If clients are bemoaning the high cost of an international ticket to Europe for a cruise or tour, 2014 may just be the start of some relief.
The KPMG Transport Tracker, a new March 2014 analytical report that examines the latest market indicators and trends in global transport, says that the new aircraft coming into the air transport pipeline should help drive down operating costs for the carriers.
But what's the benefit for consumers? “It is clear that more, newer capacity should act to drive down ticket prices," the report also said.
According to the report, full-service airlines had the largest number of aircraft on order in 2013 -- 5,168 planes – while low-cost carriers had 3,582 aircraft on order.
“Because much of this is driven by the need to replace old fleet, this should drive down ongoing operating costs,” the report states. “Therefore, although passenger demand remains strong…and load factors are increasing, the potential for excess capacity is significant,” the KPMG Transport Tracker said.
Although the authors of the Transport Tracker report acknowledged they view the manufacturers' order backlogs with a healthy degree of skepticism, they still concluded that newer capacity should have a dampening effect on ticket prices.
In addition, the report noted that low-cost carriers are expanding their fleet more aggressively than full-service airlines having almost as many aircraft on order as they are currently operating.
And, The Transport Tracker also expects further consolidation in the form of global alliances including so-called “equity alliances” and joint ventures.
Among key trends in the report?
- The improving economic environment at the end of 2013 bodes well for transport companies, especially for freight forwarders and logistics companies. With world trade picking up, earnings perspectives for transport companies are significantly stronger in 2014 than in 2013.
- Many transport companies including airlines and shipping companies who have struggled with overcapacities in the past few years, are now experiencing efficiency gains through careful capacity management, alliances and cost cutting measures.
- In the aviation sector passenger demand is expected to rise and airline profits improve. The analysis also reveals that low-cost carriers outperformed full-service airlines in 2013, a trend that is set to continue. However, increased competition between the two airline groups can be expected in 2014.
For the full report including charts in .pdf format, visit: www.kpmg.com/global/en/issuesandinsights/articlespublications/pages/transport-tracker-march-2014.aspx