airline industry profile australia.pdf

Australia - Airlines 0125 - 0756 - 2014

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MarketLine Industry Profile

Airlines in Australia May 2015

Reference Code: 0125-0756

Publication Date: May 2015

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EXECUTIVE SUMMARY

Market value The Australian airlines industry grew by 2.1% in 2014 to reach a value of $15,807.8 million.

Market value forecast In 2019, the Australian airlines industry is forecast to have a value of $21,010.1 million, an increase of 32.9% since 2014.

Market volume The Australian airlines industry grew by 2.3% in 2014 to reach a volume of 74.8 million passengers.

Market volume forecast In 2019, the Australian airlines industry is forecast to have a volume of 93.1 million passengers, an increase of 24.5%

since 2014.

Category segmentation Domestic is the largest segment of the airlines industry in Australia, accounting for 77.7% of the industry's total volume.

Geography segmentation Australia accounts for 8.4% of the Asia-Pacific airlines industry value.

Market rivalry The fixed costs associated with an airline, from the aircraft, fuel, skilled and unskilled staff, insurance, to airport fees,

duties and taxes, ensures rivalry remains heated as airlines fight to protect their profit margins while maintaining and

growing revenues.



TABLE OF CONTENTS

Executive Summary ....................................................................................................................................................... 2

Market value ............................................................................................................................................................... 2

Market value forecast ................................................................................................................................................. 2

Market volume ............................................................................................................................................................ 2

Market volume forecast .............................................................................................................................................. 2

Category segmentation .............................................................................................................................................. 2

Geography segmentation ........................................................................................................................................... 2

Market rivalry .............................................................................................................................................................. 2

Market Overview ............................................................................................................................................................ 7

Market definition ......................................................................................................................................................... 7

Market analysis .......................................................................................................................................................... 7

Market Data ................................................................................................................................................................... 8

Market value ............................................................................................................................................................... 8

Market volume ............................................................................................................................................................ 9

Market Segmentation ................................................................................................................................................... 10

Category segmentation ............................................................................................................................................ 10

Geography segmentation ......................................................................................................................................... 11

Market Outlook ............................................................................................................................................................. 12

Market value forecast ............................................................................................................................................... 12

Market volume forecast ............................................................................................................................................ 13

Five Forces Analysis .................................................................................................................................................... 14

Summary .................................................................................................................................................................. 14

Buyer power ............................................................................................................................................................. 15

Supplier power ......................................................................................................................................................... 17

New entrants ............................................................................................................................................................ 19

Threat of substitutes ................................................................................................................................................. 21

Degree of rivalry ....................................................................................................................................................... 23

Leading Companies ..................................................................................................................................................... 25



Air New Zealand Limited .......................................................................................................................................... 25

Qantas Airways Limited ........................................................................................................................................... 28

Regional Express Holdings Limited .......................................................................................................................... 32

Virgin Australia Holdings Limited .............................................................................................................................. 35

Macroeconomic Indicators ........................................................................................................................................... 38

Country Data ............................................................................................................................................................ 38

Methodology................................................................................................................................................................. 40

Industry associations ................................................................................................................................................ 41

Related MarketLine research ................................................................................................................................... 41

Appendix ...................................................................................................................................................................... 42

About MarketLine ..................................................................................................................................................... 42



LIST OF TABLES

Table 1: Australia airlines industry value: $ million, 2010–14 ......................................................................................... 8

Table 2: Australia airlines industry volume: million passengers, 2010–14 ..................................................................... 9

Table 3: Australia airlines industry category segmentation: million passengers, 2014 ................................................. 10

Table 4: Australia airlines industry geography segmentation: $ million, 2014 .............................................................. 11

Table 5: Australia airlines industry value forecast: $ million, 2014–19 ......................................................................... 12

Table 6: Australia airlines industry volume forecast: million passengers, 2014–19 ...................................................... 13

Table 7: Air New Zealand Limited: key facts ................................................................................................................ 25

Table 8: Air New Zealand Limited: key financials ($) ................................................................................................... 26

Table 9: Air New Zealand Limited: key financials (NZ$) ............................................................................................... 26

Table 10: Air New Zealand Limited: key financial ratios ............................................................................................... 26

Table 11: Qantas Airways Limited: key facts ............................................................................................................... 28

Table 12: Qantas Airways Limited: key financials ($) ................................................................................................... 29

Table 13: Qantas Airways Limited: key financials (A$) ................................................................................................ 29

Table 14: Qantas Airways Limited: key financial ratios ................................................................................................ 30

Table 15: Regional Express Holdings Limited: key facts .............................................................................................. 32

Table 16: Regional Express Holdings Limited: key financials ($) ................................................................................. 32

Table 17: Regional Express Holdings Limited: key financials (A$)............................................................................... 33

Table 18: Regional Express Holdings Limited: key financial ratios .............................................................................. 33

Table 19: Virgin Australia Holdings Limited: key facts .................................................................................................. 35

Table 20: Virgin Australia Holdings Limited: key financials ($) ..................................................................................... 35

Table 21: Virgin Australia Holdings Limited: key financials (A$) .................................................................................. 36

Table 22: Virgin Australia Holdings Limited: key financial ratios .................................................................................. 36

Table 23: Australia size of population (million), 2010–14 ............................................................................................. 38

Table 24: Australia gdp (constant 2005 prices, $ billion), 2010–14 .............................................................................. 38

Table 25: Australia gdp (current prices, $ billion), 2010–14 ......................................................................................... 38

Table 26: Australia inflation, 2010–14 .......................................................................................................................... 39

Table 27: Australia consumer price index (absolute), 2010–14 ................................................................................... 39

Table 28: Australia exchange rate, 2010–14 ................................................................................................................ 39



LIST OF FIGURES

Figure 1: Australia airlines industry value: $ million, 2010–14 ........................................................................................ 8

Figure 2: Australia airlines industry volume: million passengers, 2010–14 .................................................................... 9

Figure 3: Australia airlines industry category segmentation: % share, by volume, 2014 .............................................. 10

Figure 4: Australia airlines industry geography segmentation: % share, by value, 2014 .............................................. 11

Figure 5: Australia airlines industry value forecast: $ million, 2014–19 ........................................................................ 12

Figure 6: Australia airlines industry volume forecast: million passengers, 2014–19..................................................... 13

Figure 7: Forces driving competition in the airlines industry in Australia, 2014 ............................................................ 14

Figure 8: Drivers of buyer power in the airlines industry in Australia, 2014 .................................................................. 15

Figure 9: Drivers of supplier power in the airlines industry in Australia, 2014 .............................................................. 17

Figure 10: Factors influencing the likelihood of new entrants in the airlines industry in Australia, 2014....................... 19

