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AU INDUSTRY (ANZSIC) REPORT I4901 International Airlines in Australia Nosedive: The COVID-19 outbreak has prompted revenue to plummet significantly Tom Youl | April 2021 IBISWorld.com +61-3-9655-3800 [email protected] Contents About This Industry…………………………………….5 Industry Definition………………………………………………….5 Major Players……………………………………………………….. 5 Main Activities……………………………………………………….5 Supply Chain………………………………………………………….6 Similar Industries………………………………………………….. 6 Related International Industries………………………………6 Industry at a Glance…………………………………… 7 Executive Summary………………………………………………. 9 Industry Performance………………………………. 10 Key External Drivers……………………………………………..10 Current Performance……………………………………………11 Industry Outlook……………………………………… 15 Outlook………………………………………………………………. 15 Performance Outlook Data………………………………….. 17 Industry Life Cycle………………………………………………. 17 Products and Markets………………………………. 19 Supply Chain………………………………………………………. 19 Products and Services………………………………………….19 Demand Determinants………………………………………… 21 Major Markets……………………………………………………..22 International Trade……………………………………………….23 Business Locations…………………………………………….. 23 Competitive Landscape……………………………..26 Market Share Concentration………………………………… 26 Key Success Factors…………………………………………… 26 Cost Structure Benchmarks…………………………………. 27 Basis of Competition…………………………………………… 30 Barriers to Entry………………………………………………….. 31 Industry Globalization…………………………………………..32 Major Companies……………………………………..34 Major Players……………………………………………………… 34 Other Players……………………………………………………….42 Operating Conditions……………………………….. 43 Capital Intensity………………………………………………….. 43 Technology And Systems……………………………………. 44 Revenue Volatility……………………………………………….. 47 Regulation & Policy………………………………………………48 Industry Assistance…………………………………………….. 50 Key Statistics…………………………………………..51 Industry Data……………………………………………………….51 Annual Change…………………………………………………….51 Key Ratios………………………………………………………….. 51 Additional Resources……………………………….. 52 Additional Resources………………………………………….. 52 Industry Jargon……………………………………………………52 Glossary Terms……………………………………………………52 International Airlines in Australia I4901 April 2021 2 IBISWorld.com About IBISWorld IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching and preparing for meetings, and more time focused on making strategic business decisions that benefit you,your company and your clients. We offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that are truly global in nature. International Airlines in Australia I4901 April 2021 3 IBISWorld.com Covid-19 Coronavirus Impact Update IBISWorld’s analysts constantly monitor the industry impacts of current events in real-time – here is an update of how this industry is likely to be impacted as a result of the global COVID-19 pandemic: The International Airlines industry has been among the most severely affected by the COVID-19 pandemic. The closure of international borders has resulted in overseas travel volumes becoming negligible. Although airfreight services are projected to offer some reprieve to industry operators, revenue is forecast to decline by 67.2% in 2020-21. For more detail, please see the Current Performance chapter. Industry profitability has been similarly negatively affected. Decreased demand is expected to cause margins to be in strong negative territory in 2020-21. For more detail, please see the Cost Structure Benchmarks chapter. The COVID-19 pandemic has strongly affected the industry’s service segments. The airfreight segment is anticipated to increase significantly as a share of revenue in 2020-21. For more detail, please see the Products & Services chapter. International Airlines in Australia I4901 April 2021 4 IBISWorld.com About This Industry Industry
Definition The industry primarily transports passengers by air over
scheduled routes thateither end or originate internationally. Airlines
that provide scheduled international air freight transport are also included in the industry. Major Players Qantas Airways Limited Singapore Airlines Ltd Emirates Group Qatar Airways Group Q.C.S.C. Fedex Express Australia Pty Ltd Cathay Pacific Airways Limited Main Activities The primary activities of this industry: International air passenger transport International airfreight transport Air transport terminal operation (except airports) The major products and services in this industry: Full-fare passenger transport Low-fare passenger transport Freight transport Other services International Airlines in Australia I4901 April 2021 5 IBISWorld.com Supply Chain SIMILAR INDUSTRIES Aircraft Manufacturing and Repair Services in Australia Domestic Airlines in Australia Non-Scheduled Air Transport in Australia Travel Agency and Tour Arrangement Services in Australia RELATED INTERNATIONAL INDUSTRIES Global Airlines International Airlines in the US Airlines in China Scheduled Passenger Air Transport in the UK Scheduled Air Transportation in Canada Airlines in New Zealand Passenger Air Transport in Ireland International Airlines in Australia I4901 April 2021 6 IBISWorld.com Industry at a Glance Key Statistics $8.2bn Revenue Annual Growth Annual Growth Annual Growth 2016-2021 2021-2026 2016-2026 -22.4% 29.7% $-2.6bn Profit Annual Growth Annual Growth 2016-2021 2016-2026 -208.1% -31.4% Profit Margin Annual Growth Annual Growth 2016-2021 2016-2026 -37.4% 52 Businesses Annual Growth Annual Growth Annual Growth 2016-2021 2021-2026 2016-2026 -2.8% 5.2% 15,837 Employment Annual Growth Annual Growth Annual Growth 2016-2021 2021-2026 2016-2026 -22.3% 28.9% $2.3bn Wages Annual Growth Annual Growth Annual Growth 2016-2021 2021-2026 2016-2026 -19.4% 25.8% Key External Drivers % = 2016-2021 Annual Growth 2.9% World price of crude oil -34.3% International travel to Australia -33.0% International travel by Australians 0.2% Consumer sentiment index 0.3% Trade-weighted index Industry Structure POSITIVE IMPACT Life Cycle Growth Barriers to Entry High MIXED IMPACT Concentration Medium NEGATIVE IMPACT Revenue Volatility High Capital Intensity High Industry Assistance Low Regulation Heavy Technology Change High Globalization High Competition High Key Trends Growing global tourism supported the industry’s expansion over the three years through 2018-19 The COVID-19 pandemic has limited industry activity, with airfreight offering support to airlines The industry is anticipated to record a significant loss in 2020-21, due to travel restrictions Once the COVID-19 pandemic is contained, the industry is forecast to recover rapidly Full-fare airlines have been working to differentiate their service offering from low-cost carriers International airline capacity is anticipated to increase to cope with higher demand The COVID-19 pandemic has resulted in industry revenue and profitability plummeting International Airlines in Australia I4901 April 2021 7 IBISWorld.com Products & Services Segmentation Full-fare passenger transport 9.0% Low-fare passenger transport 0.2% Freight transport 90.4% Other services 0.4% International Airlines Source: IBISWorld Major Players % = share of industry revenue SWOT STRENGTHS High & Steady Barriers to Entry Growth Life Cycle Stage Low Imports High Revenue per Employee WEAKNESSES Low & Steady Level of Assistance High Competition High Volatility Low Profit vs. Sector Average High Customer Class Concentration High Product/Service Concentration High Capital Requirements OPPORTUNITIES High Revenue Growth (2021-2026) High Performance Drivers World price of crude oil THREATS Very Low Revenue Growth (2005-2021) Low Revenue Growth (2016-2021) Trade-weighted index International Airlines in Australia I4901 April 2021 8 IBISWorld.com Executive Summary Airlines from different countries operate in the International Airlines industry. While many airlines, such as Emirates and Singapore Airlines, have a significant market presence in Australia, few foreign airlines have local incorporated subsidiaries. As a result, any airline that flies passengers or freight to or from Australia is included in the industry. The number of people travelling to and from Australia grew strongly over the three years through 2018-19, mostly due to increased tourism from countries in the Asia- Pacific region and from the United States. The growing popularity of Australia as a tourist destination has benefited international airlines and given new entrants the chance to capitalise on increased demand. However, the COVID-19 pandemic is expected to significantly hinder the industry over the two years through 2020-21, with international travel almost stopping. Industry revenue is anticipated to decline by 67.2% in the current year. Overall, revenue is expected to decline at an annualised 22.4% over the five years through 2020-21, to $8.2 billion. Similar to revenue, the COVID-19 pandemic has caused a sharp decline in industry profitability. The industry is expected to report a significant loss in the current year. Airline operations incur high fixed costs, which are anticipated to surge as a share of revenue over the two years through 2020-21. In addition, profit margins declined over the three years through 2018-19 due to rising aviation fuel prices. However, most airlines eased capacity growth and caused airfares to modestly rise over the two years through 2018-19, partially limiting declines in profitability. Industry profit is expected to fall sharply over the two years through 2020-21, as the COVID-19 pandemic severely reduces international air travel. Industry revenue is projected to increase at an annualised 29.7% over the five years through 2025-26, to $30.2 billion. Once the COVID-19 pandemic is contained, industry revenue is anticipated to grow strongly. International travel has strong underlying demand and has traditionally recovered quickly after periods of shock- driven decline. However, the global economic downturn is projected to further delay the industry’s recovery. In addition, international travel will likely remain restricted in 2021-22 as vaccine rollout programs continue. Exempted travel routes, such as trans-Tasman flights, and airfreight services are forecast to offer some relief to airlines over the short term. International Airlines in Australia I4901 