Commercial Aviation Market

The global Commercial Aviation Market is valued at USD 147.5 Billion in 2023 and is projected to reach a value of USD 215.3 Billion by 2032 at a CAGR (Compound Annual Growth Rate) of 4.3% between 2024 and 2032.

Key highlights of Commercial Aviation Market

• The Asia Pacific region dominated the market in 2023, obtaining the largest revenue share of 36.5%,
• The North American region will witness remarkable growth with a CAGR during the forecast period,
• In 2023, the Narrow Body segment from the Size segmentation dominated the Commercial Aviation market with significant market share of 58.5%,
• From among the Application segmentation, the Passenger segment dominated the market with 38.5% market share in 2023,
• The Commercial Aviation market is growing as a result of improvements in aircraft technology and infrastructure, which enable more efficient, safe, and comfortable air travel.

Commercial Aviation Market: Regional Overview

Asia Pacific Dominated Sales with a 36.5% share in 2023. Asia Pacific's surge is propelled by rapid urbanization, expanding middle-class populations, and the growing interconnectedness of global markets. In order to accommodate the growing demand for air travel, airlines in the region have taken advantage of major development prospects and invested in fleet expansion, infrastructural improvements, and technological advancements.

The Asia Pacific region is witnessing a notable surge in air passenger traffic, with China and India poised to emerge as leading aviation markets globally in the forecast period. China's ascent to surpass the US as the world's largest aviation market in, propelled by a decline in US passenger traffic due to the COVID-19 pandemic, underscores the region's prominence. After some initial difficulties, China's aviation industry showed indications of recovery in 2020, especially with regard to domestic travel. As a result, Chinese airlines are expected to acquire aircraft in the upcoming years. Notably, amid the pandemic, China's commitment to supporting domestic aircraft manufacturers such as COMAC remained steadfast, ensuring continuity in aircraft orders despite disruptions.

India's aviation sector anticipates swift recovery owing to robust domestic demand, with airlines permitted to operate domestic flights at full capacity since October 2023. For instance, IndiGo, a prominent Indian low-cost carrier, received a substantial fleet of aircraft in 2020, equipped with fuel-efficient technologies to meet resurging local demand. Given the strong domestic market dynamics, other countries within the region are also poised for accelerated recovery compared to global counterparts.

Commercial Aviation Market: Application Overview

The Passenger segment dominated the Commercial Aviation market with the largest share of 38.2% in 2023. The Commercial Aviation market, segmented by the Application, is bifurcated into Passenger, Cargo.

The Passenger segment stands as the vital essence of air travel, accommodating the diverse needs of millions of travelers worldwide, be it for leisure, business, or other pursuits. The need for passenger flights is growing due to factors including urbanization, economic growth, and rising disposable incomes. in order to guarantee a flawless tour experience, airlines and aircraft manufacturers carefully attend to the changing preferences of passengers, placing a high priority on comfort, safety, and convenience. The passenger section, that's the backbone of the commercial aviation sector, has a significant impact on the market environment and drives the industry's growth trajectory. According to the UNWTO, tourism contributes a substantial 10% to the global GDP, with 57% of cross-border vacationers relying on aircraft. over the past 15 years, the commercial aviation region has witnessed a twofold increase in passenger numbers.

Airbus projects the delivery of over 38,000 new airplanes in the next two decades, a significant portion of which will replace aging aircraft within the existing fleet. Despite the setbacks caused by the COVID-19 pandemic, which dampened air passenger traffic in 2020 and prompted airlines to defer or cancel aircraft orders, the industry showed signs of gradual recovery in 2021, marked by a notable uptick in aircraft deliveries compared to the previous year. Aircraft with greater range and fuel efficiency are becoming more and more desirable to airlines, and in the upcoming years, the introduction of newer models should make OEMs more appealing to airline customers.

Anticipating a swifter return to pre-pandemic levels for domestic passenger demand compared to international travel, the market for narrow-body aircraft is poised for a faster rebound relative to wide-body aircraft demand. The narrow-body market's growth prospects are further enhanced by the 737 MAX's planned return to service in late 2020, which will signal a return to demand for these aircraft types as the aviation sector continues to recover and flourish.