Figure 11: Factors influencing the threat of substitutes in the airlines industry in Australia, 2014 ................................ 21

Figure 12: Drivers of degree of rivalry in the airlines industry in Australia, 2014 .......................................................... 23

Figure 13: Air New Zealand Limited: revenues & profitability ....................................................................................... 27

Figure 14: Air New Zealand Limited: assets & liabilities ............................................................................................... 27

Figure 15: Qantas Airways Limited: revenues & profitability ........................................................................................ 30

Figure 16: Qantas Airways Limited: assets & liabilities ................................................................................................ 31

Figure 17: Regional Express Holdings Limited: revenues & profitability ...................................................................... 33

Figure 18: Regional Express Holdings Limited: assets & liabilities .............................................................................. 34

Figure 19: Virgin Australia Holdings Limited: revenues & profitability .......................................................................... 36

Figure 20: Virgin Australia Holdings Limited: assets & liabilities .................................................................................. 37



MARKET OVERVIEW

Market definition The airlines industry comprises passenger air transportation, including both scheduled and chartered, but excludes air

freight transport. Industry volumes are defined as the total number of revenue passengers carried/enplaned (departures)

at all airports within the specified country or region, excluding transit passengers who arrive and depart on the same

flight code. For the US and Canada, transborder passengers departing from either country are considered as part of the

international segment. Industry value is defined as the total revenue obtained by airlines from transporting these

passengers. This avoids the double-counting of passengers. All currency conversions in this profile were carried out

using constant 2014 average annual exchange rates.

For the purposes of this report, North America consists of Canada, Mexico, and the United States.

South America comprises Argentina, Brazil, Chile, Colombia, and Venezuela.

Europe comprises Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy,

Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.

Scandinavia comprises Denmark, Finland, Norway, and Sweden.

Asia-Pacific comprises Australia, China, Hong Kong, India, Indonesia, Kazakhstan, Japan, Malaysia, New Zealand,

Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

Middle East comprises Egypt, Israel, Saudi Arabia, and United Arab Emirates.

Market analysis Australia's airline industry has seen strong growth across the 2010-2014 period in terms of value, with passengers

carried showing moderate growth. Forecasts for the 2014-2019 period suggest passenger growth will accelerate while

revenue growth decelerates as air fare increases remain subdued in response to low oil prices.

The Australian airlines industry had total revenues of $15,807.8m in 2014, representing a compound annual growth rate

(CAGR) of 6.6% between 2010 and 2014. In comparison, the Japanese industry declined with a compound annual rate

of change (CARC) of -0.2%, and the Chinese industry increased with a CAGR of 11.4%, over the same period, to reach

respective values of $23,702.3m and $65,483.7m in 2014.

Australia's airline industry has been dominated by Qantas and Virgin Australia's ongoing battle for market share in recent

years. This has resulted in the two airlines shipping significant revenues, however it has meant approximately 10 million

seats being added to domestic and international routes by the two airlines during the 2011-2014 period, driving the price

of tickets down which acts as an incentive to potential passengers.

Industry consumption volumes increased with a CAGR of 2.7% between 2010 and 2014, to reach a total of 74.8 million

passengers carried in 2014. The industry's volume is expected to rise to 93.1 million passengers carried by the end of

2019, representing a CAGR of 4.5% for the 2014-2019 period.

The domestic segment was the industry's largest in 2014, with a total of 58.1m passengers carried, equivalent to 77.7%

of the industry's overall volume. The international segment was responsible for 16.7m passengers in 2014, equating to

22.3% of the industry's aggregate volume.

The performance of the industry is forecast to decelerate, with an anticipated CAGR of 5.9% for the five-year period

2014 - 2019, which is expected to drive the industry to a value of $21,010.1m by the end of 2019. Comparatively, the

Japanese and Chinese industries will grow with CAGRs of 4.7% and 13.1% respectively, over the same period, to reach

respective values of $29,787.3m and $121,341.8m in 2019.



MARKET DATA

Market value The Australian airlines industry grew by 2.1% in 2014 to reach a value of $15,807.8 million.

The compound annual growth rate of the industry in the period 2010–14 was 6.6%.

Table 1: Australia airlines industry value: $ million, 2010–14

Year $ million A$ million € million % Growth

2010 12,247.1 13,590.6 9,227.7

2011 12,890.2 14,304.2 9,712.3 5.3%

2012 14,573.7 16,172.4 10,980.7 13.1%

2013 15,489.4 17,188.6 11,670.7 6.3%

2014 15,807.8 17,541.9 11,910.6 2.1%

CAGR: 2010–14 6.6%

SOURCE: MARKETLINE M A R K E T L I N E

Figure 1: Australia airlines industry value: $ million, 2010–14




Market volume The Australian airlines industry grew by 2.3% in 2014 to reach a volume of 74.8 million passengers.

The compound annual growth rate of the industry in the period 2010–14 was 2.7%.

Table 2: Australia airlines industry volume: million passengers, 2010–14

Year million passengers % Growth

2010 67.3

2011 68.2 1.4%

2012 71.3 4.4%

2013 73.1 2.6%

2014 74.8 2.3%

CAGR: 2010–14 2.7%


Figure 2: Australia airlines industry volume: million passengers, 2010–14




MARKET SEGMENTATION

Category segmentation Domestic is the largest segment of the airlines industry in Australia, accounting for 77.7% of the industry's total volume.

The International segment accounts for the remaining 22.3% of the industry.

Table 3: Australia airlines industry category segmentation: million passengers, 2014

Category 2014 %

Domestic 58.1 77.7%

International 16.7 22.3%

Total 74.8 100%


Figure 3: Australia airlines industry category segmentation: % share, by volume, 2014




Geography segmentation Australia accounts for 8.4% of the Asia-Pacific airlines industry value.

China accounts for a further 34.7% of the Asia-Pacific industry.

Table 4: Australia airlines industry geography segmentation: $ million, 2014

Geography 2014 %

China 65,483.7 34.7

Japan 23,702.3 12.6

South Korea 15,889.4 8.4

Australia 15,807.8 8.4

India 8,253.2 4.4

Rest of Asia-Pacific 59,349.8 31.5

Total 188,486.2 100%


Figure 4: Australia airlines industry geography segmentation: % share, by value, 2014




MARKET OUTLOOK

Market value forecast In 2019, the Australian airlines industry is forecast to have a value of $21,010.1 million, an increase of 32.9% since 2014.

The compound annual growth rate of the industry in the period 2014–19 is predicted to be 5.9%.

