Full Service Carrier Market Comparative Analysis by Leading Key Players: American Airlines, Delta Airlines, United Airlines, British Airways, Emirates, Lufthansa and Many More

Market Highlights:

Full service carriers (FSCs) are mostly based on 'hub-and-spoke' business model and have major airports as their hub. In the full-service airlines segment, there isn’t much space to bring in vast changes apart from differentiating on in-flight services, as most airlines want to keep their costs low. With the entry of new challengers and excessive competition from LCCs, the FSCs are thus aggressively introducing new loyalty rewards programs to woo and retain frequent flyers. In the situation where the price and service differentiation between FSCs and LCCs is narrowing, the FSCS are introducing new services as a key differentiator.

For example, in India, as the LCCs compete primarily on costs and fares, the FSCs differentiate their loyalty programmes. The signs are clearly visible as Jet Airways (a major FSC from India), looking to protect its base, tweaked its frequent flyer programme in 2015. Under the new scheme, customers are allowed collect points and upgrade to a higher tier of the loyalty programme based on the value of the ticket they buy as well as the distance and frequency of travel. Earlier, accumulation of points was only linked to the miles travelled, irrespective of ticket price. The new tier point structure allows members to earn more tier points per flight, thus accelerating the time taken to upgrade to the higher tier.

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Industry/ Innovation/ Related News:
April, 2018: Tata Vistara a full service carrier received its 20th aircraft to fly overseas.
April 2018: Full-service carrier Jet Airways signed an agreement with Boeing to purchase 75 B-737 Max aircraft.

Major Key Players

American Airlines (U.S.),
China Eastern Airlines (China),
China Southern Airlines (China),
Delta Airlines (U.S.),
United Airlines (U.S.),
Air China (China),
All Nippon Airways (Japan),
British Airways (England),
China Eastern Airlines (China),
Emirates (UAE),
Lufthansa (Germany), and Turkish Airlines (Turkey).

The global full service carrier market is estimated to witness a CAGR of more than 5% during the forecast period.

FSCs have to introduce such reward programs to protect their existing base of passengers, mainly the business travelers, from switching to other FSCs or LCCs. Frequent business travellers are an airline's delight. They pay up to 300% more than the lowest fares offered for advance purchases and over 10 times the average fare for business class seats. In other words, they are the backbone of an industry that struggles to make money. Most passengers would want nothing more than airlines to be on time and offer a hassle-free, clean service. The expectations of frequent travellers are markedly higher. Even on flights of two hours or more, they wouldn't mind paying a premium for extra legroom, the comfort of an airport lounge, accumulation of air miles and tasty food. A decent in-flight entertainment is a must.

With the rise in demand for air travel from emerging regions, such as Asia and South America, FSCs are expanding their market reach by increasing aircraft fleet and flying new routes. Also, FSCs are forming strategic airline alliances to obtain cost benefits and advantages through code share agreements among others.

However, the market faces certain challenges, such as a shortage of slots at the major airports, high fuel costs, and economic uncertainty that adversely affect the highly competitive low-margin business of FSCs. Also, with the narrowing of the gap between LCCs and FSCs, in terms of operations and services, LCCs are bound to compete directly with FSCs on several air routes. FSCs also need to be cautious about their expansion plans to maintain lean business and operating models, thus allowing them to be efficient and competitive in the market.

As per the market estimates, APAC will likely have an annual average growth of 6.3% in passenger traffic for the next 20 years. It is estimated that almost 50% of global air passenger traffic over the next 20 years will originate from APAC. APAC will likely account for the most air passenger traffic by 2035, overtaking North America and Europe. In 2014, APAC accounted for about 34% of the global air passengers. The region has witnessed one of the highest growth rates in the global aviation industry and will likely drive the industry for the next two decades, as demand becomes saturated in mature markets such as Europe and North America. With a population of more than four billion people, APAC is home to 60% of the global population. Growth in GDP and increasing purchasing power in the region, mainly fuelled by emerging countries such as China and India, contribute to an increased demand for air travel.

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Regional Analysis
As per the market estimates, APAC will likely have an annual average growth of 6.3% in passenger traffic for the next 20 years. It is estimated that almost 50% of global air passenger traffic over the next 20 years will originate from APAC. APAC will likely account for the most air passenger traffic by 2035, overtaking North America and Europe. In 2014, APAC accounted for about 34% of the global air passengers. The region has witnessed one of the highest growth rates in the global aviation industry and will likely drive the industry for the next two decades, as demand becomes saturated in mature markets such as Europe and North America. With a population of more than four billion people, APAC is home to 60% of the global population. Growth in GDP and increasing purchasing power in the region, mainly fuelled by emerging countries such as China and India, contribute to an increased demand for air travel. Meanwhile, other East Asian countries have also witnessed rapid growth in air traffic; they are thus lucrative markets for full service carriers.

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