Predicting what will happen to the airline industry in 2011 and beyond is, as always, a hazardous task.
As the second decade of the 21st century begins, a whole new scenario presents itself for the airline industry. Much of that is the result of developments in the past decade and particularly since 2008 – not, as might be expected, due to economic conditions – but because there has been a substantial structural shift across the industry. As a foundation year for the second decade of this century, 2010 was, even by aviation standards, a watershed. In these developments lie the seeds for what will shape the industry in 2011.
2010 was the year global alliances entrenched their market position, led by the largest of the European and US flag carriers. Coincidentally – or not – 2010 was also the year the established national flag carriers coalesced in their recognition of the long- term threat posed by the Middle East airlines and acted to prevent it. 2009 had marked a turning point in aviation, as intra-Asian passenger traffic overtook the US as the largest in the world. The rapid recovery in Asia in 2010 has pointed the way to the region becoming the dominant market over the next 20 years, with a resurgent China heading a boom in air travel.
Analyzing these reports market researchers predict that over the next 8-10 years, Asian aviation, along with the next-generation airlines of the Middle East, will occupy a much greater part of the limelight, as well as taking on new influence in shaping industry outcomes. That is where the growth will occur. More than one third of all current aircraft orders and more than half the wide body orders are from Asia and the Middle East and most of the high-growth passenger demand originates there.
The Euro-American driven mega- developments also exclude the growing presence globally of low-cost airlines, new entrants or non-flag carriers. Their influence has been fundamental to the changes wrought on the industry, particularly in North America and Europe. As similar entry has occurred across the world – their common link a fixation on low-cost, low-frills, point-to-point operation – many variants have appeared, just as their influence on events has varied.
As always the need for flexibility and innovation will define the winners and losers. But like mushrooms thrusting through concrete, it is these outsiders who will be the drivers of airline industry in 2011.