Nearly half of the 197 airlines that participated in the survey, 48 percent, believe developing new revenue streams is important to the overall airline revenue strategy, but only about a third or fewer thought some of the most talked-about ideas for generating new revenue would be effective, such as some airlines moves toward offering unbundled pricing and service.
Thirty-five percent said charging extra for seat selections would be an effective source of new revenue and even fewer said in-flight entertainment (34 percent), meals (24 percent) and in-flight comfort items such as pillows and blankets (17 percent) would be effective revenue sources. There was a significant difference of opinion on this issue between North American and international airlines, however; 30 percent of international airlines said meals could be an effective revenue source but only 13 percent of their North American counterparts agreed.
Slightly more than two thirds of the respondents -- 68 percent (73 percent North American, 57 percent international) -- predicted the number of low-cost carriers would increase by January 2008, while 9 percent believe the number will decrease and 23 percent predict it will stay relatively the same. Far less than half the airlines surveyed saw increases in the number of regional or international long-haul carriers.
While 45 percent of North American airlines said airline bankruptcies will have a significant revenue or operational impact on their airline, only 29 percent of international carriers agreed. "Each region or nation has its own unique bankruptcy laws, and the U.S. airline industry has now spent many years learning all the ins and outs of Chapter 11 restructurings," Hendrickson said.
"The ones taking place today are more sophisticated and well managed than those a decade or more ago. The U.S. industry had a lot of legacy costs and related issues to cleanse itself of in bankruptcy court, and they had a lot of intellectual capital -- lawyers, accountants, consultants, etc. -- at their disposal to work all the leverage that a court-supervised restructuring allows. The bankruptcy gambit in other parts of the world is just not as accepted or conducive to effective restructuring as it is in the United States and Canada."
In another notable difference of opinion, while 30 percent of international airlines thought the inability to secure new routes would be among their top three revenue impediments, only 15 percent of North American airlines agreed.
"The U.S. domestic market is totally deregulated and thus any airline can fly where it wants, when it wants," Hendrickson said. "This is not necessarily so for many other domestic markets around the world.
"Plus, the U.S. government has secured a good array of bilateral route authorities and even open skies agreements from which its carriers can draw their expansion opportunities," Hendrickson added. "Contrast that to some of the other countries around the world where airlines may still face restrictive route freedoms, slot scarcity or gate constraints. In some cases, the traditional flag carrier may be owned by that country's government and hold the majority of route authorities while newer rivals, who might be privately funded, are only slowly gaining route authorities from the government."
Respondents expect 46 percent of all passengers will book their travel directly online in 2007. This number is considered an increase by 87 percent of the respondents over the number that booked online in 2006. Among those who book their travel online, airline executives said six out of 10 will book through an airline's Web site while the others will use online distributor Web sites.
Sabre Airline Solutions conducted the online survey between March 13 and March 23.