2012, operators will increase capacity slowly as travel demand continues to recover. As a result, industry revenue is estimated to grow 5.0% in 2012.

International Airlines industry concentration has risen to a high level during the past five years. ?Over the period, poor profitability and rising competition have forced some airlines out of business, leading to industry consolidation and falling participation,? explains Samadi. In November 2011, American Airlines filed for bankruptcy protection. A high-profile merger occurred between Delta Air Lines and Northwest in 2008, leading to the creation of the world's largest airline at the time. But in 2010, United Airlines and Continental Airlines merged, placing United Continental Holdings above Delta as the world's largest airline. Over the five years to 2012, the number of firms is estimated to decline an average 0.8% per year to 172, with industry employment also falling 1.5% per year on average to 96,310. The industry?s high level of concentration implies little scope for new entrants into the industry. Possible entries include companies servicing niche markets and to a certain extent competing with the majors.

Open skies agreements and international tourists coming to the United States will aid demand for industry services over the next five years. These tourists are the industry's major driver and will be encouraged by further cyclical depreciation of the US dollar. Future profit will largely depend on volatile fuel prices, an airline's ability to successfully hedge against their movement and increases in the cost of greenhouse gas emissions. New fuel-efficient aircraft will aid this cause and increase operator competitiveness in the global market. For more information, visit IBISWorld?s International Airlines in the US industry report page.

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IBISWorld industry Report Key Topics

The International Airlines industry provides air transportation of passengers and cargo over regular routes and on schedules. These services include any flights that either end or originate internationally. Scheduled air passenger carriers, including commuter and helicopter carriers (except scenic and sightseeing), are included in this industry. Airlines that provide scheduled international air transportation of mail on a contract basis are also included in this industry.

Industry Performance

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Products & Markets

Supply Chain

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Globalization & Trade

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Market Share Concentration

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Cost Structure Benchmarks

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Major Companies

Operating Conditions

Capital Intensity

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About IBISWorld Inc.

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