Question

What is the general environment in the global airline industry?

Answer 1

When we are talking about airlines and aviation, it is important to note the huge cost of asset, asset maintenance and fuel. With the crude oil prices picking up over the last few months, it's had a knock on effect on the margins of the airline companies. While the top players did manage to maintain their zeal with the economics of scale, the low volume players had to take most on their chins. Added to this most of emerging economies apply huge tax tariffs on airlines revenues, gasoline pipelines and airport management. This adds to the overall cost of operation and ultimately hitting the operating margins.

In emerging economies you would also notice small scale aviation companies merge or get taken over for sustainable and continued presence. So it is safe to conclude that global airline and aviation industry is going through a rough patch with most of the injuries contained by the smaller to medium players while the larger/high volume players are finding it hard to increase the operating margins and organic growth.