Domestic Air Travel Procurement Category Market Research Report from IBISWorld has Been Updated

Los Angeles, California (PRWEB) February 21, 2015

Domestic air travel has a buyer power score of 2.6 out of 5, indicating limited negotiating power for buyers. Major airlines wield significant pricing power. According to IBISWorld market research analyst, Andrew Krabeepetcharat, “These suppliers’ high market share and use of differential pricing means that most buyers cannot negotiate for discounts on published fares.” During the past three years, airfare has risen at a moderate rate, despite a decline in airlines’ largest cost, fuel. Moderate airfare growth illustrates the market-based nature of domestic air travel prices, because input costs play a lesser role in determining fares than demand and competition.

Unfortunately for buyers, recent growth in major airlines’ market share has eroded competition. “Legacy airlines have engaged in large-scale mergers and acquisitions during the past decade, the most recent of which was 2013’s merger of AMR Corporation and US Airways to form American Airlines Group,” says Krabeepetcharat. Additionally, the domestic air travel market’s largest nonlegacy airline, Southwest, acquired AirTran in 2011. Consolidation has resulted in merged carriers dominating routes that were once contested by smaller players, particularly routes between hub airports. While some low-cost airlines have grown during recent years, such growth has largely stemmed from serving more remote secondary airports and leisure markets, neither of which are suitable for many business travelers. Additionally, the domestic market is protected from foreign competition, further limiting buyer choice. IBISWorld expects major airlines to continue to consolidate, though on a smaller scale, during the next three years to gain further control over market capacity and maintain moderate price growth.

Airline consolidation has been accompanied by aggressive unbundling of services as airlines seek to lower costs and raise revenue. As a result, travelers have faced a proliferation of ancillary fees for services that were once included with airfare. Airlines’ increasing reliance on such fees has made it more difficult for travelers to grasp the full price of air travel and comparison shop. Fortunately for travelers, recent and forthcoming passenger protection regulations increase fee transparency and reduce the risk of incurring unexpected costs when flying. For more information, visit IBISWorld’s Domestic Air Travel procurement category market research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of domestic air travel. Domestic air travel includes scheduled passenger routes within the United States. Airlines are the dominant suppliers in this market. Other supplier types include corporate travel management companies, travel agencies and online travel companies. This report does not cover international air travel, aircraft charter services or air cargo transport.

Executive Summary



Pricing Environment



Price Fundamentals



Benchmark Price



Pricing Model



Price Drivers



Recent Price Trend



Price Forecast



Product Characteristics



Product Life Cycle



Total Cost of Ownership



Product Specialization



Substitute Goods



Regulation



Quality Control



Supply Chain & Vendors



Supply Chain Dynamics



Supply Chain Risk



Imports



Competitive Environment



Market Share Concentration



Market Profitability



Switching Costs



Purchasing Process



Buying Basics



Buying Lead Time



Selection Process



Key RFP Elements



Negotiation Questions



Buyer Power Factors



Key Statistics

About IBISWorld Inc.



IBISWorld is one of the world’s leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://ift.tt/UiKiKD or call 1-800-330-3772.

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