rewrite this title Global commercial airline market to grow by USD 370.2 billion by 2028

Punta Cana, DR.- The size of the global commercial airline market is estimated to grow by USD 370.2 billion between 2024 and 2028, according to Tecnavio. The market is estimated to grow at a CAGR of 8.09% during the forecast period. Rising passenger air traffic is driving the market growth, with a trend towards increased preference for smart airports. However, rising operational expenses pose a challenge.

The aviation industry has seen significant growth since the turn of the millennium, leading to the need for more efficient and cost-effective airport operations. IATA and Airports Council International (ACI) have proposed the concept of smart airports to address this challenge. These airports use a single digital network to share real-time information between airport operators, airlines and passengers. The operational efficiency of smart airports is enhanced through integrated passenger services and security capabilities. Regulatory bodies including IATA, FAA, EASA, CASA and the EU encourage their development to minimise risks and improve passenger experience. Since 2000, airline and airport companies have adopted new approaches, such as shared and agile infrastructure, to manage complex operations. This infrastructure reduces response times for airlines, ensuring a better passenger experience and advanced operational efficiency for aviation ecosystem partners. The emergence of smart and agile airports is expected to have a positive impact on the global commercial airline market.

The commercial airline market is experiencing significant trends that impact air travel demand and airline profitability. Manual aircraft are giving way to modern, fuel-efficient aircraft such as narrow-body aircraft. Geopolitical stability and environmental regulations drive the need for sustainable aviation and urban air mobility. Connectivity and technology integration are key, with fuel-efficient engines and advanced materials reducing operating costs. Legal frameworks and the use of commercial drones require exemptions and special parts. Machine learning and artificial intelligence improve aircraft safety and product offerings. The commercial aviation industry continues to grow, with UNWTO reporting an increase in passenger air traffic from cross-border travellers in emerging countries. Fleet management remains crucial for airlines as they face the challenges of an ever-evolving market.

Market challenges

• Commercial airlines face rising operating expenses (OPEX) due to rising fuel prices and labor costs. Fuel prices have increased as a result of geopolitical events, such as U.S. sanctions on Iranian oil exports and OPEC production cuts. Labor costs, on the other hand, are fixed costs in the short term for airlines, but fuel costs are subject to volatility based on crude oil prices. Unit labor costs have increased significantly after years of stability. Competition in the industry has intensified with the proliferation of low-cost carriers (LCCs) and consolidation agreements. Online travel agencies (OTAs) and intermediaries are investing in digital solutions, which increases the costs for airlines to remain competitive. These factors are eroding profit margins, forcing airlines to adopt strategies such as competitive pricing, which may not be sustainable in the long term. The combination of rising fuel and labor costs, as well as increased competition, pose a threat to revenue growth in the commercial airline market.
• The airline industry faces several challenges in the current business environment. Economic conditions significantly impact aircraft orders, and uncertainty affects both the business and leisure sectors. Domestic passenger traffic growth is uneven, influenced by per capita income and infrastructure development. Fleet expansion plans require careful consideration due to the high cost of purchasing new commercial aircraft, such as wide- and narrow-body models from manufacturers such as Boeing and Airbus. Mitsubishi Heavy Industries, SpaceJet, and ATR are making inroads with regional aircraft such as the Turbofan and Turboprop, which offer cost-effective solutions for smaller markets. Delta Airlines and other major airlines are investing in new aircraft technologies and engine programs to improve fuel efficiency and reduce emissions. Wizz Air, Frontier, Volaris, JetSMART, and others are focused on expanding their networks with narrow-body aircraft. Cargo transportation remains a crucial aspect of the air transport industry, with freighters and commercial helicopters playing an essential role. Companies such as ROSTEC and ATR are exploring new aircraft designs, including civil aircraft, commercial gliders and even drones, to meet diverse market needs. Aircraft turbines, aircraft engines and rocket engines continue to evolve, driving innovation in the industry.