Commercial Aviation Market: Government Initiatives

• The Regional Connectivity Scheme (RCS) known as UDAN (Ude Desh ka Aam Nagrik) has transformed air travel accessibility in India's unserved regions over the past six years. UDAN aims to connect previously isolated communities and stimulate regional economic growth. With a decade-long operational strategy, UDAN ensures equitable air travel access for all Indians. To date, Rs. 3751 Crores out of the allocated Rs. 4500 Crores have been utilized for airport development, with 517 RCS routes operational, serving 76 airports, including 9 Heliports & 2 Water Aerodromes. Over 1.30 crore people have benefited from UDAN, prompting a further allocation of Rs. 1000 crore in the Budget 2023-24 for the revival and development of 50 additional aerodromes across the country.
• In September 2023, The European Union (EU) is backing Hamburg Airport’s (HAM) initiative, the Baltic Sea Region Hydrogen Air Transport Project, aimed at establishing requirements for a regional hydrogen flight network in the Baltic Sea Region. This three-year endeavor, with a €4.8 million (.4 million) budget, primarily funded by the EU's interregional cooperation program (Interreg Europe), involves 16 partners and 24 organizations. It includes airport operators from Estonia, Finland, Latvia, Lithuania, and Sweden, with German participation from Lubeck and Sylt Airports, as well as regional airline Lubeck Air and charter operator Sylt Air.
• The Commercial Aviation Alternative Fuels Initiative (CAAFI) aims to advance the development, assessment, and adoption of drop-in alternative jet fuels. These fuels are made to be as safe as petroleum-based jet fuel while also being more cost-effective, providing advantages to the environment and securing aviation's energy supply.
• The "three-step plan" that the Chinese government has adopted places a great focus on encouraging the industry's expansion. The government has demonstrated its dedication to this endeavor through a number of high-level policies, such as the "Made in China 2025" strategy and the "Middle- and Long-Term Development Plan for the Civil Aviation Industry (2013–2020)".
• Europe's aviation sector has launched its leading sustainability initiative, Destination 2050 - A route to achieving net-zero emissions for European aviation. Aligned with the Paris Agreement and the European Green Deal, the initiative aims for all flights within and departing from the EU, UK, and EFTA to achieve net-zero CO2 emissions by 2050.

Key Trends

• Increasing focus on reducing carbon emissions has led to the development and adoption of sustainable aviation fuels (SAFs) and electric aircraft and hybrid aircraft. Airlines and manufacturers are investing in technologies that improve fuel efficiency and reduce environmental impact.
• Urban air mobility, exemplified by electric vertical takeoff and landing (eVTOL) aircraft, is poised to transform urban transportation and short-haul travel, presenting novel prospects for suppliers and manufacturers.
• Enhancing the passenger experience with in-flight internet, tailored services, and modernized cabin furnishings is becoming more and more important. Airlines are utilizing technology to provide smooth and delightful travel encounters.

Premium Insights

The Commercial Aviation market is driven by the increasing global demand for air travel, fueled by factors such as economic expansion, urbanization, and rising disposable incomes. Passenger flight demand rises when economies expand because more people can afford to fly for work, pleasure, and other reasons. For instance, according to the UNWTO, tourism stands as a formidable economic force, contributing a significant 10% to the world's GDP, thereby solidifying its position as one of the primary revenue streams in the modern era. With a notable 57% of cross-border travelers opting for air travel, commercial aviation has experienced a remarkable surge, witnessing a doubling in the number of passengers over the past 15 years.

The COVID-19 pandemic cast a shadow over the aviation sector in 2020, resulting in a global downturn in air passenger traffic, dwindling flight activities, and adversely impacting airline cash flows. Consequently, airlines resorted to canceling or deferring aircraft orders to weather the storm. Nevertheless, the industry exhibited signs of gradual recovery in 2022, marked by a substantial upsurge in aircraft deliveries compared to the preceding year. With a keen eye on enhancing operational efficiency and range, airlines are increasingly seeking aircraft with superior fuel efficiency, paving the way for OEMs to attract a broader spectrum of airline customers in the ensuing years.

In the realm of aircraft deliveries between 2017 and 2022, global airlines procured a total of 2,049 aircraft, predominantly comprised of passenger aircraft, accounting for 96%, and freighter aircraft, constituting the remaining 4%. As the domestic passenger demand edges closer to pre-pandemic levels, outpacing international passenger demand in its recovery trajectory, the market anticipates a swifter rebound in the demand for narrowbody aircraft relative to widebody counterparts. The return of the 737 MAX to service in late 2020 further bolsters prospects for the narrowbody segment's expansion, setting the stage for heightened demand in the market. In total, a forecast of 13,812 passenger aircraft and 268 freighter aircraft deliveries globally during the forthcoming period underscores the industry's resilience and anticipated growth trajectory.

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Market Dynamics

The surge in demand for air travel, propelled by factors such as economic expansion, urbanization, and rising disposable incomes, is significantly boosting the global demand for air transportation

As economies grow, more individuals are afforded the opportunity to travel for leisure, business, and various other purposes. This need increases by urbanization, as denser populations demand efficient air travel for both local and foreign locations. Demand is further fueled by travelers' ability to devote a higher percentage of their money to air travel because of rising disposable incomes. This escalating demand for air travel is poised to propel the growth of the commercial aircraft market in the foreseeable future. The main method of moving people or goods across the sky is through commercial aircraft, which provide quick and effective travel over great distances. For instance, in March 2023, a report by the Bureau of Transportation Statistics indicated a remarkable 30% year-on-year increase in passengers transported by US airlines in 2022, totaling 853 million passengers, up from 658 million in 2021 and 388 million in 2020.

