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Capacity, capacity, capacity
01 August 2013
Bobby Janagan, General Manager, Rolls-Royce & Partners Finance, discusses capacity management.
In the economic downturn that
came after the September 11 2001 terrorist attacks, airlines
worldwide posted large losses because of the significant drop
The economic downturn that
followed the 2008 financial crisis was much more severe, but
airlines did not incur losses to the same magnitude. How did
the airlines perform better second time around?
The answer is capacity
Since 2008 airlines have managed
their capacity in a more disciplined way and focused on yield
instead of load factors.
They have managed that capacity
either by parking or returning aircraft to the lessors. In the
past 25 years two major drivers have propelled growth in the
aviation industry. First, significant passenger and freight
demand has been achieved on the back of general economic
growth, particularly from the emerging markets.
Second, governments worldwide have liberalized the airline
industry by privatizing state-owned airlines, as well as
relaxing ownership and...
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