When we look at consolidation over time, I think we will see a better fit between the airlines’ route networks and demand. So, ultimately, we think airlines will continue to expand, but they will be very efficient in their expansion.
NEW YORK--(BUSINESS WIRE)--Through consolidation, more efficient aircraft and systems, and revenue generation, airlines today are responding to their challenging environment, says Jeff Knittel, President of Transportation Finance at CIT Group Inc. (NYSE: CIT), a global leader in transportation finance. These are just some of the findings Knittel shares while discussing CIT’s exclusive global aerospace study, “2011 Global Aerospace Outlook—Challenges of an Ever-Changing Industry.”
The interview is the second in a two-part series featured on CIT’s award-winning “5 Minute Capital” (www.5minutecapital.com) podcast series, featuring senior CIT executive commentary on current market conditions and industry trends.
Eighty-one percent of the airline executives surveyed said they expect to see an increase in consolidations over the next five years. Knittel comments: “When we look at consolidation over time, I think we will see a better fit between the airlines’ route networks and demand. So, ultimately, we think airlines will continue to expand, but they will be very efficient in their expansion.” Factors driving consolidation include marketing synergies, the need to optimize labor efficiency and cost, and opportunities to optimize fleet capacity.
In discussing the new revenue streams airlines are seeking as they work to maximize their profitability, Knittel says: “I think you have to look at it—in the case of legacy airlines, specifically—as a way for them to charge for a core product and for people to pay for things as they want them. There are certain passengers who only want a seat … and want the lowest possible fare.” The study showed that three-quarters of U.S. respondents say they are charging for the first bag, though that is not the case with carriers in Europe and other regions.
The report, prepared in association with Forbes Insights, gathered the views of senior airline executives who have fleets of 25 or more jet aircraft worldwide on the issues and challenges they are facing, as well as on the steps they plan on taking to move forward.
EDITOR’S NOTE: Complimentary copies of the report are available for download at www.cit.com/aerospaceoutlook. In addition, Mr. Knittel’s first podcast, which focused on the “Airline Industry’s Leading Challenges,” can be found at www.5minutecapital.com.
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Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $35 billion in finance and leasing assets. It provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. www.cit.com
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