2.2 presentation global nature of the aviation industry

Aviation Market

Detailed research report on the aviation market, covering market analysis, industry growth, size, and forecast from 2024 to 2029..

The Aviation Market is Segmented by Type (Commercial Aviation (Passenger Aircraft and Freighter), Military Aviation (Combat Aircraft and Non-Combat Aircraft), and General Aviation (Helicopter, Piston Fixed-Wing Aircraft, Turboprop Aircraft, and Business Jet)) and Geography (North America, Europe, Asia-Pacific, Latin America, and Middle East and Africa). The Report Offers Market Size and Forecast for all the Above Segments in Value (USD).

Aviation Market Size

Compare market size and growth of Aviation Market with other markets in Aerospace & Defense Industry

Airport Operations

Aerospace & Defense Technology

Aircraft Parts

Loading the graph. Please wait.

Interact With Data Points To Access Key Markets In The Aerospace & Defense Industry

Growth rate.

Click on data point to dive deeper into the details and uncover valuable insights about each segment.

We've received your request. Our team will be reaching out to you shortly.

Get Free Sample Of This Report

Please enter a valid email

Please enter your phone number

Aviation Market Analysis

The Aviation Market size is estimated at USD 333.96 billion in 2024, and is expected to reach USD 396.15 billion by 2029, growing at a CAGR of 2.87% during the forecast period (2024-2029).

The COVID-19 pandemic affected the aviation market in many ways, and the effect of the pandemic is expected to continue even during the forecast period. In the commercial sector, passenger traffic fell dramatically in 2020 and 2021. However, the aviation industry has started to improve during 2022 and is gradually returning to its pre-COVID-19 level. According to the latest updates from IATA, ICAO, the Airports Council International (ACI), the UN World Tourism Organization (UNWTO), the World Trade Organization (WTO), and the International Monetary Fund (IMF), the international air passenger traffic in 2022 has improved compared to that of 2021. The international air passenger traffic in June 2022 increased by 229.5% compared to June 2021, and the revenue passenger kilometers (RPK) in June 2022 reached 65% of that of June 2019.

There has been a significant rise in demand for helicopters and business jets to transport medical supplies, cargo, VIPs, and charter operations. Thus, the aforesaid factors are expected to propel the growth of the market. The orders and deliveries improved during 2022 compared to 2021, signifying the growth in demand for general aviation aircraft and recovering the market to its pre-COVID-19 level.

Several manufacturers are now focusing on developing newer generation aircraft in various aviation segments. The newer generation aircraft offer better fuel efficiency and safety for commercial and general aviation customers and better situational awareness and tactical advantage for military customers. The advent of such aircraft is expected to drive market growth during the forecast period.

Aviation Market Trends

Commercial Aircraft Segment Projected to Witness the Highest CAGR During the Forecast Period

In 2020, there was a decline in commercial aircraft deliveries due to the COVID-19 pandemic. However, aircraft deliveries improved in 2021, and the major commercial aircraft OEMs, like Airbus and Boeing, increased their production and delivery rates. With the lifting of travel restrictions, air passenger traffic is improving.

With the increase in air passenger traffic, airlines have started operating on all major routes and added new routes. United Airlines has announced that it has started operating on new routes, describing it as its "largest transatlantic expansion." With everything returning to normal, new airlines have started operations. Akasa Air, a new Indian airline, started its operations in August 2022, starting with one route with 28 flights a week and gradually adding two more routes. In October 2022, Alaska Airlines ordered 52 Boeing B737 MAX aircraft with a plan to expand its fleet. The airline announced plans to have an all-Boeing mainline fleet by the end of 2023.

With the e-commerce operations increasing rapidly since COVID-19, the air cargo market has increased, and thus the orders for freighter aircraft have increased in 2022. For instance, in October 2022, Luxembourg's Cargolux airlines placed an order with Boeing for 10 B777-8 freighters along with options for 6 additional aircraft. China holds the position of second largest air freight market only next to the US. According to Boeing's Commercial Market Outlook 2022, China's commercial airfleet is expected to grow from 3900 to 9600 by 2041.

