Monday, July 09, 2007

The Airline Industry - Economist Style

Interesting little podcast here from the Economist speaking to Paul Markillie the author of their recent report on the aviation industry.

Couple of points from the interview
  • On the whole the industry is carrying $200 billion dollars in debt;
  • It was a fantastic year for turnover with more than $473 billion in revenues however this generated only a a profit of $5billion for a net margin <1%;
  • Continues the hype build up on the Beoing Dreamliner on fuel efficiency and the supposed increased consumer comfort from the carbon fibre hull;
  • Asian aviation market will be bigger than US domestic by 2010; and
  • The airline industry is unique in that it is a mature industry but no one carrier owns more than a few percentage points of the market. This is of course caused by the the obsession of nations to restrict ownership and consolidation. As Markville notes
"as the result you have an industry that brought the world globalisation but has been unable to globalise".
What a staggering industry. Such a critical part of the model world, employs so many people, pays such high salaries for executives and generates so much for the media industry through advertising revenues, yet is such an inefficient and poorly structured industry.

Worth eight and half minutes of your time if you enjoy tracking the airline industry

1 comment:

Anonymous said...

Transparency of the internet has allowed some to reverse engineer the Revenue Management systems they use.
Smart guys like Oren Etzioni, have been exploiting this transparency for a while. His first projects metacrawler, mysimon and now farecast. Notice that they even offer fare insurance... so they must be confident...

In short I believe it will get tougher