For most of the industry's history after 1978, airlines had not yet reached their cost of capital. Capacity discipline and an unprecedented drop in fuel prices have fostered the industry's healthiest phase ever. With the additional free cash flow generated, airlines are investing heavily in incremental product and airframe improvements. In the near term, we will see capacity continue to be added on certain routes, particularly by ultra-low-cost carriers (ULCCs). However, airline executives have signaled their intention to avoid recreating the history of the industry's market share battles. The main trend in 2016 is expected to be downward pressure on airfares due to increased capacity and falling fuel costs. With the proliferation of airfare transparency and the aggressive growth of ULCCs serving as a catalyst for change, the industry is evolving to attract the next generation of younger, more cost-conscious consumers by adding an unbundled (or restricted) fare class. This new fare offers significantly lower yield than other fare classes, so airlines are responding by adding extremely high ancillary revenue products/services at many points in the air travel experience. In the future, ancillary revenues will represent a larger share of the total