Table 5: Australia airlines industry value forecast: $ million, 2014–19

Year $ million A$ million € million % Growth

2014 15,807.8 17,541.9 11,910.6 2.1%

2015 16,628.2 18,452.3 12,528.7 5.2%

2016 17,680.2 19,619.7 13,321.4 6.3%

2017 18,776.8 20,836.6 14,147.6 6.2%

2018 19,876.7 22,057.2 14,976.3 5.9%

2019 21,010.1 23,314.9 15,830.3 5.7%

CAGR: 2014–19 5.9%


Figure 5: Australia airlines industry value forecast: $ million, 2014–19




Market volume forecast In 2019, the Australian airlines industry is forecast to have a volume of 93.1 million passengers, an increase of 24.5%

since 2014.

The compound annual growth rate of the industry in the period 2014–19 is predicted to be 4.5%.

Table 6: Australia airlines industry volume forecast: million passengers, 2014–19

Year million passengers % Growth

2014 74.8 2.3%

2015 77.5 3.5%

2016 81.2 4.8%

2017 84.9 4.6%

2018 88.9 4.6%

2019 93.1 4.8%

CAGR: 2014–19 4.5%


Figure 6: Australia airlines industry volume forecast: million passengers, 2014–19




FIVE FORCES ANALYSIS

The airlines market will be analyzed taking airline companies as players. The key buyers will be taken as individuals for

leisure and business, and to a lesser extent corporate customers, and fuel suppliers, airports, aircraft manufacturers, and

skilled and unskilled employees as the key suppliers.

Summary

Figure 7: Forces driving competition in the airlines industry in Australia, 2014


The fixed costs associated with an airline, from the aircraft, fuel, skilled and unskilled staff, insurance, to airport fees,


growing revenues.

Typically, a majority of buyers in the airline industry are individual customers purchasing tickets for scheduled flights.

Buyer power from this type of customer is minimal due to the sheer volume of passengers, while their smaller size

restricts their ability to negotiate prices. In regards to supplier power, the number of suppliers necessary for the

successful operation of an airline is extensive and diverse, offering a complex array of services and products.

New entrants are faced with high entry barriers, although there are alternative cost savings available in the form of

leased aircraft. Substitutes to the airline industry are numerous and include road vehicles such as cars, buses or

coaches, railroads and ferries for domestic and regional travel, and ocean going vessels such as cruise ships, or

passenger berths on cargo ships for journeys crossing large spans of open water. All come with respective advantages

and disadvantages depending on the type of journey being made.



Buyer power

Figure 8: Drivers of buyer power in the airlines industry in Australia, 2014


Typically, a majority of buyers in the airline industry are individual customers purchasing tickets for scheduled flights.

Buyer power from this type of customer is minimal due to the sheer volume of passengers, almost 75 million passengers

were carried (via departures) in Australia during 2014, while their smaller size restricts their ability to negotiate prices.

However, for airlines offering chartered passenger flights, customers generally tend to be wealthy individuals or

corporate clients. In this case, individual customers or corporations exercise a greater degree of buyer power due to their

high value and negotiating position, and their limited number in relation to the smaller size of the chartered flights market.

Switching costs can be costly once a ticket has been purchased. For scheduled flights, an airline isn't obliged to refund a

ticket if it is a nonrefundable fare and is cancelled by the customer, although they may be allowed to apply the fare from

the cancelled ticket to a future flight with the same airline. However, refundable tickets are available which can be

returned for a refund to a customer's debit or credit card, although some airlines charge an airline service fee to process

a refund.

These caveats to the purchase of an airline ticket can be detrimental to buyer power. However, due to the nature of

airlines offering customers one off flights, customers will often switch between airlines particularly in lieu of pricier fares

compared to rival airlines, increasing buyer power. To counter this, many airlines run frequent-flyer programs offering

regular flyers the opportunity to earn free flights among other incentives.

Many customers, particularly infrequent flyers, take advantage of online price comparison websites and mobile apps,

selecting whichever airline offers the cheapest deal. Passengers flying coach class or on short-haul flights are ordinarily

incentivized by price, as such loyalty is minimized due to the extensive use of said price comparison sites and apps,

resulting in increased buyer power. This phenomenon has also seen low cost carriers steal market share from pricier

incumbents, with low-cost carriers such as Qantas' Jetstar subsidiary being significant beneficiaries.

Contrary to this, customers flying business or first class may be more concerned with the level of service offered than the

price of tickets, reducing the likelihood of switching and price sensitivity, resulting in reduced buyer power.



Airlines are restricted in the level of differentiation they offer. Coach class is largely the same from airline to airline, with

minor differences including leg space, in-flight entertainment and in-flight meals. Low cost carriers offer even less

product/service differentiation, providing the absolute basics in order to protect slim profit margins. This is favorable for

passengers as it allows them to focus on price when choosing an airline. When it comes to business and first class,

product and service differentiation is more palpable and often engenders a greater degree of loyalty, which swings buyer

power in the airline's favor. One way in which an airline can differentiate itself is the routes and destinations it offers to

customers. If an airline offers flights to a destination its primary rivals don't (due to factors such as the denial of

cabotage), or offers flights via an exclusive route, then this level of differentiation diminishes buyer power.

Although often a necessity in terms of journey times, convenience and cost, airlines are not indispensable due to

alternative available transportation methods, increasing buyer power. However, this is stymied somewhat by the low

likelihood of customers backward integrating and providing their own air transport (although private pilot licenses and

airplane ownership is not uncommon, so it isn't impossible).

Overall, buyer power is assessed as moderate.



Supplier power

Figure 9: Drivers of supplier power in the airlines industry in Australia, 2014


The number of suppliers necessary for the successful operation of an airline is extensive and diverse, offering a complex

array of services and products. One of the primary suppliers is personnel, ranging from skilled workers such as pilots,

aircraft maintenance, repair and overhaul (MRO) engineers and air traffic controllers, to un-skilled workers such as

ground handling and catering staff, cabin crews and check-in staff.

In regards to skilled staff, although the size of suppliers is limited (i.e. a single person providing their skills), the number

of suppliers is restricted due to the smaller pool of talent industry players have to pick from. This is the result of a number

of factors including the finite number of people with the necessary attributes to become a successful pilot, air traffic

controller or MRO engineer etc. Switching costs for these particular suppliers can be costly due to high wages and

employment contracts. Furthermore, both skilled and unskilled personnel are protected by unions which further increase

supplier power due to the disruption and damage union members can inflict in response to unfavorable actions from

industry players. For example, in January 2015 the Qantas subsidiary Jetstar's union for pilots (Australian Federation of

Air Pilots) requested the right for a ballot of its pilot members on whether to take protected industrial action. However

strike action was avoided after Jetstar and the union reached an acceptable four-year agreement on pay.