Environmental Concerns Regarding Carbon Emissions and Regulatory Constraints hinders the market growth

Regulatory bodies impose strict guidelines and regulations on the commercial aviation industry to ensure safety, security, and environmental sustainability. Airports and airlines may incur higher expenses as a result of having to make significant expenditures in infrastructure, technology, and operational procedures in order to comply with these requirements. The industry's potential for expansion may also be constrained by laws governing airport operations, airspace utilization, and flight routes.

The aviation industry is under increasing pressure to address its environmental impact, particularly regarding carbon emissions and climate change. Greenhouse gas emissions, which are linked to climate change and global warming, are increased by aircraft emissions. Environmental organizations and regulatory bodies are pushing for initiatives like carbon offsetting, the use of sustainable aviation fuels, and increased aircraft economy to cut down on carbon emissions from aviation. The industry faces difficulties in complying with these environmental standards, especially in terms of cost and technological innovation.

The integration of digital technologies presents significant opportunities for the commercial aviation industry to enhance operational efficiency and improve the customer experience

Airlines and airports are investing in digital solutions such as data analytics, artificial intelligence, Internet of Things (IoT), and mobile applications to streamline operations, optimize resource allocation, and personalize the passenger experience. By enhancing flight planning, scheduling, and maintenance procedures, these technologies help airlines operate more profitably and with more efficiency. Additionally, digital advances improve the travel experience for passengers by offering self-service options, real-time information, and personalized services, which boost client loyalty and satisfaction.

Competitive Landscape

The competitive landscape of the Commercial Aviation market is characterized by a dynamic interplay among various key players and segments. Leading aircraft manufacturers such as Boeing and Airbus hold substantial market shares, constantly innovating with new aircraft models to improve efficiency and reduce emissions. Other prominent manufacturers like Lockheed Martin and Bombardier contribute to niche segments and specialized aircraft types. Manufacturers of engines, such as Rolls-Royce and General Electric, are vital because they offer cutting-edge propulsion systems that improve aircraft efficiency and performance. Airlines that use their huge fleets and global networks to stay competitive, like Lufthansa, Delta, and Emirates, are major market influencers. To increase their market share and streamline operations, these airlines frequently form strategic partnerships and alliances. The maintenance, repair, and overhaul (MRO) industry, which includes businesses such as ST Engineering and Lufthansa Technik, guarantees the durability and security of airplanes by providing a range of services from simple maintenance to intricate overhauls. In addition, businesses are being compelled by environmental initiatives and legislative changes to adopt greener practices and technologies, which is propelling the use of electric airplanes and alternative fuels. Additionally, the market is under pressure from new competitors.

The key players in the global Commercial Aviation market include - Boeing Company (U.S.), Airbus SE (Netherlands), United Technologies Corporation (U.S.), Rolls-Royce Holdings PLC (UK), Honeywell International Inc. (U.S.), Safran SA (France), Thales Group (France), Raytheon Technology (U.S.), Embraer S.A. (Brazil), Bombardier Inc. (Canada), Lockheed Martin Corp. (U.S.), General Dynamics Corp. (U.S.) among others.

Recent Market Developments

• July 2022, The Boeing 787-9 Dreamliners that AerCap Holdings, a business that specializes in leasing aircraft to airlines and other aviation companies, ordered five more of, bringing its total orders—including those that are owned and those that are being ordered—to 125 aircraft. In the airline and aircraft leasing industries, the fuel-efficient 787 Dreamliner family is promoting sustainability and the launch of new long-haul routes.
• In September 2023, A significant participant in the aviation sector, Air France-KLM was created by the union of two well-known European airlines. A unprecedented acquisition of fifty Airbus A350 aircraft, comprising both the A350-1000 and A350-900 variants, was made by Air France and KLM. Delivery of the extra 40 aircraft is anticipated between 2026 and 2030, increasing the capability of their fleet.
• In September 2023, The United States launched an official investigation after F-35 stealth fighter jets in South Carolina vanished mysteriously. One of the most expensive and sophisticated stealth aircraft in the American military is the F-35 fighter jet. It took almost 30 years to build, and the aircraft can fly on autopilot for extended periods of time.
• In June 2023, Strong orders for 40 737 Max 8s were placed with Boeing by the Irish airplane leasing firm Avolon.
• In June 2023, the national airline of Algeria, Air Algérie, has agreed to buy seven wide-body planes to aid in the country's economic expansion.
• In 2023, Regarding a jumbo jet deal, Delta Air Lines Inc. and Airbus SE (AIR.PA) are in discussions. Both A350 and A330neo dual-aisle are on order.

The global Commercial Aviation market can be categorized as Size, Application, and Region.