TheEurope aviation marketis expected to witness a CAGR of more than 2% during the forecast period.
- Due to the increasing pressure from the current government in the United States for NATO members to achieve their defense expenditure target (2% of GDP), several countries in Europe plan to increase their defense budget allocation in the coming years. It is estimated that a major share of the allocation is expected to be for the development of future military combat jets.
- The growing preference of people opting for charter and private jets to reduce their travel time is driving the general aviation market in Europe.
- However, with the COVID-19 pandemic around the world in the year 2019-2020, the air traffic was severely reduced, prompting major commercial airlines to ground their entire fleet and cancel orders of new aircraft restraining the growth of the market studied during the forecast period.
Key Market Trends
The Commercial Aviation Segment had the Highest Market Share in 2019
The Commercial Aviation segment had the highest market share in the year 2019. Some of the factors driving the growth of the segment are the growth of low-cost carriers, growth in disposable income, and a rise in economic activities around Europe. In 2019, 2.43 billion passengers traveled by air in the European region, which is a 3.2 % increase as compared to 2018. Major European airports like London-Heathrow airport, Paris-CDG, Frankfurt airport, Amsterdam-Schiphol, Madrid Adolfo Suarez airport, Barcelona airport, Munich airport, Rome-Fiumicino airport witnessed a huge surge in air passengers in 2019. Ryanair, Lufthansa Group, International Airlines Group, Air France-KLM, EasyJet, and Aeroflot Group are some major commercial airlines in Europe, which offers international and domestic flights. Moreover, commercial airlines are investing heavily in modernization and expansion of their existing fleet by procurement of new fuel-efficient aircraft, for instance, in July 2019, Air France-KLM signed a Memorandum of Understanding (MoU) with Airbus for 60 A220-300 aircraft to modernize its fleet and in December 2019, Air France-KLM Group ordered additional ten widebody Airbus A350-900s. However, with the outbreak of novel coronavirus (COVID-19) in 2020, commercial airlines are suffering from major financial losses as governments around the world are restraining the movement of air passengers, which is ultimately leading to a decrease in air passenger travel to and from Europe. In the first half of 2020, European airlines had lost more than USD 40 billion of passenger revenues. The decrease in air traffic is forcing commercial airlines to ground their entire fleet, which is putting additional strain on commercial airlines due to heavy maintenance costs and high parking fees of the grounded fleet. Heavy financial losses are reducing the purchasing power of the airlines in the region, forcing them to cancel or postpone their procurement plans, which may affect the market growth in the region during the forecast period. In addition, the aircraft production and supply chain have been disrupted due to the shutdowns in several countries, which may affect the manufacturers' revenues.
United Kingdom Held a Major Share in the Europe Aviation Market in 2019
In the European Aviation Market, the United Kingdom currently accounts for a major share in terms of revenue. The United Kingdom has some of the busiest international airports in Europe like London-Heathrow airport, Gatwick airport, Manchester airport, Stansted airport, Luton airport, etc. In 2019, 80 million air passengers traveled through London-Heathrow airport, making it the busiest airport in Europe. Moreover, to meet the increasing air passenger traffic, commercial airlines are procuring new aircraft to expand their fleet and to replace aging aircraft, for instance, in February 2019, UK based commercial airline, International Airlines Group, announced plans to purchase up to 44 Boeing 777x aircraft, including 18 orders and 24 options. Apart from commercial aviation, the United Kingdom government had invested heavily in the modernization of its fighter aircraft fleet. The Royal air force and Royal Navy are planning to procure 138 Lockheed Martin F-35B STOVL aircraft, out of which 17 aircraft were delivered in 2019. The government has also announced to invest GBP 2 billion on Tempest, a new fighter aircraft project (under development) by 2025. Moreover, the UK business aviation sector had also witnessed a huge growth rate. The country has two of the top ten busiest business aviation airports in Europe, Farnborough airport, and London Luton airport. VistaJet, Ravenair, Wijet, and the Luxaviation United Kingdom, are some of the main charter jet service providers in the United Kingdom. With the growing number of people opting for charter service for business travel in Europe, charter jet service providers are procuring new aircraft to increase their fleet. For instance, in October 2019, Luxaviation UK added a Bombardier Global 6000 to its fleet. However, with the outbreak of COVID-19, the growth of the United Kingdom aviation market is expected to restrain during the forecast period, as aircraft operations have come to a standstill, and aircraft operators are facing severe losses.
Competitive Landscape
Airbus SE, Boeing, Lockheed Martin Corporation, Leonardo SpA, and Dassault Aviation SA are some of the major players in this region. Airbus dominates the market in Europe in commercial, as well as military aviation. The market is highly competitive and is majorly dominated by a few players. Companies are focused on receiving long-term contracts from the defense forces to expand their market dominance. The aircraft industry is expected to see new innovations getting implemented in aircraft design, which is expected to change the meaning of safety, comfort, and efficiency for both passengers and aircraft manufacturers, as per the records of the patent database. Companies are looking forward to grabbing the opportunities offered by the new technological innovations, thereby increasing their respective market shares. Countries are partnering to develop new military aircraft models, which is expected to bolster the prospects of the local players in those countries. For instance, Germany, France, and Spain are involved in the development of next-generation fighter jet. Such programs are expected to drive the growth of the local players during the forecast period.
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