Air travel is one of the largest rapidly growing industries. It is central to the globalization process and plays an important role in the development of many industries all over the world. It has a major task in facilitating world trade, economic growth, international investments and most importantly, tourism.
In the last decade, the airline industry has grown by 7%. Business and pleasure trips have increased in exponential measures over this period. The availability of large aircraft has made it possible and affordable for tourists to travel to newer locations for vacations. Most, official air carriers of countries have reported the figure of over one and a half billion passengers last year, owing to a spurt in business and tourism.
*Tourism & Aviation Goes Hand In Hand
The governments in developing countries are fast realizing the potential of the tourism industry and the impact it can have on the economy of the country. Budgetary allocations for developing infrastructure and construction of more resorts and hotels have been increased in an effort to attract more tourists. The past few years has also seen a tremendous increase in business travel category as more and more companies are looking to tap global markets. Industries are increasingly becoming international in terms of their investments. With the rapid strides being made in the internet technology, it is now possible to attract customers all over the world. The phenomenal growth of world trade in goods and services is the chief cause of proliferation in business travel category.
The profitability of airlines is closely linked to economic growth and increase in trade quantum. The industry has faced enormous problems due to recent world recession. Over-ordering by companies resulted in problems of excess capacity. Since then many prudent economic measures have been implemented to improve the bottom line and sustain growth.
*Passengers Are The Beneficiaries Of Cut-Throat Competition
Major airlines have projected a growth average of 5 to 6 per cent over the next ten years. Studies show that the main air travel market of the future will be between Europe, North America and Asia. To meet the growing demands of passengers, companies all over the world find it necessary to invest in improving quality of service both on the ground and in the air. Gourmet menu, timely take off and arrivals, plush comfortable seats and convenience in ticket booking procedures are some of the areas that have seen major improvements. There are more flights at convenient hours to popular destinations. In-flight entertainment services have undergone a complete makeover, as companies vie with each other to increase their load factor.
The United States is the single largest market accounting for about 35 per cent of the revenue and more than 40 per cent of the total passengers. Allowing the aviation industry to operate under market forces has come as a shot in the arm for the ailing industry. The deregulation acts, which allow entry of private business houses to compete in this industry, the freedom to fix their own fares and choose their preferred domestic destinations has given a massive boost to this sector.
Over the last few years, major players in the aviation sector have forged alliances to evolve a new strategy to capture a larger market share. The travel sector market is shared between major airline companies that have created global alliances. This has resulted in a win-win situation for all concerned. The passengers can now avail of the best of both the worlds (read alliances), the companies’ benefit because of the synergy effect of an alliance and a booming aviation sector brings considerable revenue to the Government coffers.