April 2021 9 IBISWorld.com Industry Performance Key External Drivers International travel to Australia International travel to Australia measures the number of short-term international travellers arriving in Australia. Most of these people travel to Australia by air due to the country’s remote location. As a result, increased international travel to Australia tends to heighten demand for international air travel. International travel to Australia is expected to fall in 2020-21. International travel by Australians International travel by Australians measures the number of Australian residents leaving the country on short-term trips. Due to Australia’s geographic isolation, most Australians travel to other countries by air. As a result, a rise in the number of Australians travelling overseas generally increases demand for international air transport. International travel by Australians is expected to decrease in 2020-21. Trade-weighted index The value of the Australian dollar influences industry revenue. When the Australian dollar appreciates, more Australian travellers generally travel overseas as it becomes relatively cheaper. Conversely, visiting Australia becomes relatively more expensive for international travellers. Because Australian travellers are the industry’s largest market, any rise in the Australian dollar benefits the industry. The Australian dollar is expected to appreciate in 2020-21. International Airlines in Australia I4901 April 2021 10 IBISWorld.com World price of crude oil Fuel is a significant cost for international airlines. When the price of crude oil increases, the industry’s purchase costs rise. Many airlines cannot pass increases in fuel prices on to their customers due to competition from other airlines, which subsequently constrains profit margins. Passing on costs by increasing airfares tends to decrease demand for air travel, which negatively affects the industry’s performance. The world price of crude oil is expected to rise from a low base in 2020-21. However, aviation fuel prices will likely remain well below recent benchmarks, representing an opportunity for the freight transport segment. Consumer sentiment index Consumer sentiment reflects individuals’ opinions regarding their financial situation and the general economy. When consumer sentiment is positive, Australian consumers feel more optimistic about current and future economic conditions. As a result, individuals are more likely to travel abroad, increasing industry demand. Conversely, Australians tend to defer leisure travel and international holidays when consumer sentiment is negative, which can threaten growth. Consumer sentiment is expected to rise but remain negative in 2020-21. International Airlines in Australia I4901 April 2021 11 IBISWorld.com Current Performance The International Airlines industry’s performance has varied significantly between the period before and after the COVID-19 outbreak. Over the three years through 2018-19, and through most of 2019-20, airlines benefited from mostly positive operating conditions. Rising inbound tourist numbers, particularly from Asia, prompted several airlines to expand their flight routes to and from Australia. A weak Australian dollar further increased inbound tourist numbers. Despite the weaker dollar, outbound passenger numbers were growing strongly. However, the COVID-19 pandemic has severely constrained international travel over the two years through 2020-21. Overall, industry revenue is expected to decrease at an annualised 22.4% over the five years through 2020-21, to $8.2 billion. COVID-19 International airlines have faced substantial challenges over the two years through 2020-21, due to the COVID-19 pandemic. Air passenger travel to and from Australia has essentially stopped. According to the Bureau of Infrastructure and Transport Research Economics (BITRE), international passenger movements in December 2020 were 98.0% lower than in December 2019. Since March 2020, monthly passenger numbers have totalled below 100,000, when up to 4.0 million is reported under typical conditions. Most nations, including Australia, have imposed strict border controls in an attempt to limit the spread of COVID-1

9. The progression of global COVID-19 cases has pushed back the opening of international borders on several occasions. In March 2021, the Federal Government announced the international border will remain restricted until at least 17 June 2021. As a result, revenue from passengers is expected to plummet in 2020-21. Some airlines have generated limited revenue through passenger travel for migration or repatriation purposes. However, demand for airfreight has been less affected. Airfreight tonnage is expected to decline by 9.1% in 2020-21, following a 12.0% decline in 2019-20. However, revenue from airfreight services has grown amid a surge in airfreight prices. Some Australian exporters have reported price increases of over 400%. The average price charged by some airlines has more than doubled, benefiting industry airlines offering airfreight services. Global constraints on freight supply have