One of the most visible aspects of an airline is its aircraft. Airlines must enter into contracts when buying or leasing

aircraft from suppliers. Breaking these contracts can often incur a heavy financial cost. Furthermore, Boeing and Airbus

effectively form a duopoly of suppliers of new jetliners, especially in the large jetliner category with airplanes such as the

new Boeing 787 Dreamliner or the new Airbus A380 (the world's largest passenger airliner). As such, Boeing and Airbus

wield significant influence and power when dealing with airline companies. Industry players in the market for lower-

capacity regional jets and propeller-driven aircraft ordinarily have dealings with companies such as Embraer, ATR, and

Bombardier. Although significant suppliers, they don't yield the influence of the much larger Boeing and Airbus.

Furthermore, the larger number of suppliers of smaller aircraft decreases supplier power somewhat.

Suppliers of aviation fuel are of vital importance to airlines, with relatively few companies supplying aviation fuel which

strengthens supplier power.

Fuel and crude oil supply make up a major part of any airline's costs, with increases in ticket prices usually reflective of

rising fuel costs, although airlines generally defend against oil price rises using hedging strategies.



In 2014, the International Air Transport Association (IATA) estimates fuel costs to have represented 28.6% of total

operating costs for the global airline industry at a total of $204 billion. This is a decrease of $4 billion over 2013, primarily

due to the well-publicized fall in oil prices but also the increase in more fuel efficient modern aircraft. IATA forecasts total

fuel costs will continue to fall to $192 billion (26.1% of total operating costs) for the industry during 2015.

Airports also supply a significant amount of infrastructure and services. Airlines rely upon airports for time slots to take-

off and land. They rely upon the infrastructure provided by airports to collect, deliver and process passengers, luggage

and cargo. They also provide storage for aircraft not in use, and essential air traffic control services. Due to the absolute

necessity to an airline's operations, airports and the authorities and companies that operate them wield significant

supplier power.

Typically, the size of suppliers to the airline industry are significant (excluding individual personnel making up an airl ine's

workforce) which makes them difficult to influence, and favors the supplier when players are negotiating with them.

Equally, the limited number of suppliers (barring unskilled workers) forces players to develop relationships with suppliers

who have a negotiating advantage.

Switching costs in terms of personnel can be costly if a worker's union becomes involved. In terms of the supply of

tangible assets such as aircraft and aviation fuel, switching costs can be even more substantial as contracts are used to

protect suppliers. The cost of contract breaches are high enough for an industry player to ordinarily ensure they adhere

to contract requirements, thus switching from supplier to supplier is difficult and costly.

Industry players are not likely to backward integrate into aircraft manufacturing or fuel supply. Although major airlines

may provide in-house training to pilots and cabin crew, and often own subsidiaries which provide catering, MRO and

ground handling services (air traffic controllers are provided by airports), personnel as an entity are entirely independent

of the companies that employ them so it is not possible to integrate in this respect. This favors suppliers.

However, supplier power is restricted by the improbability of forwards integration into the airline industry (although not

impossible in terms of personnel as an individual such as a pilot may set up a chartered air transport service on a small

scale). In addition, although a company like Boeing has alternative sources of revenue, notably in defense, space and

security, civil aviation remains a very significant part of its business. In 2014, Boeing generated around 66% of total

revenues from its global commercial airplanes division, with its defense, space and security division accounting for a

majority of the remaining revenues. If a supplier lacks diversity it is more dependent on airlines as customers, weakening

its influence.

Commonly, airlines are forming alliances with one another, not only to achieve network size economies through code

sharing, but also to achieve scale economies in the purchase of fuel, and even of aircraft. Combining forces to make

purchases serves to increase the industry players' bargaining power and therefore reduces supplier power. A vast tide of

consolidation in recent years has to some extent helped to protect airlines from supplier power, as large conglomerate

airline companies have a much stronger bargaining position than smaller ones due to scope and market share.

However, the relative lack of alternative manufacturers or substitute inputs increases supplier power. Furthermore, in an

industry where reliability and safety are critical, the quality of the planes and their maintenance are highly important;

another factor that boosts supplier power.

A further factor favoring suppliers is the lack of viable and practical alternative inputs, although some are emerging: for

instance, British Airways has committed to buying large amounts of green jet fuel, created from converted waste. Unlike

other modes of transport, airlines have no reliable current alternative source of energy.

Overall, supplier power is assessed as moderate.



New entrants

Figure 10: Factors influencing the likelihood of new entrants in the airlines industry in Australia, 2014


The economic entry barriers to the airline industry can be high; however there are alternative cost savings available to

new entrants. Initial fixed costs include the up-front outlay needed to obtain airplanes whether through leasing or

purchase. However, for a new airline, the purchase of an aircraft is not usually cost effective. The acquisition of an

aircraft subject to a lease arrangement is generally seen as more cost effective for an entirely new entrant.

Airlines can obtain new aircraft through two main types of leasing, wet and dry, with a combination of the two also

possible. A wet lease is when an airline provides a new airline or service with an aircraft, complete crew, maintenance,

and insurance (ACMI) for a fee. The new airline or service, the lessee, pays for fuel, airport fees and all other duties and

taxes in addition to the cost of the lease. Typically, wet leases last from one month to two years, and can be switched to

a dry lease once the new service has been established and the airline's own flight and cabin crews have been trained.

A dry lease is when an aircraft financing company such as GE Capital Aviation Services (GECAS) leases aircraft to

airlines without insurance, crew, and maintenance etc. Major airlines can also come to dry lease agreements with other

airlines. For example, a major airline may provide the aircraft and a regional airline provide crew etc. which allows the

aircraft to be operated under the major airline's name, drastically reducing the associated hiring and training costs

personnel needed to fly and maintain an aircraft.

The leasing system particularly favors entirely new entrants, allowing them to establish a new service with a single

aircraft and avoiding the pitfalls associated with purchasing an aircraft and gaining a pricey fixed asset.

For existing airlines looking to offer flights to a new country or region, or launching a new service or subsidiary such as a

low-cost carrier, leasing is also favorable until it has been established whether or not the route or service is financially

viable. If the airline is looking to purchase an aircraft for a new route or service, it is likely they already have favorable

terms with aircraft providers, or indeed are able to redeploy part of their existing fleet. Equally, an existing airline

establishing a new service will be able to exploit scales of economies and relationships with aviation fuel suppliers,

whereas an entirely new entrant with a single aircraft or very small fleet may find fuel costs more expensive. As such, all

of these factors in terms of fixed costs are not as prohibitively expensive as would be ordinarily expected, although are

still considerable.



Distribution is not particularly easy, as new players need to establish an online booking system, and relationships with

travel agents and other sales intermediaries. It is also vital to obtain airport ‘slots’ for take-off and landing.