Aviation Market: Global Airline Passenger Traffic (In Billion), 2015-2021

Asia-Pacific Expected to Dominate the Aviation Market During the Forecast Period

Asia-Pacific has become a significant hub for the aviation industry over the years. The emerging economies in the region, like India and China, are experiencing a massive surge in their respective civil aviation markets due to an increased demand for air travel. Hence, the revenues from Asia-Pacific are projected to witness a high growth rate during the forecast period.

China is leading the recovery of global commercial aviation due to great domestic demand, helping the airlines witness financial recovery. It has become a major hub for the aviation industry over the years due to high demand from civilian and military customers. Commercial aviation has been a key contributor to China's aviation industry over the years. China is the largest market in aviation due to an increase in domestic air passenger traffic, which has surpassed the North American region and is expected to grow rapidly at a rate of 4.4% by 2040, according to Boeing. An increase in the number of airports in the region would also help in the growth of the market. In March 2022, the Indian aviation ministry approved the construction of 21 greenfield airports in the country. New airlines in the region have also helped to improve the market.

With the increase in military spending of the countries in the region due to tensions between neighboring countries and with foreign nations investing in arranging military base stations in countries like Australia, military aviation in the Asia-Pacific region is also increasing. China is increasing its military airborne capabilities, and a new stealth fighter aircraft, the new version of the J-20, which is the world's first twin-seat stealth fighter aircraft, was unveiled in October of 2021.

Aviation Industry Overview

The global aviation market is semi-consolidated, occupied by major manufacturers like Airbus SE, The Boeing Company, Lockheed Martin Corporation, Embraer, and Textron Inc., catering to market needs. The rivalry between The Boeing Company and Airbus SE continued during 2022, mainly in the commercial aviation sector. Along with Lockheed Martin Corporation, a key player in the military segment, these two companies have maintained their market dominance for over a decade now.

Though Boeing's commercial segment revenues were down in the last two years, a strong performance in the defense segment has helped it gain a significant market share. The aviation industry is expected to witness innovations implemented in aircraft design, which are likely to alter the meaning of safety, comfort, and efficiency for commuters. Companies are looking for opportunities offered by the latest technological innovations that can help them improve revenue shares. The military segment of the market is witnessing increased collaborations between the players to develop next-generation combat and non-combat aircraft, which is expected to help the players' collective growth during the forecast period.

Aviation Market Leaders

The Boeing Company

Lockheed Martin Corporation

Textron Inc.

Embraer S.A.

*Disclaimer: Major Players sorted in no particular order

Aviation Market News

December 2023: Air India rejigged the 250-aircraft order with Airbus to 140 A321neo and 70 A320neo aircraft. The remaining 40 widebody A1350s included six A350-900 and 34 A350-1000s.

October 2022: Alaska Airlines ordered 52 Boeing 737 MAX aircraft with a plan to expand its fleet. The airline stated that by the end of 2023, it is expected to have an all-Boeing mainline fleet.

September 2022: Lockheed Martin announced that it has been awarded a firm-fixed contract by the US Navy to produce 12 Sikorsky MH-60R Seahawk helicopters for the Royal Australian Navy. The OEM plans to deliver these 12 helicopters between mid-2025 and mid-2026.