been placing upward pressure on shipping prices, including by air and water. In response, some international airlines have maintained or increased airfreight capacity during the COVID-19 pandemic, with a surge in online retail sales partially stabilising demand. Government support initiatives such as the International Freight Assistance Mechanism have also supported revenue from airfreight activities over the past two years. Despite these factors, industry revenue is expected to decline by 67.2% in 2020-21. Passenger demand and freight International airlines depend on demand from international travellers visiting Australia and Australians travelling overseas. International Airlines in Australia I4901 April 2021 12 IBISWorld.com Due to Australia’s geographic isolation, international air travel is the primary method for getting to or from Australia. Prior to the COVID-19 pandemic, demand for international air travel was high. According to the BITRE, total inbound and outbound passenger numbers on international flights increased at an annualised 5.1% over the five years through 2018-19. However, revenue declined in 2016-17 due to a fall in international airfares. A surge in industry participation during the previous year provided consumers with more scope to find cheaper flights. Over the two years through 2018-19, capacity optimisation measures by most industry operators caused airfares to rise, with ongoing passenger volume growth boosting industry revenue over the same period. However, demand is expected to plummet over the two years through 2020-21, as the COVID-19 pandemic significantly disrupts global travel. Increases in the number of inbound tourists from Asia had driven growth in international visitors coming to Australia prior to the COVID-19 outbreak. Arrivals from Australia’s other large tourist markets, such as New Zealand and the United States, were also increasing. Ongoing capital investment from tourism-related businesses in Australia and marketing from Tourism Australia contributed to increasing visitor numbers. However, international visitors from China declined in 2019, after a period of strong growth. This decline, which occurred prior to the COVID-19 pandemic, was a worrying sign for many tourism-focused businesses, including international airlines. However, strong growth from other markets, such as India, Japan and the United States, underpinned the industry’s strong performance until January 2020. Mail and freight services typically account for a small proportion of industry activity, although international aircraft carry higher airfreight volumes than domestic services. Freight volumes largely increased in line with passenger numbers prior to the COVID-19 outbreak, as international airfreight is often transported in passenger aircraft. However, some airlines operate dedicated freighters. Some cargo companies, including United Parcel Service and FedEx, also participate in the airfreight segment. Singapore Airlines and Qantas carry most airfreight in and out of Australia, due to their global reach and extensive route networks. Prices and costs Budget carriers, such as Singapore Airline’s subsidiary Scoot Tigerair and Malaysia-based AirAsia X, extended their Australian route networks and passenger capacities over the first half of the period. This trend placed downwards pressure on airfares, particularly on routes to popular destinations such as Bali and Singapore. Other airlines responded by becoming less labour-intensive, passing on cost savings to consumers by lowering airfares. However, airfares increased over the three years through 2018-19. Many airlines, mainly full-fare carriers, wound back capacity growth over this period, while increasing demand pushed up prices. Fuel is the largest industry cost. Although fuel prices increased over the three years through 2018-19, industry profitability was supported by low prices relative to the highs reported over the three years through 2013-14. In addition, the use of increasingly fuel-efficient aircraft has reduced per-flight fuel consumption over the International Airlines in Australia I4901 April 2021 13 IBISWorld.com past five years, placing downward pressure on purchase costs. An increase in airfares over the two years through 2018-19 also moderated purchase costs relative to revenue. The price of fuel fell significantly in 2019-20, as demand from global manufacturing and transport sectors plunged. Industry profit has fallen over the past five years, and the industry is expected to report a heavy loss in the current year. Falling activity and revenue are projected to result in a significant rise in fixed costs, such as depreciation, during the COVID-19 pandemic. Historical Performance Data Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic Demand ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) 2012–13 23,840 8,296 204 56 49,767 N/A N/A 5,302 N/A 2013–14 25,852 7,135 202 54 51,320 N/A N/A 5,823 N/A 2014–15 27,644 8,957 208 53 52,743 N/A N/A 6,052 N/A 2015–16 29,188 10,595 213 60 56,014 N/A N/A 6,813 N/A 2016–17 27,513 9,987 232 62 54,176 N/A N/A 6,651 