The North American aviation market was adversely affected by economic recession, periods of declining passenger traffic and high oil prices, which resulted in underperformance during 2008-2010, a new report from New York-based search engine Reportlink.com has revealed.
The market’s performance improved in 2011 due to strengthening economic conditions, a rise in corporate travel budgets and capacity discipline. However, rising fuel prices and intense competition continue to negatively impact revenues.
To protect margins, airlines began focusing on ancillary revenues, aligning capacity to meet demand and improve cost structures. These steps are expected to help airlines maintain their profitability over the forecast period despite economic uncertainty.
Improved financial performance will enable airlines to enhance their brand presence and long-term viability through differentiated and consistent customer service, the report said.
According to the United Nations World Tourism Organization (UNWTO), the North American region accounted for the largest number of inbound tourist arrivals in the Americas in 2011.
The region accounted for a 10.3% share of the world’s international visitor arrivals and a 15.9% share of total inbound tourists to the Americas, yet registered nominal growth during the review period, from 107.8 m arrivals in 2007 to 116.9 m in 2011.
According to the report, the total number of seats sold in the North American aviation market declined at a CAGR of 2.56% during the review period, with full-service airlines being most affected. The number of seats sold for full-service airlines declined at a CAGR of 4.83% during the same period.
The North American aviation market recorded high levels of M&A activity during the review period. The merging of Delta and Northwest Airlines in 2008, United and Continental Airlines in 2010 and Southwest and AirTran in 2011 were some of the key deals announced.