Strength in time
Despite current market conditions, the long-term forecast for airplanes in Europe has increased a little this year. So far, the European airline market has been less affected by economic factors and shows traffic declines about half those in other regions. Several factors give us confidence in a return to strong development of air transport in Europe.
For example, the region is highly diverse economically, and newly developing leisure markets generate rapidly growing traffic flows. The European Union continues to pursue air transport liberalization with countries such as Turkey, Brazil, India and Korea. And, as airlines address markets that are not suitable for high-speed rail, average flight length will increase.
European airlines' strategy for environmental responsibility includes replacement of older airplanes with newer models that allow them to lower fuel consumption, carry more passengers and fly longer hours using fewer airplanes to accommodate the same amount of traffic. We calculate that in the year 2028, 94 percent of European airplanes will have been delivered new since 2009.
Leading strategic change
European airlines are shaping global airline trends in two distinct but related areas. First of all, larger airlines with well established long-haul networks are strengthening their market presence through pursuing mergers, acquisitions and antitrust immunity.1 Secondly, low-cost airlines are securing a larger share of local markets.
Larger network airlines continue to shift their focus away from carrying passengers between local destinations targeted by low-cost airlines. They are not able to compete profitably with carriers whose business model is designed specifically to make money by stimulating high levels of demand with simple, low-cost service.
Low-cost long-haul and charter airlines
European charter airlines were the pioneers of the operating model behind long-haul low-cost service and benefit from the flexibility of mixing direct and packaged sales of low-cost seats. Competition with new low-cost entrants from other regions on long-haul routes will stimulate response from European airlines as they benefit from a large local market base.
1Authorization for extensive cooperation with partner airlines on transatlantic routes