N/A 2017–18 29,080 10,469 248 65 55,867 N/A N/A 7,021 N/A 2018–19 30,458 10,904 243 63 56,053 N/A N/A 7,063 N/A 2019–20 25,090 9,584 249 65 53,088 N/A N/A 6,132 N/A 2020–21 8,219 3,304 188 52 15,837 N/A N/A 2,320 N/A International Airlines in Australia I4901 April 2021 14 IBISWorld.com Industry Outlook Outlook Once the COVID-19 pandemic is contained, the International Airlines industry is forecast to benefit from increasing tourist numbers. The number of inbound tourists is projected to recover over the long term, driving significant revenue growth for airlines. However, lingering travel restrictions and the global economic downturn are anticipated to limit demand over the five years through 2025-26, particularly early in the period. Industry revenue is forecast to rise at an annualised 29.7% over the five years through 2025-26, to $30.2 billion. Recovery from COVID-19 The International Airlines industry is anticipated to gradually recover from the effects of the COVID-19 pandemic over the next five years. However, restrictions on international travel will likely hinder the industry’s short- term outlook. The Federal Government has announced restrictions will continue until at least 17 June 2021. Many border restrictions are expected to remain until most of the adult population is vaccinated against COVID-19, which is scheduled to be in October 2021. As of March 2021, Australia is behind schedule on its vaccine rollout. Industry revenue is expected to strongly rise in 2021-22, but remain well below totals reported prior to the COVID-19 pandemic. Nations with rapid vaccine rollouts or similarly low case numbers to Australia, such as New Zealand, are expected to be key markets for travel during this period. Although demand for airfreight services is anticipated to remain strong, increasing capacity is expected to result in prices trending towards levels exhibited prior to the COVID-19 pandemic during 2021-22. The industry’s recovery from the COVID-19 pandemic will likely be strong. After previous shocks, albeit more modest ones such as SARS, international air travel has typically grown significantly. Individuals travelling to visit friends and family are forecast to be the industry’s primary market once borders reopen. In addition, fiscal stimulus packages, both domestically and abroad, are expected to hasten the economic recovery from the downturn during the COVID-19 pandemic. Nevertheless, the negative economic effects of the pandemic will likely prolong the industry’s recovery period. Airlines are forecast to carefully expand capacity over the next five years, in an attempt to boost profit and offset the severe losses International Airlines in Australia I4901 April 2021 15 IBISWorld.com reported during the COVID-19 pandemic. These strategies are projected to place upward pressure on airfares, limiting industry demand over the period. Demand for tourism A recovery in tourism to Australia is forecast to drive industry revenue growth over the next five years. Australia will likely remain a reputable tourism destination, supporting a recovery in traveller numbers. Advertising campaigns run by Tourism Australia, the government body established to promote Australian tourism, are anticipated to further support inbound tourism over the period. However, a moderate increase in the value of the Australian dollar is projected to partially limit growth, as the relative cost of travelling to Australia rises. The number of Australians travelling overseas is also anticipated to rise over the next five years, although at a slightly slower pace than growth in international visitors to Australia. Over the short term, the adverse economic effects of the COVID-19 pandemic are expected to encourage Australian residents to either substitute international travel for domestic trips or fly to destinations close to Australia, such as New Zealand. However, the strengthening Australia dollar is forecast to support demand for outbound travel over the period. International airline capacity is anticipated to increase to cope with higher demand over the next five years. While most industry operators have indicated they will only be increasing capacity in line with demand, passenger volume growth will result in more flights to and from Australia. As a result, the scope and scale of airfreight services to and from Australia are also anticipated to increase, as passenger aircraft transport a substantial quantity of airfreight. Outbound airfreight volumes will likely grow over the next five years, particularly due to increasing exports of Australian produce. Competition and costs Several airlines are forecast to exit the industry as a result of the COVID-19 pandemic. A foreign airline ceasing flights to Australia would signal an industry exit. Strong growth of inbound and outbound international trips is projected to entice new airlines into the industry over the next five years, or draw back airlines that temporarily ceased flights to Australia. Enterprise numbers are therefore forecast to increase over the period. However, airlines are expected to carefully increase