A backcloth of steady population growth, combined with the effect of improving income levels in developing regions, looks poised to thrust passenger traffic across the world’s biggest airlines higher in coming years.
This trend is already driving passenger volumes across the industry’s major operators steadily higher, and budget airline Ryanair (LSE: RYA) announced just today that traveller numbers swelled 28% during March to 6.67 million. The Irish firm’s latest blockbusting results follows growth of 29% in February, as well as the 28% advance recorded in the previous month.
Ryanair commented that fare reductions and improvements to its forward booking system, combined with the introduction of its Always Getting Better customer service proposition — designed to shrug off its shoddy image by cutting fees, improving its website and revamping its aeroplanes — have specifically paid off in recent times.
Budget firms’ purple patch set to continue
But Ryanair’s show-stopping performance is far from a one-off, and a number of its low-cost operators have also punched sterling results in recent times as holidaymakers try to stretch their budgets that little bit further. On top of this, Europe’s cheaper carriers are also reporting surging demand from commercial travellers as businesses attempt to slash costs.
Exeter’s Flybe (LSE: FLYB) announced yesterday that passenger numbers were up 15% during January-March, a result which helped push revenues 5% higher from the corresponding 2014 quarter. And Wizz Air (LSE: WIZZ) — which only floated in early March — announced recently that it had “traded well through the fourth quarter.”
Accordingly transatlantic behemoth International Consolidated Airlines (LSE: IAG), operator of blue-ribbon airlines British Airways and Iberia, plans to increase its exposure to the budget arena by acquiring Dublin-based Aer Lingus.
International Consolidated Airlines has been in hot pursuit of the company for some time now, and with good reason — it announced just today that total passenger volumes across all its brands leapt 10.5% in March, to 6.3 million. The business acquired Spanish low-cost brand Vueling back in 2013, and the strong performance of its new acquisition is prompting the Heathrow firm to ratchet up its exposure to the budget sector.
With traveller numbers expected to keep on climbing, and expectations of persistently-low oil prices boosting the profits outlook for each of the firms I have mentioned, I reckon that these airlines are in great shape to enjoy splendid long-term earnings growth.
