Transportation & Logistics

The global aviation industry consumes over 200 million tons of fuel per year. The rising demand for air transport and the rising crude oil prices could impact the industry’s carbon emissions. The environmental impact could also influence sustainability.

Technological advancement has been the driving factor for improving airlines’ operational efficiency. Airlines have been able to reduce costs and improve operations by using advanced aircraft engine technology, IT solutions, and mobile technology. The technology has created better connectivity and enhanced passengers’ travel experience.

The Boston Consulting Group researched the millennial generation’s travel preferences in the business and leisure segment. This will provide a better understanding of how social and demographic factors influence air travel. It will also show how the factors influence company strategies to adopt to the changing trends.

Categorizing generations in the U.S. according to the year of birth provides insight into the changing trends in the travel and tourism industry. The demand for air travel has increased significantly over the years. Demographic factors also play an important role in forecasting demand.

Like most industries, the airline industry is impacted by the economic cycle’s peaks and troughs. The current growth in developed economies—like U.S.—has resulted in a rise in business confidence, industrial production, and international trade.

Higher aircraft utilization will result in lower fixed costs per unit, as the costs spread across more air trips and passengers and results in lower cost per available seat mile.

JetBlue Airways’ (JBLU) operating revenue has increased at a four-year compounded annual growth rate (or CAGR) of 13.4%, driven primarily by the growth in passenger revenue.

JetBlue has almost equal share in Florida, Latin America, and the transcontinental region which together accounted for about 87% of JetBlue’s total capacity.

JetBlue (JBLU) operates a hybrid business model that caters to the niche market comprising customers that it defines as “underserved customers.”

JetBlue Airways Corporation is the fifth largest passenger carrier in the U.S. based on revenue passenger miles.

Over the last decade, with increasing mergers and consolidation in the U.S. airline industry and reduced competition, air fares were expected to increase dramatically.

LCCs don’t offer all services provided by a legacy carriers like free meals and drinks.

Southwest was instrumental in revolutionizing the industry with a differentiated business model.

American’s number one position, in terms of revenue share as shown in the following chart, was replaced by United.

United has partnered with Aviation Partners Boeing (APB) to launch the Split Scimitar winglet. The new winglet is expected to save more than 45,000 gallons of fuel per aircraft per year.

Under United’s MileagePlus program, members earn mileage credits for flights on United, United Express, airlines in Star Alliance, and other airlines that participate in the program.

Frequent-flyer programs are incentives given to customers by airlines to increase customer loyalty by awarding free miles on tickets purchased.

A comparison of the fleet sizes of Delta Air Lines with its competitors reveals that American Airlines group (AAL) has overtaken Delta (DAL) and United (UAL).

Delta (DAL) has outperformed its peers in terms of margins continuously for the past four years, followed by Southwest Airlines (LUV), American Airlines (AAL), and United Continental (UAL).

Delta’s Operating revenue grew at a five-year CAGR (compound annual growth rate) of 6.1% from 2009 to 2013, mainly driven by a 6% growth in passenger mile yield, a 0.6% growth in RPM, and a load factor of more than 80%.

Delta leads in many corporate surveys for customer satisfaction. These surveys help companies track their performance and take corrective steps when required.