Aviation Market Report - Table of Contents

1. INTRODUCTION

1.1 Study Assumptions and Market Definition

1.2 Scope of Study

2. RESEARCH METHODOLOGY

3. EXECUTIVE SUMMARY

4. MARKET DYNAMICS

4.1 Market Overview

4.2 Market Drivers

4.3 Market Restraints

4.4 Market Trends

4.5 Porter's Five Forces Analysis

4.5.1 Bargaining Power of Buyers/Consumers

4.5.2 Bargaining Power of Suppliers

4.5.3 Threat of New Entrants

4.5.4 Threat of Substitute Products

4.5.5 Intensity of Competitive Rivalry

5. Market Segmentation

5.1.1 Commercial Aviation

5.1.1.1 Passenger Aircraft

5.1.1.2 Freighter

5.1.2 Military Aviation

5.1.2.1 Combat Aircraft

5.1.2.2 Non-combat Aircraft

5.1.3 General Aviation

5.1.3.1 Helicopter

5.1.3.2 Piston Fixed-wing Aircraft

5.1.3.3 Turboprop Aircraft

5.1.3.4 Business Jet

5.2 Geography

5.2.1 North America

5.2.1.1 United States

5.2.1.2 Canada

5.2.2 Europe

5.2.2.1 United Kingdom

5.2.2.2 France

5.2.2.3 Germany

5.2.2.4 Italy

5.2.2.5 Rest of Europe

5.2.3 Asia-Pacific

5.2.3.1 China

5.2.3.2 India

5.2.3.3 Japan

5.2.3.4 South Korea

5.2.3.5 Rest of Asia-Pacific

5.2.4 Latin America

5.2.4.1 Mexico

5.2.4.2 Brazil

5.2.4.3 Rest of Latin America

5.2.5 Middle East and Africa

5.2.5.1 Saudi Arabia

5.2.5.2 United Arab Emirates

5.2.5.3 Qatar

5.2.5.4 South Africa

5.2.5.5 Rest of Middle East and Africa

6. COMPETITIVE LANDSCAPE

6.1 Vendor Market Share

6.2 Company Profiles

6.2.1 The Boeing Company

6.2.2 Airbus SE

6.2.3 Embraer SA

6.2.4 Textron Inc.

6.2.5 Lockheed Martin Corporation

6.2.6 Bombardier Inc.

6.2.7 PILATUS AIRCRAFT LTD

6.2.8 Leonardo SpA

6.2.9 Honda Aircraft Company

6.2.10 Piper Aircraft Inc.

6.2.11 General Dynamics Corporation

6.2.12 Dassault Aviation SA

6.2.13 Cirrus Design Corporation

6.2.14 Diamond Aircraft Industries

7. MARKET OPPORTUNITIES AND FUTURE TRENDS

Aviation Industry Segmentation

The aviation market encompasses the sales of fixed-wing and rotary-wing aircraft across the commercial, military, and general aviation segments. The market report offers an overview of air passenger traffic, aircraft orders and deliveries, variation in defense spending, the introduction of new routes, and investments by major countries into the aviation sector.

The aviation market is segmented by type into commercial aviation, military aviation, and general aviation. Commercial aviation is further segmented by passenger aircraft and freighter. Military aviation is further segmented by combat aircraft and non-combat aircraft. General aviation is further segmented by helicopter, piston fixed-wing aircraft, turboprop aircraft, and business jet. The report also covers the market sizes and forecasts for the aviation market in major countries across different regions. For each segment, the market size is provided in terms of value (USD).

Aviation Market Research FAQs

How big is the aviation market.

The Aviation Market size is expected to reach USD 333.96 billion in 2024 and grow at a CAGR of 2.87% to reach USD 396.15 billion by 2029.

What is the current Aviation Market size?

In 2024, the Aviation Market size is expected to reach USD 333.96 billion.

Who are the key players in Aviation Market?

The Boeing Company, Airbus SE, Lockheed Martin Corporation, Textron Inc. and Embraer S.A. are the major companies operating in the Aviation Market.

Which is the fastest growing region in Aviation Market?

Asia Pacific is estimated to grow at the highest CAGR over the forecast period (2024-2029).

Which region has the biggest share in Aviation Market?

In 2024, the Asia Pacific accounts for the largest market share in Aviation Market.

What years does this Aviation Market cover, and what was the market size in 2023?

In 2023, the Aviation Market size was estimated at USD 324.38 billion. The report covers the Aviation Market historical market size for years: 2020, 2021, 2022 and 2023. The report also forecasts the Aviation Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.

What are the key factors propelling the Aviation Market's growth?

Key factors propelling the Aviation Industry are: a) Rising demand for air travel b) Economic development and tourism surges in emerging markets, and c) New fuel-efficient aircraft and improved infrastructure contribute to sustainability & efficiency, driving further growth

Our Best Selling Reports

Life Science Tools Market
Dynamic Random Access Memory (DRAM) Market
Canada Asset Management Market
UK Hospitality Market
USA Aftermarket Automotive Parts & Components Market
Silicone Market
Workflow Automation Market
Active Pharmaceutical Ingredients (API) Market
Nigeria Upstream Oil and Gas Market
Luxury Hotel Market

