ABSTRACT
Over the past century, commercial aviation has shaped the world by growing economic prosperity, stimulating trade, and cultivating tourism development, while its relative affordability in more recent times has allowed it to become an integral part of many people’s lifestyles. Every day throughout the world, over 9 million passengers travel on 104,000 flights over a network of 51,000 routes, while US$17.5 billion worth of goods are transported to industry and homes. Aviation’s global economic impact (direct, indirect, induced and tourism catalytic) is estimated at US$2.7 trillion, equivalent to 3.5 per cent of world gross domestic product (GDP) (ATAG, 2016; IATA, 2016a). The airline industry is characterised by sustained long-term growth in demand for air services. Yet the industry, consisting of around 1,400 airlines globally in 2015 with a combined fleet of over 23,151 aircraft (ATAG, 2016; IATA, 2016a), remains in a financially challenging state, returning only marginal profitability down through the decades. The paradox of sustained long-term growth and only marginal profitability forms the basis for this chapter, which consists of six main sections. The first section briefly investigates the growth, dispersion and segmentation of passenger traffic (the air cargo industry is covered in detail in Chapter 2). The chapter then investigates the profitability of the global airline industry before focusing on the profitability of airlines (see also Chapter 11) domiciled in three main geographical areas: the United States (US), Europe and Asia. The final section provides a conclusion to the chapter.
