Strength despite uncertainty
The European aviation market remained strong in 2011, despite uncertainties from the sovereign debt crisis and the lingering threat of recession. Europe's GDP increased by 1.8 percent in 2011 compared to 2010. The Association of European Airlines reports that member airlines carried 9.3 percent more passengers in 2011. Members of the European Low Fares Airline Association (ELFAA) reported a 6.1 percent increase in passengers. European airlines acquired more than 330 new airplanes that year, of which more than 80 percent were single aisle.
Aviation growth is expected to persist over the next 20 years, with European airlines forecast to acquire 7,760 new airplanes valued at $970 billion. Single-aisle airplanes will account for the majority of deliveries, representing a 75 percent share.
Although aviation growth in Europe is not as rapid as in the world's emerging economies, the region's large installed base of airplanes (more than 4,400 units) sustains a substantial demand for replacement airplanes. This demand will account for 50 percent of Europe's new-airplane market.
Europe is economically diverse, with both mature economies and newer high-growth economies. Though uncertainties remain for some European economies, the region's GDP is expected to grow 1.9 percent annually during the forecast period, spurred by growth exceeding 3.6 percent in the rapidly developing economies. European Union transport liberalization efforts contribute to this growth, with negotiations taking place with Turkey, Brazil, India, Korea, and other countries.
Leading strategic change
Airline operations continue to evolve with the launch of new ventures and new business models. The next 20 years are expected to bring additional mergers and acquisitions, along with increased collaboration with alliance partners around the world.
Large network airlines are tending to shift focus away from short-haul routes that are targeted by low-cost carriers (LCC) and toward longer haul routes. LCCs have continued to add service in short-haul markets, with ELFAA members providing 32 percent of capacity on intra-Europe flights in 2011. Smaller flag carriers and charter airlines will be challenged to adapt to a competitive environment where LCCs dominate short-haul, point-to-point service, and large network carriers and their alliance partners exploit the cost advantages of mega-hubs for long-haul traffic.
European airlines continue to reduce their environmental impact by replacing older, less efficient airplanes with newer technology planes, like the 787. By 2031, more than 93 percent of planes operated by European airlines will have been delivered since 2011.