Aviation Industry Report

The aviation market is segmented by type, including commercial aviation, military aviation, and general aviation, and by geography, spanning North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. The market is poised for significant expansion, driven by increasing efficiency in airlines, investments in airport infrastructure, and the construction of new airports and terminals. The commercial segment is expected to see substantial growth, fueled by the rising disposable income of the middle class and the emergence of low-cost carriers. The adoption of RFID technology is enhancing manufacturing efficiency and maintenance. Despite supply chain complexities due to technological advancements, the Asia-Pacific region is anticipated to lead growth, thanks to a rise in air passenger transport and technological enhancements. The market share is expanding, and industry growth is evident across all segments. An industry overview indicates a positive trend, with market size increasing steadily. Sector analysis shows that commercial aviation, particularly passenger and freighter services, is a major contributor to revenue. Industry information reveals that the market is benefitting from technological advancements and infrastructure investments. A comprehensive industry report provides detailed insights into market size, industry trends, and market segmentation. Industry data highlights the growth forecast, with industry worth and market value showing promising increases. Market analysis and industry outlook suggest continued expansion, supported by industry statistics and market predictions. Industry research and market forecast indicate that market growth will be sustained, driven by market leaders and evolving industry trends. The market overview and market review provide a detailed analysis of market segmentation and market structure. Market data and industry reports offer valuable insights into industry sales and market trends. The report example and report pdf provide a thorough analysis of the aviation market, highlighting the contributions of various segments and regions. Research companies and industry sales data underscore the market's potential, with market outlook and industry size pointing to robust growth. Industry analysis and market review emphasize the importance of technological advancements and infrastructure investments in driving market expansion.

Aviation Market Report Snapshots

Aviation Market Share
Aviation Companies

Please enter a valid email id!

Please enter a valid message!

Aviation Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

Aviation Market Get a free sample of this report

Please select an honorfic

Please enter your name

Business Email

2.2 presentation global nature of the aviation industry

Get this Data in a Free Sample of the Aviation Market Report

Please enter your requirement

Thank you for choosing us for your research needs! A confirmation has been sent to your email. Rest assured, your report will be delivered to your inbox within the next 72 hours. A member of our dedicated Client Success Team will proactively reach out to guide and assist you. We appreciate your trust and are committed to delivering precise and valuable research insights.

Please be sure to check your spam folder too.

Sorry! Payment Failed. Please check with your bank for further details.

Add Citation APA MLA Chicago

➜ Embed Code X

Get Embed Code

Want to use this image? X

Please copy & paste this embed code onto your site:

Images must be attributed to Mordor Intelligence. Learn more

About The Embed Code X

Mordor Intelligence's images may only be used with attribution back to Mordor Intelligence. Using the Mordor Intelligence's embed code renders the image with an attribution line that satisfies this requirement.

In addition, by using the embed code, you reduce the load on your web server, because the image will be hosted on the same worldwide content delivery network Mordor Intelligence uses instead of your web server.

Transportation & Logistics ›

Air transportation - statistics & facts

Challenging times, facilitating global trade during the pandemic, the return of passengers will put pressure on infrastructure, key insights.

Detailed statistics

Air traffic - worldwide revenue with passengers 2005-2023

Countries with the highest efficiency in air transport services 2019

Available seats in aviation - ranking of countries 2019

Editor’s Picks Editor’s Picks Current statistics on this topic

Passenger Air Transport

Global air traffic - scheduled passengers 2004-2024

Air freight rates change since the beginning of COVID-19 outbreak 2019-2022

Market value of selected airlines worldwide 2024

Recommended statistics

Premium Statistic Air traffic - worldwide revenue with passengers 2005-2023
Premium Statistic Air cargo traffic - worldwide revenue 2004-2022
Premium Statistic Profit and loss of airlines worldwide 2010-2022
Premium Statistic Commercial airlines - global EBIT margin 2010-2022
Basic Statistic Weekly flights change of global airlines due to COVID-19 as of January 2021

Worldwide revenue with passengers in air traffic from 2005 to 2021, with a forecast until 2023 (in billion U.S. dollars)

Air cargo traffic - worldwide revenue 2004-2022

Worldwide revenue of cargo airlines from 2004 to 2022 (in billion U.S. dollars)

Profit and loss of airlines worldwide 2010-2022

Profit and loss of commercial airlines worldwide from 2010 to 2022, by region (in billion U.S. dollars)

Commercial airlines - global EBIT margin 2010-2022

EBIT margin of commercial airlines worldwide from 2010 to 2022, by region

Weekly flights change of global airlines due to COVID-19 as of January 2021

Year-on-year change of weekly flight frequency of global airlines from January 6, 2020 to January 4, 2021, by country