There has been substantial growth in air traffic over recent years; as a result congestion at airports in many countries is

expected, especially at major hubs. The time slot given to an airline is important, and is something all airlines negotiate

with airports. Established airlines may already hold a monopoly over slots at certain airports, making it harder for new

airlines to infiltrate. This creates difficulties for a new airline aiming to negotiate prime slots at busy airports and can

result in it being restricted to offering off-peak flight times, or having to fly to airports further away from popular

destinations. On many occasions the new company cannot afford to pay the significant fees to airports for service

charges, forcing them to either choose other destinations or draw back from or avoid a particular market until they have

become more established. This can be a deterrent to new airlines, as customers may seek more convenient alternatives.

While there is some debate as to whether traditional scale economies are significant in this industry, it seems likely that

being able to offer a wide range of routes is advantageous. The larger airlines achieve this not only through their own

fleet, but through code sharing agreements with other carriers in airline alliances such as the Star Alliance, oneworld and

SkyTeam; however, a new entrant will not necessarily be approved for membership although they may be able to

individually negotiate partnerships and code sharing agreements with airlines.

Regulation forms an additional barrier as well. The various national and international civil aviation authorities, for

example the Civil Aviation Safety Authority, regulate areas such as safety, environmental impact, airspace usage, and

passenger rights. If an airline does not provide safety oversight in accordance with the minimum safety oversight

standards established by the International Civil Aviation Organization (ICAO), then that airline can be banned from a

country or region's airspace. As such, compliance raises the cost of entry for a new airline, and if it is banned from

certain airspace its area of operations and ability to generate revenues will become severely impeded.

Furthermore, the airline industry has other additional regulatory issues to consider. Cabotage is the provision of domestic

transport services in a country by companies based in a different country. Airline cabotage is generally forbidden, unless

explicitly permitted by an agreement between two or more countries. For example, cabotage by any EU-based carrier is

permitted in any other EU-country; also, the Open Skies agreement accords cabotage rights to US carriers in the EU.

This liberalization should increase the opportunities for market access in this region. However, in other countries

cabotage is generally not possible, and in some cases foreign ownership of domestic airlines is also restricted to a

certain percentage.

Industry growth across 2009-2014 was strong which can be construed as an incentive to potential new entrants.

Overall, the threat posed by potential new entrants is assessed as moderate.



Threat of substitutes

Figure 11: Factors influencing the threat of substitutes in the airlines industry in Australia, 2014


Although airlines provide an important service, alternative transport methods are available. Road vehicles such as cars,

buses or coaches are a viable means for many, as are railroads and ferries for domestic and regional travel. Ocean

going vessels such as cruise ships, or passenger berths on cargo ships, are also alternatives for journeys crossing large

spans of open water, such as transatlantic crossings.

For business travel, alternatives include ‘virtual meetings’ via videoconferencing and similar technologies. The switching

costs here are the cost of the equipment required, although at present it is not clear how completely such technologies

will replace face-to-face meetings.

When planning a journey, buyers take into account not only the cost of travel but also the duration of the journey and

convenience of the available methods of transit when comparing different forms of transportation.

In larger countries, air travel makes it easier to overcome long distances and has certain benefits such as shorter travel

time than rail or car travel, even when including the time to check in. However, in smaller countries, domestic air travel

may not be so appropriate, and rail and road transportation become more attractive alternatives, with some countries

such as Singapore offering no or very limited scheduled domestic passenger flights due to their small size. It is possible

to travel around much of the world by long-distance bus or train, although levels of service vary, and some border

crossings may present a difficulty.

Other than cross-border land transport to Canada and South America, there are few substitutes for international air travel

in the US. Its geography isolates it from Europe and Asia-Pacific, and marine passenger transportation is essentially

restricted to leisure cruises and small-scale passenger transportation on cargo ships. For transatlantic crossings, there

are few, if any, beneficial substitutes to air travel unless passengers want a leisure cruise.

For countries and regions with well-developed land transport infrastructure, such as Europe and Japan, domestic flights

(defined as flights beginning and ending in the same country) can easily be substituted by car, bus, or rail.



In the Asia-Pacific region, domestic flights can be substituted by car, bus, or rail. International air travel is generally less

vulnerable to road and rail substitution in this region. Japan, Australia, and Taiwan are islands with no links to mainland

Asia, and land access from the South Korean peninsula to the rest of the continent is complicated by the need to travel

via North Korea. Singapore is connected by a road and rail bridge to Malaysia. Travel from the more developed regions

of China to the west is technically possible over land, but the distances make this impractical. In contrast, international

land travel in Europe is serviced by dense road and rail infrastructure, and is a more significant substitute to air travel in

that region. Cross-border land transport, including high speed trains in several countries, means that many international

flights can be substituted in this region.

Substitute transport methods are very much dependent on the destination as to their validity as an alternative to flights.

Geography, infrastructure, distance and location of journey origin and destination are additional factors which can

influence this validity.

Cost is another major factor, and the low switching costs can be deemed beneficial to substitute transport methods,

however the advent of low-cost airlines has seen many journeys, which would have been cheaper by train, car or ferry,

now cheaper via low-cost airlines.

Overall, the threat from substitutes is assessed as moderate, although this will vary depending on the type and length of

journey, as well as factors such as infrastructure.



Degree of rivalry

Figure 12: Drivers of degree of rivalry in the airlines industry in Australia, 2014


The competitive landscape in Australia is typified by the presence of large companies, such as Qantas Airways and

Virgin Australia, operating alongside smaller regional and domestic competitors.

The size of competitors in the airline industry can vary massively depending on which market a player operates in, for

example independent regional and domestic airliners are typically smaller than those serving international markets.

Another factor to consider is the prevalence of codeshare agreements, partnerships and alliances. Airline alliances in

particular can significantly increase a competitor's size merely through association, creating fierce competition amongst

members of rival alliances.

The number of players serving a market can be significant. In addition to domestic airline companies, usually with at

least one large flag carrier (Qantas Airways being Australia's), airlines have to contend with rival foreign airlines offering

flights to and from their home market. However, airlines offering internal domestic flights are protected from cabotage as

it is generally forbidden unless permitted by an agreement between two or more countries. For example, cabotage by

any EU-based carrier is permitted in any other EU-country; also, the Open Skies agreement accords cabotage rights to

US carriers in the EU.

Low-cost switching facilitated by price comparison websites and mobile apps, and a general lack of differentiation

(primarily in regards to coach class), also fuels rivalry as buyers switch from airline to airline on the basis of price.

The fixed costs associated with an airline, from the aircraft, fuel, skilled and unskilled staff, insurance, to airport fees,


growing revenues. For long-haul and night flights, airlines have to provide their cabin crew and pilots with

accommodation which can become costly for larger companies. Aircraft are stored in hangars and maintenance bays

when not in use which can also be costly. Furthermore, the storage of MRO equipment and the necessity for a

maintenance bay for airlines which have integrated MRO services also adds to costs.



