Executive Summary

The revenues generated by the UK's major airlines increased by 10.8% between 1997 and 1999, to £13.3bn. Key Note estimates that the revenues generated by foreign airlines for services into and out of the UK fell by 1.7% over the same period, to £5.8bn. This was accompanied by a growth of 15.6% in the number of passengers at UK airports, to 169.7 million.

Scheduled passenger services constitute the most important sector of the UK airline industry and account for over 70% of the revenue generated. Nevertheless, non-scheduled services, including cargo transport, increased their share from 17.4% to 20.7% between 1994 and 1999.

The number of passengers using scheduled services operated by UK airlines increased by 37.8% over the period 1995 to 1999, compared with an increase of 39% in passenger kilometres. The average distance travelled by passengers, therefore, increased marginally. Over the same period, the average price per passenger fell by nearly 6%, indicating that the real cost of flying on UK airlines, per kilometre, has fallen since the mid-1990s.

The number of passenger kilometres travelled on non-scheduled services has grown at a slower rate than the number travelled on scheduled services: between 1995 and 1999, the number of passenger kilometres performed on non-scheduled services rose by 25.2%, compared with an increase of 39% on scheduled services. Non-scheduled services' share of the market, measured in terms of passenger kilometres, fell from 38.2% to 35.8% over the period.

British Airways (BA) dominates UK airlines, accounting for 54.6% of the scheduled passengers carried by UK airlines in 1999, although it carried only 0.5% of charter or non-scheduled passengers. The other major UK-registered scheduled airlines are British Midland, KLM uk (Air UK until bought by the Dutch KLM in 1997), Virgin Atlantic Airways, easyJet, Jersey European Airways, British Regional Airlines, Go and CityFlyer Express, each of which carried more than a million scheduled passengers in 1999.

In the charter sector, Britannia Airways, a subsidiary of the Thomson Travel Group, is dominant, with 25.2% of uplifted passengers in 1999. The other major charter airlines in 1999 were Air 2000, Airtours International Airways, Monarch Airlines, Flying Colours and Caledonian Airways, each of which carried more than a million passengers in 1999.

Key Note estimates that the number of passengers at UK airports will increase by 12.5% between 2000 and 2003, to 197.2 million. The market for air travel services will grow by a similar percentage in volume and value terms as the real cost of air travel continues to fall.

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