Premium Statistic Global air traffic - annual growth of passenger demand 2006-2024
Premium Statistic Global air traffic - scheduled passengers 2004-2024
Premium Statistic Revenue passenger kilometers of airlines - growth by region 2011-2022
Premium Statistic Air cargo traffic - worldwide volume 2004-2023
Premium Statistic Monthly freight load factor change in the aviation industry by region 2020-2021
Premium Statistic Cargo yield of airlines worldwide 2005-2022
Premium Statistic Air freight rates change since the beginning of COVID-19 outbreak 2019-2022

Global air traffic - annual growth of passenger demand 2006-2024

Annual growth in global air traffic passenger demand from 2006 to 2023, with a forecast for 2024

Number of scheduled passengers boarded by the global airline industry from 2004 to 2024 (in millions)

Revenue passenger kilometers of airlines - growth by region 2011-2022

Year-on-year change in revenue passenger kilometers (RPK) of commercial airlines from 2011 to 2022 by region

Air cargo traffic - worldwide volume 2004-2023

Worldwide air freight traffic from 2004 to 2021, with an estimate for 2022 and 2023 (in million metric tons)

Monthly freight load factor change in the aviation industry by region 2020-2021

Year-on-year freight load factor (FLF) change from January 2020 to December 2021, by region

Cargo yield of airlines worldwide 2005-2022

Year-on-year change in cargo yield of commercial airlines worldwide from 2005 to 2022

Impact of coronavirus on major global air freight rates between December 2019 to March 2022 (in U.S. dollars per kilogram)

Airline companies

Premium Statistic COVID-19's impact estimate on passenger revenue of airlines by region 2020
Premium Statistic Leading airlines ranked by brand value 2024
Premium Statistic Market value of selected airlines worldwide 2024
Basic Statistic Leading airlines worldwide based on total number of passengers 2020
Premium Statistic Passenger kilometers flown by airline worldwide 2020
Basic Statistic Airlines worldwide - total freight tonne-kilometers 2020

COVID-19's impact estimate on passenger revenue of airlines by region 2020

Airline passenger revenue loss due to coronavirus outbreak worldwide in 2020, by region of airline registration (in billion U.S. dollars)

Leading airlines ranked by brand value 2024

Leading airlines worldwide in 2024, ranked by brand value (in million U.S. dollars)

Market value of selected airlines worldwide as of May 2024 (in billion U.S. dollars)

Leading airlines worldwide based on total number of passengers 2020

Leading airline groups worldwide in 2020, based on passengers (in millions)

Passenger kilometers flown by airline worldwide 2020

Leading airlines worldwide in 2020, by revenue passenger kilometers flown* (in billions)

Airlines worldwide - total freight tonne-kilometers 2020

Leading airlines worldwide by international and domestic freight tonne-kilometers in 2020 (in millions)

Premium Statistic Coronavirus: quarterly revenue loss of airports by region 2020-2022
Premium Statistic Airports with the most international air passenger traffic worldwide 2023
Premium Statistic Leading airports worldwide based on aircraft movements 2023
Premium Statistic Worldwide air cargo traffic at airports by region 2020
Premium Statistic Largest cargo airports worldwide by freight volume 2019-2022

Coronavirus: quarterly revenue loss of airports by region 2020-2022

Estimated revenue losses of airports worldwide due to coronavirus from 2020 to 2022 , by region and quarter (in billion U.S. dollars)

Airports with the most international air passenger traffic worldwide 2023

Leading airports for international air passenger traffic in 2023 (in million international passengers)

Leading airports worldwide based on aircraft movements 2023

Leading airports worldwide in 2023, based on aircraft movements*

Worldwide air cargo traffic at airports by region 2020

Cargo traffic at airports worldwide in 2020, by region (in 1,000 tons)

Largest cargo airports worldwide by freight volume 2019-2022

Cargo airports worldwide by freight volume from 2019 to 2022 (in million tons)

Specialties - aviation safety

Basic Statistic Worldwide air traffic - number of fatalities 2006-2021
Basic Statistic Aircraft hull loss rate 2013-2021
Basic Statistic Fatal civil airliner accidents by country and region 1945-2022
Premium Statistic Insurance claims in aviation industry worldwide by value of claims 2016-2020

Worldwide air traffic - number of fatalities 2006-2021

Number of worldwide air traffic fatalities from 2006 to 2021*

Aircraft hull loss rate 2013-2021

Aircraft hull losses per one million flights from 2013 to 2021, by region

Fatal civil airliner accidents by country and region 1945-2022

Countries and regions with the highest number of fatal civil airliner accidents from 1945 through February 28, 2022

Insurance claims in aviation industry worldwide by value of claims 2016-2020

Distribution of aviation insurance industry claims worldwide from 2016 to 2020, by value of claims

Further reports

Get the best reports to understand your industry.