The ability to expand tempers rivalry somewhat as airlines have a number of options available to them. They can expand

the number of different routes they service, or they can expand the number of flights they run to a destination. Once the

type of expansion has been decided, airlines can decide if they are going to achieve their expansion plans through

codeshare agreements, partnerships or trying to join an airline alliance. When it comes to the more practical aspects of

expansion such as a need for more aircraft and staff, again an airline has several options; they can purchase an aircraft

either new or used, or take out a wet or dry lease.

The relative ease with which airlines can exit the industry also helps alleviate rivalry as leases on airplanes can be

cancelled, and owned planes can be sold to rival airlines or new/smaller airlines looking to purchase cheaper used

aircraft. Contracts with airports and fuel suppliers etc. can also be cancelled.

However, the general lack of diversity for airlines can be problematic as rival airlines have little to differentiate

themselves from one another. Airlines are generally restricted to differentiation in the level of service they offer to their

business and first class passengers, e.g. airport lounges and in-flight services. Coach class ordinarily offers the same

degree of service across most airlines. Low-cost carriers differentiate themselves on price, offering absolute basic levels

of service to customers, charging extra for items and services that are normally inclusive of the price of a ticket for

regular carriers. Many airlines offer charter flights and air cargo transport services, with some also offering complete

vacation packages. However, companies offering these vacation packages are the exception to the rule and the lack of

diversity among airlines (essentially all airlines offer the same core product, the air transportation of passengers) creates

a reliance on the airline industry which results in fierce competition.

The degree of similarity amongst industry players contributes to an alleviation in rivalry. As airlines have similar business

models and structures, behavior from rival airlines is easier for competitors to predict.

This is offset by significant storage costs in the airline industry. A seat on a flight can only be sold up to a particular time:

once the plane leaves the ground, there is no way to generate revenue from an empty seat. This is analogous to the

situation in food retail where a product that is too old becomes unsellable, and is reflected in the high score for storage

costs.

The strong performance of the airline industry in Australia in recent years contributes to the assuagement of rivalry.

Overall, rivalry in the global airline industry is assessed as moderate.



LEADING COMPANIES

Air New Zealand Limited

Table 7: Air New Zealand Limited: key facts

Head office: Air New Zealand House, 185 Fanshawe Street, Auckland 1010, NZL

Telephone: 64 9 336 2400

Fax: 64 9 336 2401

Website: www.airnewzealand.com

Financial year-end: June

Ticker: AIZ, AIR

Stock exchange: Australian, New Zealand

SOURCE: COMPANY WEBSITE M A R K E T L I N E

Air New Zealand Limited (ANZ) is an international and domestic airline group that provides air passenger and cargo

transport services. The company operates in Australia, New Zealand and the US.

ANZ operates its business through a single segment: transportation of passengers and cargo.

ANZ's transportation of passengers and cargo segment provides an integrated network of scheduled airline services to,

from and within New Zealand.

The company's fleet of jet aircraft comprises a range of Boeings, ATRs and Airbus among others.

ANZ, through its subsidiary Air New Zealand Engineering Services, provides engineering services including air motive

and component MRO (maintenance, repair and overhaul) services with customers in New Zealand, Australia, Asia, the

Americas and Europe. The company also offers engineering services through its other subsidiaries and joint ventures

which includes Safe Air Limited, TAE Gas Turbines Pty Limited, TAE Aviation Pty Limited, Christchurch Engine Centre,

ANZGT Field Services LLC and Pacific Leisure Group Limited. ANZ also provides consultancy services to the aviation

industry.

The company's other subsidiaries include Altitude Aerospace Interiors Limited, a provider of aviation design and

engineering services; Air New Zealand Aircraft Holdings Limited, a provider of aircraft leasing and financing services;

and Mount Cook Airline Limited, Air Nelson Limited and Eagle Airways Limited which are involved in the provision of

aviation services. ANZ is also engaged in investing activities through Air New Zealand Associated Companies Limited.

Key Metrics

The company recorded revenues of $3,866 million in the fiscal year ending June 2014, an increase of 1.0% compared to

fiscal 2013. Its net income was $217 million in fiscal 2014, compared to a net income of $150 million in the preceding

year.



Table 8: Air New Zealand Limited: key financials ($)

$ million 2010 2011 2012 2013 2014

Revenues 3,354.6 3,599.2 3,716.9 3,826.4 3,866.2

Net income (loss) 68.0 67.2 58.9 150.1 217.2

Total assets 3,811.5 4,064.3 4,526.2 4,639.7 4,850.3

Total liabilities 2,513.1 2,817.3 3,126.6 3,146.5 3,298.2

Employees 10,499 10,861 10,453 10,336 10,546

SOURCE: COMPANY FILINGS M A R K E T L I N E

Table 9: Air New Zealand Limited: key financials (NZ$)

NZ$ million 2010 2011 2012 2013 2014

Revenues 4,046.0 4,341.0 4,483.0 4,615.0 4,663.0

Net income (loss) 82.0 81.0 71.0 181.0 262.0

Total assets 4,597.0 4,902.0 5,459.0 5,596.0 5,850.0



Table 10: Air New Zealand Limited: key financial ratios

Ratio 2010 2011 2012 2013 2014

Profit margin 2.0% 1.9% 1.6% 3.9% 5.6%

Revenue growth (12.2%) 7.3% 3.3% 2.9% 1.0%

Asset growth (8.9%) 6.6% 11.4% 2.5% 4.5%

Liabilities growth (11.9%) 12.1% 11.0% 0.6% 4.8%

Debt/asset ratio 65.9% 69.3% 69.1% 67.8% 68.0%

Return on assets 1.7% 1.7% 1.4% 3.3% 4.6%

Revenue per employee $319,517 $331,388 $355,586 $370,200 $366,602

Profit per employee $6,476 $6,183 $5,632 $14,519 $20,598




Figure 13: Air New Zealand Limited: revenues & profitability


Figure 14: Air New Zealand Limited: assets & liabilities




Qantas Airways Limited

Table 11: Qantas Airways Limited: key facts

Head office: 10 Bourke Road, Mascot, New South Wales 2020, AUS

Telephone: 61 2 9691 3636

Fax: 61 2 9490 1888

Website: www.qantas.com


Ticker: QAN

Stock exchange: Australian


Qantas Airways Limited is Australia's largest domestic and international airline group. The group provides regional,

domestic and international services. It is also engaged in the sale of international and domestic holiday tours and

providing associated support activities, including flight training, catering, passenger and ground handling, and

engineering and maintenance services. Qantas offers services worldwide primarily to Australia, New Zealand, Asia,

North and South America, Africa and Europe.

