According to Abhay Singh, lead analyst at Technavio for aerospace components research, “Global air traffic has been increasing significantly, particularly in the emerging countries in APAC, the Middle East, and South America. In the next 20 years, global air passenger traffic is slated to increase by around 5% and full service carriers are expected to account for a major share of this traffic.”
Growing urbanization and increase in purchasing power, especially in emerging markets like China, India, and Brazil, provide excellent growth opportunities for long haul traffic, which is mostly served by FSCs.
Technavio’s lead aerospace and defense research analysts have identified the following three factors that will drive the global full-service carrier market:
- Growth of scheduled air passenger traffic
- Emerging nations driving market growth
- Urbanization to benefit FSCs
Growth of scheduled air passenger traffic
The rising demand for air travel from emerging countries in APAC, the Middle East, and South America has led to a progressive increase in air traffic worldwide. Technavio envisages an increase of almost 5% in the next 20 years.
There has been a continuous increase in the number of commercial flights and passengers every year and this is expected to continue over the forecast period. Growing air traffic has been reported in major airports such as Beijing Capital International Airport, China and Hartsfield-Jackson Atlanta International Airport, US.
In 2014, full service carriers (FSCs) accounted for almost 70% of the scheduled air passenger capacity in terms of seats. Therefore, the market for FSCs is expected to increase with the growth in air traffic during the forecast period.
Emerging nations driving market growth
Emerging regions such as Asia, Africa, Latin America, and the Middle East, are showing a higher rate of economic growth than developed regions. Technavio’s research shows that the middle class in Asia in slated to multiply by 2033. Globally, the middle-class population is expected to double from 33% to 63%.
“China, India, and Brazil present high growth opportunities for FSCs owing to rising levels of urbanization, concentration of wealth, and the consequent increase in demand for air travel,” says Abhay.
The high number of aircraft orders from the region complements this increase in demand. Airbus expects to see continued demand for larger models that can fly on long haul routes and cater to both regional and domestic sectors. The company is estimating demand for nearly 9,300 wide-body passenger and freight aircraft over the next 20 years, valued at approximately USD 2.5 trillion. All five of the largest airlines in APAC (in terms of passengers carried) are FSCs.
Urbanization to benefit FSCs
Urban population worldwide has grown rapidly from 746 million in 1950 to 3.9 billion in 2014. By 2050, 66% of the world’s population is likely to be urban as against 30% in 1950. Tokyo has a population of 38 million and is the world’s largest city. It is followed by New Delhi (25 million) and Shanghai (23 million). Mexico City, and Mumbai and São Paulo, each have a population of approximately 21 million.
With an increase in urbanization, there will be a rise in the demand for air travel for personal and business purposes.
The FSCs' hub-and-spoke structure ensures that all destinations of an airline are linked to a central airport or a hub. It enables airlines to obtain efficient flight frequencies and an adequate load factor, especially for large aircrafts. Large cities can serve as major hubs for the FSC business model, and will suit the hub-and-spoke structure, as they will have more than 95% of all long haul traffic connecting through them.
Browse Related Reports:
- Aviation Market in the UK 2015-2019
- Global Low Cost Carrier Market 2015-2019
- Global Business Jet Market 2015-2019
Purchase these three reports for the price of one by becoming a Technavio subscriber. Subscribing to Technavio’s reports allows you to download any three reports per month for the price of one. Contact firstname.lastname@example.org with your requirements and a link to our subscription platform.
Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.
Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
If you are interested in more information, please contact our media team at email@example.com.