Air transportation worldwide
Aviation industry in the GCC
Air transportation in Canada
Air transportation in Mexico

Mon - Fri, 9am - 6pm (EST)

Mon - Fri, 9am - 5pm (SGT)

Mon - Fri, 10:00am - 6:00pm (JST)

Mon - Fri, 9:30am - 5pm (GMT)

Taking stock of the pandemic’s impact on global aviation

There’s no sugarcoating the diagnosis: airlines are the biggest destroyer of value among all aviation subsectors. McKinsey’s analysis of the aviation value chain in 2020—our latest—paints a grim picture. All subsectors save freight forwarders and cargo airlines suffered huge losses (Exhibit 1).

Of course, this is expected. The COVID-19 pandemic is entering its endemic stages in some parts of the world at the time of writing, and airlines hemorrhaged $168 billion in economic losses in 2020. Although the temptation is to pin the blame solely on the pandemic-induced plunge in passenger traffic, that would be to ignore the airline industry’s underlying and long-term health problems.

This article, the first in a two-part series, provides an overview of global aviation’s performance during the pandemic, by subsector. The second article explores what airline executives could consider doing to generate more value for their carriers—for instance, examining their cost base and accelerating capital turnover. Fiscal year 2021 data are not yet available for all the companies covered in this analysis, so this article draws insights mostly from the 2012–20 data, supplemented by observations of key developments in 2021.

Breaking down the global aviation value chain by subsector

Since 2005, McKinsey, often in collaboration with the International Air Transport Association (IATA), has assessed the performance of the entire aviation value chain—that is, the degree to which each subsector earns its cost of capital. We have looked at all value chain players: original equipment manufacturers (OEMs) of aircraft; lessors; air navigation service providers (ANSP); airports; catering operations; ground services; maintenance, repair, and overhaul (MRO); airlines; freight forwarders; and global distribution system (GDS).

As a measure of value creation, we look at economic profit. This is the difference between the returns a company makes after taking into account its invested capital and the alternative returns of equal-risk opportunities investors have access to, measured by the weighted average cost of capital (WACC).

As we have noted, the pandemic wreaked financial devastation across the aviation value chain, most notably for airlines. All subsectors reported massive losses in 2020, except for freight forwarders and cargo airlines, which benefited from a rise in demand for air cargo (Exhibit 2). Even previously reliable value creators, such as airports and manufacturers, were not spared the pandemic’s economic impact.

We found that the degree of devastation varied according to the variability of the costs borne by companies in a subsector and the revenue flows to which they have access. Companies that relied more on flights for their revenues still made money from cargo flights and half-full passenger flights and were therefore less adversely affected than companies that depended more on passenger flows. Similarly, companies with high fixed costs struggled more because they could not easily shed the financial burden of keeping operations running smoothly.

The pandemic wreaked financial devastation across the aviation value chain, most notably for airlines. All subsectors reported massive losses in 2020, except for freight forwarders and cargo airlines.

Although the COVID-19 pandemic hit airlines harder than any other aviation subsector, it wasn’t doing particularly well before then. From 2012 to 2019, despite a favorable environment of strong economic growth and low fuel prices, airlines were bleeding $17 billion in economic profit a year, on average. Of the 122 carriers we studied, 77 percent were value destroyers (Exhibit 3). But the average losses of airlines before the pandemic were only around one-tenth of their $168 billion in losses for 2020. Their revenues plummeted by 55 percent, setting the subsector back, in nominal terms, roughly 16 years—to 2004.

All regions contributed to the overall losses in 2020—including North America, which outperformed other parts of the world from 2012 to 2019, when its airlines registered a cumulative $44 billion in economic profit (Exhibit 4). Five of the world’s ten top-performing airlines during this period were based in the United States, because years of consolidation and restructuring had left the North American market with a few big leading players. Nonetheless, the pandemic did not spare them, and they lost $63 billion in 2020.