Qantas offer services to various destinations across the globe, including Australia and those served by codeshare

partner airlines. In FY2014, the group operated a fleet of 303 aircraft, including 203 owned aircraft and 100 leased, with

an average fleet age of 7.7 years. Qantas carried 48.8 million passengers in FY2014 with a load factor of 77.4%. During

the year, the group's available seat kilometers (ASKs) and revenue passenger kilometers (RPKs) stood at 141,715

million and 109,659 million, respectively.

Qantas operates through six segments: Qantas domestic, Qantas international, Jetstar group, Qantas loyalty, Qantas

freight, and corporate/ unallocated.

Qantas domestic is a full service airline carrying 21.8 million passengers in FY2014 on over 4,600 flights per week in

Australia. It is also a single integrated airline providing airline transportation through its brands Qantas, QantasLink and

Network Aviation. The main markets of Qantas domestic are all Australian capital cities, large metropolitan areas as well

as various regional hubs throughout Australia. The QantasLink and Network Aviation, together service 53 metropolitan

and regional regular passenger transport destinations across Australia and Port Moresby in Papua New Guinea, as well

as 13 dedicated fly-in-fly-out charter destinations.

Qantas international is a premium full service international airline providing transportation between Australia, New

Zealand, Asia, North and South America, Africa, the Middle East and Europe under the Qantas brand. In FY2014, the

segment carried approximately 5.8 million passengers on over 550 flights per week.

The Jetstar group is Qantas's low cost airline brand operating in the leisure and value-based markets. Jetstar offers

services across Australia, New Zealand and the Asia-Pacific region. Jetstar's Australian operation is wholly-owned by

Qantas and managed separately and operates independently. Jetstar also has holdings in Singapore-based Jetstar Asia,

Vietnam-based Jetstar Pacific, Jetstar Japan and Jetstar Hong Kong. Jetstar carried approximately 21.1 million

passengers in FY2014.

Qantas Loyalty is a coalition loyalty business with 10.1 million members in FY2014 and hundreds of earn partners. It

operates in the international loyalty market with a focus on Australia and New Zealand. Qantas Loyalty customers

include program partners and Qantas Frequent Flyer (QFF) members. In FY2014, over 4.6 million award seats were

redeemed on flights, over 550,000 awards redeemed on products and vouchers through the QFF Store, and almost 1

million Auto- Rewards redeemed through Woolworths Everyday Rewards.



Qantas freight is an independent air freight service which markets the freight capacity on Qantas and Jetstar passenger

aircraft. It also operates a fleet of 11 dedicated freighters. The business offers a full range of air freight services,

including airport to airport air linehaul and ground handling services (including customs clearance), supported by related

courier and trucking services. In FY2014, Qantas freight operated a network of 22 cargo handling terminals which

provided ground handling to the Qantas group and over 25 other airlines. Qantas freight is present in all international

markets where Qantas flies and has dedicated freighter aircraft operating between Australia and Asia, New Zealand and

the Americas, and Asia and the Americas.

The corporate/unallocated segment includes costs associated with the centralized management and governance of the

Qantas Group, together with certain items which are not allocated to business segments and other activities of the

Qantas Group.

Key Metrics

The company recorded revenues of $13,834 million in the fiscal year ending June 2014, a decrease of 2.7% compared

to fiscal 2013. Its net loss was $2,562 million in fiscal 2014, compared to a net income of $1 million in the preceding year.

Table 12: Qantas Airways Limited: key financials ($)

$ million 2010 2011 2012 2013 2014

Revenues 12,261.9 13,421.6 14,169.6 14,217.4 13,834.4

Net income (loss) 100.9 224.4 (219.9) 0.9 (2,562.0)

Total assets 17,941.8 18,796.1 19,084.4 18,051.7 15,606.0



Table 13: Qantas Airways Limited: key financials (A$)

A$ million 2010 2011 2012 2013 2014

Revenues 13,607.0 14,894.0 15,724.0 15,777.0 15,352.0

Net income (loss) 112.0 249.0 (244.0) 1.0 (2,843.0)

Total assets 19,910.0 20,858.0 21,178.0 20,032.0 17,318.0





Table 14: Qantas Airways Limited: key financial ratios

Ratio 2010 2011 2012 2013 2014

Profit margin 0.8% 1.7% (1.6%) 0.0% (18.5%)

Revenue growth (6.5%) 9.5% 5.6% 0.3% (2.7%)

Asset growth (0.7%) 4.8% 1.5% (5.4%) (13.5%)

Liabilities growth (2.5%) 5.6% 4.0% (7.2%) 1.8%

Debt/asset ratio 70.0% 70.5% 72.2% 70.8% 83.5%

Return on assets 0.6% 1.2% (1.2%) 0.0% (15.2%)


Figure 15: Qantas Airways Limited: revenues & profitability




Figure 16: Qantas Airways Limited: assets & liabilities




Regional Express Holdings Limited

Table 15: Regional Express Holdings Limited: key facts

Head office: 81-83 Baxter Road, Mascot, New South Wales 2020, AUS

Telephone: 61 2 9023 3555

Fax: 61 2 9023 3599

Website: www.rex.com.au


Ticker: REX



Regional Express Holdings Limited (REX) is an Australian airline company engaged in the provision of air transportation

for passengers and freight under the Regional Express brand, transporting over a million passengers annually.

The company operates through three segments: regular public transport, charter flights, and training.

REX operates a fleet of 96 aircraft comprised of the Saab 340, Westwind 1124, Lear 35/36, Brasilia 120, Beechcraft

1900D, King Air B200C, Piper Chieftain, Cessna 310, Piper Warrior, Piper Seminole and the Cessna 150.

The company's subsidiaries include Regional Express Pty Limited, Rex Freight & Charter Pty Limited, Rex Investment

Holdings Pty Limited, Air Link Pty Limited, Pel-Air Aviation Pty Limited, Australian Airline Pilot Academy Pty Limited and

VAA Pty Ltd.

Key Metrics

The company recorded revenues of $228 million in the fiscal year ending June 2014, a decrease of 1.9% compared to

fiscal 2013. Its net income was $7 million in fiscal 2014, compared to a net income of $13 million in the preceding year.