capacity in an attempt to maximise airfares and boost profitability. A period of low prices to reinvigorate demand is projected to be followed by an increase in airfares. Strategies of deliberate capacity growth are forecast to limit industry competition over the next five years. Full-fare airlines have been working to differentiate their service offering from low- cost carriers. Such measures include investing in new, efficient aircraft with more legroom and improved in-flight amenities such as free Wi-Fi. Full-fare airlines are projected to be more protected from price-based competition from low-cost carriers over the next five years, as services continue to become less homogenous. Industry International Airlines in Australia I4901 April 2021 16 IBISWorld.com profit margins are projected to return to positive territory over the period. Demand is anticipated to return to long-term levels after the COVID-19 pandemic is contained, which will likely allow airlines to operate on a profitable scale. Steadily increasing airfares are also projected to support industry profitability over the period. Investment in new fuel-efficient aircraft will likely boost operating efficiencies for major airlines. Despite the increasing use of fuel-efficient aircraft, industry fuel expenses are projected to rise over the next five years, as the world price of crude oil increases. Industry players are anticipated to continue maximising employee efficiency to reduce costs and protect profit margins over the next five years. As a result, wages are projected to decline as a share of revenue over the period. However, both total wages and employment are forecast to rise over the next five years, as airlines hire more operational staff to manage increasing capacity. Performance Outlook Data Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic Demand ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) 2021–22 14,659 5,732 207 56 28,825 N/A N/A 3,883 N/A 2022–23 23,413 8,874 229 60 46,977 N/A N/A 5,917 N/A 2023–24 26,383 9,814 238 63 51,230 N/A N/A 6,494 N/A 2024–25 28,615 10,788 250 65 54,348 N/A N/A 6,973 N/A 2025–26 30,212 11,994 256 67 56,303 N/A N/A 7,301 N/A Industry Life Cycle The life cycle stage of this industry is Growth LIFE CYCLE REASONS Industry value added is growing slower than the overall economy, due to the COVID-19 pandemic Consumers are becoming increasingly value conscious by booking with budget airline carriers Industry technological change is robust and ongoing International Airlines in Australia I4901 April 2021 17 IBISWorld.com The International Airlines industry is in the growth phase of its economic life cycle. Industry value added, a measure of the industry’s contribution to the overall economy, is forecast to increase at an annualised 1.2% over the 10 years through 2025-26. This is slower than real GDP growth, which is expected to rise at an annualised 2.1% over the same period. While this indicates that the industry is underperforming compared with the overall economy, this is expected to be a temporary trend, driven by the COVID-19 outbreak. As such, this IVA performance cannot be used in isolation to determine the industry’s life cycle phase. The industry is highly competitive, with large international airlines competing to attract and retain customers. The emergence of low-cost carriers, which primarily compete on price, has increasingly drawn customers away from full-service airlines. The rise of online travel companies, such as Expedia, has allowed consumers to easily compare prices among airlines. These factors have all contributed to consumers becoming more price savvy, increasing the number of budget carriers operating in the industry. While these factors suggest the industry is in a mature phase, the industry exhibits several signs of growth. Despite an increase in price- based competition, most of the industry’s major players were expanding leading into the COVID-19 pandemic. Increasing global wealth has provided the industry with a rapidly expanding market. In addition, industry technological change is rapid, with most operators striving to incorporate emerging aviation technology. International Airlines in Australia I4901 April 2021 18 IBISWorld.com Products and Markets Supply Chain KEY BUYING INDUSTRIES 1st Tier Tourism in Australia 2nd Tier Consumers in Australia KEY SELLING INDUSTRIES 1st Tier Petroleum Product Wholesaling in Australia Aircraft Manufacturing and Repair Services in Australia 2nd Tier Non-Scheduled Air Transport in Australia Catering Services in Australia Products and Services Services provided by the International Airlines industry can be segmented into passenger and freight transport. Passenger transport services, which include both full- and low-fare travel, are the largest service segments. Industry operators also derive a small portion of revenue from surcharges and extra fees, such as excess baggage fees. The COVID-19 pandemic has significantly disrupted all industry segments. Freight transport International airlines provide cargo transport services on both freighter and passenger aircraft.