While the full data from 2021 is still unavailable, we expect airlines’ 2021 performance to remain weak, with net losses of around 11 percent. The IATA estimates that even though global revenues for airlines rose by 27 percent last year compared to 2020, they were still 44 percent less than what they were in 2019.

The reasons for the persistent weakness of airlines even before the pandemic are well documented. The subsector grapples with high capital intensity but fluid supply and low entry barriers. Furthermore, the large field of carriers means that suppliers—OEMs and airports—have stronger negotiating power. On the customer side, passengers hold significant buying power and are mostly price driven, an added challenge in an age when passengers can easily compare the ticket prices of different carriers online. Despite the best efforts of airlines to differentiate themselves, an airline seat remains relatively commoditized. In addition, national carriers may find that the interests of their countries may sometimes supersede their business interests. For example, a national carrier may continue offering flights on unprofitable routes, to its own distress and that of other airlines offering the same route.

What’s more, airlines are especially vulnerable to external shocks beyond their control, because they have high fixed costs and mostly variable revenues. The Gulf War, 9/11, the 2010 volcano eruption in Iceland, and the 2008 global financial crisis all affected the airline subsector dramatically, though not as profoundly as the pandemic did.

Airlines need to bolster their resilience. They could increase their cash reserves, voluntarily or by regulation, which would reduce the need for bailouts every time a crisis hits. They could also work to make their operations more agile and nimble—that is, they could improve their ability to reduce supply quickly and cost-effectively when demand abruptly falls, by increasing the variability in their cost base. (The next article will explore this topic further.)

Airports and ANSPs

Until the pandemic’s onset, airports created more value than any other aviation subsector in most regions except North America (Exhibit 5). Globally, airports enjoyed annual aggregate economic profits of $5 billion, on average, from 2012 to 2019, when their economic-profit margins were around 3 percent. Airports in the Asia–Pacific region were especially strong performers and very competitive because they benefited from high demand and a favorable regulatory climate. But the pandemic exposed an inherent challenge in the business model of most airports: high fixed costs and mainly variable revenue flows. Dwindling traffic led to heavy economic losses of $32 billion, or 45 percent, in 2020. The Airports Council International estimates that airports’ performance improved somewhat last year, drawing in 26 percent more revenues than in 2020. However, last year’s revenues remained more than 50 percent lower than in 2019.

ANSPs, which manage the safe flow of air traffic, are mostly government-run entities, though some countries, including the United Kingdom and Canada, have private-sector players. These air traffic operators have significant infrastructure costs and use highly trained labor, which generally means high and fixed overheads. Before the pandemic, the subsector managed to achieve marginal profitability—an average of around 0.3 percent in economic profit from 2012 to 2019. Since the revenues of this subsector are mostly variable and linked to aircraft movements, it suffered significant losses in 2020.

Freight forwarders and cargo airlines

The sole bright spots are the freight forwarder and air cargo subsectors. In 2020, both managed to generate healthy economic profits: for freight forwarders, 4 percent; and air cargo carriers, 9 percent. In fact, the only five airlines that reaped profits in 2020—AirBridgeCargo, Atlas Air, Cargojet, Cargolux, and Kalitta—were cargo carriers.

Before the pandemic, the performance of the freight-forwarding subsector was high and relatively stable, with an annual economic profit averaging $2 billion from 2012 to 2019, or a margin of 2.2 percent. Despite some consolidation and M&A over the years, this is still a largely fragmented market in which the top five companies by revenue had a 27 percent share in 2019. Many companies have an asset-light model, which improves their return on invested capital (ROIC) thanks to low levels of invested capital. Large players, such as Expeditors and Kuehne+Nagel, enjoy consistently impressive profit margins.

During the pandemic, robust demand for air cargo was initially driven by protective personal equipment (PPE) and medications, and later by challenges in the ocean-shipping supply chain and strong growth in e-commerce sales. The supply of air cargo fell as the number of grounded passenger planes rose, constricting belly capacity and raising rates (and profits for freight forwarders).

Globally, air cargo yields rose by 40 percent year on year in 2020, and by an additional 15 percent last year. Load factors were also up significantly, by ten percentage points in 2021 compared to 2019. We expect cargo yields to drop over the next two to three years but remain above 2019 levels due to a continuing gap between supply and demand.