Table 16: Regional Express Holdings Limited: key financials ($)

$ million 2010 2011 2012 2013 2014

Revenues 207.3 214.5 246.0 232.5 228.0

Net income (loss) 22.5 16.2 22.5 12.6 7.2

Total assets 197.4 216.3 234.3 234.3 260.4

Total liabilities 61.3 71.2 74.8 71.2 90.1




Table 17: Regional Express Holdings Limited: key financials (A$)

A$ million 2010 2011 2012 2013 2014

Revenues 230.0 238.0 273.0 258.0 253.0

Net income (loss) 25.0 18.0 25.0 14.0 8.0

Total assets 219.0 240.0 260.0 260.0 289.0

Total liabilities 68.0 79.0 83.0 79.0 100.0


Table 18: Regional Express Holdings Limited: key financial ratios

Ratio 2010 2011 2012 2013 2014

Profit margin 10.9% 7.6% 9.2% 5.4% 3.2%

Revenue growth (8.4%) 3.5% 14.7% (5.5%) (1.9%)

Asset growth 30.4% 9.6% 8.3% 0.0% 11.2%

Liabilities growth 58.1% 16.2% 5.1% (4.8%) 26.6%

Debt/asset ratio 31.1% 32.9% 31.9% 30.4% 34.6%

Return on assets 12.9% 7.8% 10.0% 5.4% 2.9%


Figure 17: Regional Express Holdings Limited: revenues & profitability




Figure 18: Regional Express Holdings Limited: assets & liabilities




Virgin Australia Holdings Limited

Table 19: Virgin Australia Holdings Limited: key facts

Head office: 56 Edmondstone Road, Bowen Hills, Queensland 4006, AUS

Telephone: 61 7 3295 3000

Fax: 61 7 3295 3996

Website: www.virginaustralia.com


Ticker: VAH



Virgin Australia Holdings (Virgin Australia) is an Australian provider of airline services. The company has operations in

Australia, Singapore and New Zealand.

The company operates through two segments: domestic operations and international operations.

Virgin Australia's domestic operations offer Australian domestic flights including regional network operations. Its fleet

includes Boeing B737, Airbus A320 and A330, ATR 72-500 turbo-props, Embraer E170 and E190, and Fokker F50 and

F100. The segment offers a frequent flyer program.

The company's international flights segment uses a mix of Boeing 777 and Boeing 737 aircraft. It operates flights to the

Trans-Pacific, Abu Dhabi, Trans-Tasman, Pacific Island and South East Asia regions.

Virgin Australia's airline partners include Air New Zealand Limited, Delta Air Lines Inc., Etihad Airways P.J.S.C,

Singapore Airlines Limited, Virgin America, Hawaiian Airlines and Virgin Atlantic.

The company's subsidiaries include Virgin Australia Airlines Pty Ltd, Virgin Tech Pty Ltd, VB Investco Pty Ltd, Virgin

Australia (NZ) Holdings Pty Ltd, Virgin Australia Airlines (NZ) Ltd, Red Jet Foundation Pty Ltd, Skywest Airlines (S) Pte

Ltd, Virgin Australia (NZ) Employment and Crewing Ltd, VAH Newco No1 Pty Ltd and VB Training Pty Ltd.

Key Metrics

The company recorded revenues of $3,878 million in the fiscal year ending June 2014, an increase of 7.5% compared to

fiscal 2013. Its net loss was $321 million in fiscal 2014, compared to a net loss of $88 million in the preceding year.

Table 20: Virgin Australia Holdings Limited: key financials ($)

$ million 2010 2011 2012 2013 2014

Revenues 2,686.3 2,947.6 3,527.1 3,606.4 3,877.6

Net income (loss) 18.9 (61.3) 20.7 (88.3) (320.8)

Total assets 3,489.2 3,461.3 3,600.1 3,988.5 4,216.5





Table 21: Virgin Australia Holdings Limited: key financials (A$)

A$ million 2010 2011 2012 2013 2014

Revenues 2,981.0 3,271.0 3,914.0 4,002.0 4,303.0

Net income (loss) 21.0 (68.0) 23.0 (98.0) (356.0)

Total assets 3,872.0 3,841.0 3,995.0 4,426.0 4,679.0



Table 22: Virgin Australia Holdings Limited: key financial ratios

Ratio 2010 2011 2012 2013 2014

Profit margin 0.7% (2.1%) 0.6% (2.4%) (8.3%)

Revenue growth 13.1% 9.7% 19.7% 2.2% 7.5%

Asset growth 15.0% (0.8%) 4.0% 10.8% 5.7%

Liabilities growth 5.3% (0.8%) 5.2% 10.4% 7.2%

Debt/asset ratio 75.9% 75.9% 76.7% 76.5% 77.6%

Return on assets 0.6% (1.8%) 0.6% (2.3%) (7.8%)


Figure 19: Virgin Australia Holdings Limited: revenues & profitability




Figure 20: Virgin Australia Holdings Limited: assets & liabilities




MACROECONOMIC INDICATORS

Country Data

Table 23: Australia size of population (million), 2010–14

Year Population (million) % Growth

2010 22.0 1.2%

2011 22.3 1.2%

2012 22.6 1.1%

2013 22.8 1.1%

2014 23.1 1.1%


Table 24: Australia gdp (constant 2005 prices, $ billion), 2010–14

Year Constant 2005 Prices, $ billion % Growth

2010 838.5 2.3%

2011 860.1 2.6%

2012 890.0 3.5%

2013 911.4 2.4%

2014 936.5 2.8%


Table 25: Australia gdp (current prices, $ billion), 2010–14

Year Current Prices, $ billion % Growth

2010 1,249.0 25.2%

2011 1,498.5 20.0%

2012 1,555.9 3.8%

2013 1,505.8 (3.2%)

2014 1,483.2 (1.5%)




Table 26: Australia inflation, 2010–14

Year Inflation Rate (%)

2010 2.8%

2011 3.3%

2012 1.8%

2013 2.4%

2014 2.5%


Table 27: Australia consumer price index (absolute), 2010–14

Year Consumer Price Index (2005 = 100)

2010 115.8

2011 119.7

2012 121.8

2013 124.8

2014 127.9


Table 28: Australia exchange rate, 2010–14

Year Exchange rate ($/A$) Exchange rate (€/A$)

2010 1.0906 1.4462

2011 0.9687 1.3477

2012 0.9660 1.2419

2013 1.0360 1.3772

2014 1.1097 1.4728




METHODOLOGY

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Industry associations

Civil Aviation Safety Authority

16 Furzer Street, Phillip ACT 2606, AUS

Tel.: 61 2 6217 1111

www.casa.gov.au

International Civil Aviation Organization (ICAO) 252/1 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, THA

Tel.: 66 2 537 8189

Fax: 66 2 537 8199

www.icao.int

International Air Transport Association (IATA) 800 Place Victoria, PO Box 113, Montreal, H4Z 1M1, Quebec, CAN

Tel.: 1 514 874 0202

Fax: 1 514 874 9632

www.iata.org

Related MarketLine research

Industry Profile

Global Airlines

Airlines in China

Airlines in the United Kingdom

Airlines in Brazil

Airlines in the United States



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