As author David Allen1 says, “Much of the stress that people feel doesn’t come from having too much to do. It comes from not finishing what they started,” - the same holds true when it comes to finalizing the budget for your airline company for 2017. If you wait until the end of the year to start budget planning for 2017, you’ve already missed the boat. 2017 has already started with a BANG and it’s the perfect time to look forward to the possibilities and demands that the next financial year will bring for the aviation industry.
Bud(jet)ting: Important factors to include in your 2017 Airline Budget
Airline budgeting is slightly different than the budgeting of many businesses in other industries. In the airline industry, the numbers are purely statistics and percentages, and the available resource production units are aircrafts and routes.
Budget planning is tiresome work since the whole cost centre/locations budget should lead into one single report to arrive on the performance data. You need to analyze the financial numbers by using ratios and airline statistics. Considering the recurrent changes in airline operations nowadays, it makes a lot of sense to have periodical budget reviews.
The airline industry will experience the same remarkable growth as it did in the last year. However, there will surely be some difficulties.
Below, we have highlighted 4 of the most important factors that will be affecting airline budget considerations in 2017:
1. Jet Fuel Cost
Volatility in the jet fuel market poses a risk for airlines. An increase in jet fuel prices lifts the airline industry’s largest input cost. On the other hand, a price decrease, such as that experienced in the last year, can also affect an airline’s budget considerations. Due to the low jet fuel cost, many U.S carriers were enjoying record profits and this will continue in 2017 as well. While finalizing the budget plans for 2017, airlines need to keep in mind that the aviation sector is expected to save $23.6Bn on fuel this year.
2. Emergence of Low-Cost Carriers
Another important factor that is going to affect airline budgeting is the emergence and growth of in-house low-cost carriers within the big names in the airline industry. These airlines have an ability to gain market share without incurring losses and are a competitive force in the industry that must be considered when budgets are created.
3. Continued Passenger Growth
According to a recent statistic published by the International Civil Aviation Organization (ICAO), the total number of passengers carried on scheduled services reached 3.7 billion in the last year and this was a significant increase over the year before. The number of departures also rose to approximately 35 million globally, and there was also an increase in the world passenger traffic. As air transport carries some 35% of world trade by value, the continuous growth in airline passenger will surely be affecting airline budget in 2017.
4. Asian Countries Will See Huge Growth
If we examine the latest trends in the Asia-Pacific’s civil airline industry, we can understand that these countries are profiting most from the rise in domestic and international air passenger numbers. Keeping this in mind, Asian airlines and their increasing passenger numbers will surely be driving the global aviation markets in 2017.