Looking Back, Looking Ahead: The top 10 developments in 2016—and what to watch in 2017

The top 10 developments in 2016—and what to watch in 2017In many ways, to the eyes of the world’s airlines, 2016 looked a lot like 2015, which was a radical break from pre-2014 conditions. Again this year, the industry operated with a backdrop of low fuel prices, strong traffic growth, a strong U.S. dollar and more favorable economic circumstances for countries less dependent on commodity exports. And best of all, according to IATA forecasts—not to mention three quarters of hard financial data—2016 will be another strongly profitable year for the industry as a whole, led by U.S. carriers but true also of carriers in Asia, Europe and elsewhere. That said, buried underneath the industry’s composite figures were pockets of pain for airlines with certain traffic segments in certain regions. On Airline Weekly’s list of noteworthy trends a year ago, for example, was the thensudden pressure mounting on Gulf carriers, with their heavy exposure to oil sector business, non-dollar revenues and overcapacity. That only intensified in 2016. This year featured a new set of unique developments, which form this year’s list of Airline Weekly’s 10 most noteworthy developments, in no particular order:

1. Leisure demand drives strong traffic growth: The global economy hasn’t had a great year, but cheap fuel was enough to trigger falling airfares and robust consumer spending in big economies like the U.S., China and even Europe. No wonder why international tourism demand was “robust” in the first three quarters of the year, according to the UNWTO, with tourism spending by Chinese travelers up fully 19% y/y. Americans spent 9% more on international travel, Germans 5% more and Brits 10% more. Not even security incidents in France, Turkey, Egypt and Belgium (nor the Zika virus early in the year) stopped people from traveling—they merely went elsewhere. Asians stayed closer to home, for example, leading to a 24% spike in arrivals to Japan. Spain, Portugal and Ireland enjoyed double-digit increases too.

2. Longhaul leisure was especially hot: Strength was particularly evident in the longhaul leisure segment, giving life to the long-troubled longhaul LCC concept, as pursued with vigor in 2016 by carriers like Norwegian and WestJet, as well as subcarriers owned by Lufthansa (Eurowings), Air Canada (Rouge), Korean Air (Jin Air), Singapore Airlines (Scoot), Qantas (Jetstar) and soon Air France (if unions allow). Long- …

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