Airlines: Intense competition will provide benefits to customers

Airlines: Intense competition will provide benefi...

The long term outlook for the sector is positive.

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James Stamp, KPMG’s Global Head of Aviation, comments on the back of IATA’s updated profit forecast for the global airline industry published today:

The updated forecast issued today supports our view that the industry is finally emerging from a tumultuous and challenging period and that the long-term outlook for the sector is positive." 

“We also believe that intense competition will continue to provide benefits to customers in terms of both choice and price, as the industry has historically passed on cost savings to passengers."

“Cost savings will be driven by consolidation, primarily in the form of enhanced alliances and joint ventures, and investment in new aircraft, with airlines around the globe currently replacing their fleet at unprecedented levels."

Much of the order activity by legacy airlines is driven by the desire to cut operating costs. With fuel costs representing percent of the airline cost base, and a new aircraft generation on the market which is up to 20 percent more fuel efficient, this trend should not come as a surprise. Significant fleet expansion in the low cost sector, particularly in Asia Pacific, will drive record levels of lower cost capacity."

“Assuming that the orders are fulfilled (and this is a major “if” with orders standing at up to eight years of production), the increase in capacity, even allowing for replacement of aging fleet, will be significant. In this event, falling operating costs and competition to fill capacity would result in further downward pressure on ticket prices, which would be good news for airline passengers.”


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For further information please contact:

Katrin Boettger, KPMG Press Office

M: 07824 475 168



KPMG Press Office: +44 (0) 207 694 8773


About KPMG

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.


This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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