What’s Ahead For Airlines And Aviation In 2019

Forbes’ expert aviation contributors see change in the air next year. From airline M&A to advances in technologies that will change the passenger experience to a slowdown in the torrent of outbound Chinese travel, here are their predictions for 2019.

THE BIG TREND: Declining profitability, at least for the U.S. carriers. As the economy slows, it will be hard for demand to keep up with rising capacity and costs.

WHAT TO WATCH: Amazon’s expansion into the aviation space. By the end of 2019, Amazon’s Prime logistics will have all the pieces of a major integrator, like UPS and FedEx (5th largest fleet in the world?): aircraft, distribution centers, last mile delivery, scalable IT platform and customer contact.

THE UNCONVENTIONAL WISDOM: Passengers want biometrics. Biometrics help tighten security and can be used to speed immigration, but it will be several more years before biometrics are consistently able to speed passenger boarding. And overhead bins will still be the constraint.

THE BIG TREND: Distribution of airline tickets will actually start to experience the upheaval everyone has predicted for years as direct connects build volume and a technology called the New Distribution Capability (NDC) becomes a reality.

THE UNCONVENTIONAL WISDOM: As segmentation (e.g. basic economy) and new products (premium economy) penetrate most of the U.S. airline industry, the noise around overcrowding on airplanes and related topics will begin to slow down

THE MISPLACED ASSUMPTION: That fuel prices will drive airline profitability. Actually it will be demand – the economy – that determines airlines’ fate.

A BOLD PREDICTION: We will see one, or possibly even two airline mergers in the U.S. in 2019. Most likely would be an ULCC tie up (two out of Frontier, Spirit, Allegiant) with the less likely being a combination between two of: Jet Blue, Alaska and Hawaiian.

THE BIG TREND: Stability and growth for the airline industry. It’s just about all good news, with financial and operational stability — at least through the end of the third quarter. There are no material outside shocks expected. Oil will likely stay under $70-$80. Labor costs will go up, but they can be absorbed.

WHAT TO WATCH:  The ULCC model is providing air travel as a spend-choice competing with other uses of discretionary dollars. Mostly, it is not focused on core travel demand. Therefore, any material shifts in levels of discretionary spending could hit this segment first – and that includes spikes in such spending.

 

Source: https://www.forbes.com/sites/jeremybogaisky/2018/12/26/whats-ahead-for-airlines-and-aviation-in-2019/#196b916b2d17

 

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