Manufacturers and lessors

Aircraft manufacturers were the third-weakest subsector in 2020, incurring $12 billion in losses. The reason is straightforward: financially struggling airlines place fewer orders for new aircraft and defer deliveries. Orders for commercial aircraft dropped by around 55 percent in 2020 from the previous year’s level, while the number of deferred aircraft deliveries increased fivefold. Last year, orders picked up but were still 10 percent below their 2019 levels. There were also twice as many deferrals compared to two years before.

Lessors were middling performers before the pandemic, neither reaping large profits nor incurring significant losses. The subsector came under considerable pressure during the pandemic. Many airlines asked for—and received—lease payment deferrals. Rates for new aircraft leases were much lower because of the oversupply of aircraft; for instance, lease rates for widebody aircraft (such as the Boeing 787-9) fell by around 35 percent in 2020 from the previous year’s level, recovering only by 10 percent last year. Worst of all, many lessee airlines, especially in Asia, were in deep financial distress and also sought to renegotiate contract terms, with a preference for power-by-the-hour contracts. Some airlines went through Chapter 11 (or similar bankruptcy proceedings) to restructure their leases.

GDS providers

High barriers to entry protect the providers of the global distribution systems that grease the wheels of travel by making it more seamless to book tickets and hotel stays. Private-equity investors have been active in this subsector, pumping in the capital to make it fairly stable and high performing. It raked in average annual economic profits of around $1 billion, equivalent to a margin of 10.5 percent, from 2012 to 2019.

Airlines—the core customers of GDS providers—have been trying to steer more traffic toward their own channels as a way to ameliorate intensifying cost pressures and to establish a direct link to their customers. But such efforts have yielded mixed success for airlines because the majority of business travel, the highest-yielding passenger segment, is booked through indirect channels, to the benefit of GDS providers.

All forms of travel, including the high-yielding corporate trips , plunged during the pandemic, so GDS providers incurred economic losses in 2020. Yet the drop in profitability, though significant, was less dramatic than it was in other subsectors of the aviation value chain because many GDS providers also have access to revenue streams (from airline IT systems, for example) less directly dependent on air travel demand.

Catering, ground services, and MRO providers

Subsectors with lower fixed costs fared better, even though revenue flows decreased because of lower passenger traffic or fewer flights. The revenue flows for catering and ground service companies are highly dependent on passenger traffic and flight volumes, for example, but much of their workforce consists of contract workers, so the fixed costs of their operations are lower than those of players in other subsectors. This flexibility allowed these companies to partially offset the losses incurred though depressed air traffic during the pandemic. The losses of catering and ground service companies ($2.4 billion and $3.2 billion, respectively) were therefore smaller than those of companies in many other aviation subsectors.

MRO providers were fairly stable value creators before COVID-19. In nonpandemic periods, most airlines choose to keep their flight services to cover their high fixed costs even when travel demand is low. They may tighten their margins by lowering fares in a bid to fill planes. Regardless of whether or not a plane is full, MRO providers still benefit because airlines continue to require their services, which depend more on flight activity than on passenger volume. This generally gives MRO revenue streams greater stability than those of subsectors more dependent on passenger traffic. Still, aircraft activity fell so drastically in 2020 that MROs collectively suffered an economic loss of $3.6 billion. Revenues for the commercial MRO market did improve by 40 percent in 2021, but total recovery to 2019 levels is not expected until 2024.

In today’s highly connected world, international mobility is the norm. But large global shocks will probably become more frequent. As global aviation rebuilds itself, resilience must clearly be a top priority. In the next article, we’ll suggest ways to help airlines enhance their performance by drawing lessons from the value-creating subsectors.

Jaap Bouwer is a senior knowledge expert in McKinsey’s Amsterdam office, Vik Krishnan is a partner in the Bay Area office, Steve Saxon is a partner in the Shenzhen office, and Caroline Tufft is a senior partner in the London office.

The authors wish to thank Regis Huc for his contributions to this article.

This article was edited by Jason Li, a senior editor in the Shanghai office.

Explore a career with us

Turning on the revenue tap: How US airports could make the most of additional liquidity

Back to the future? Airline sector poised for change post-COVID-19

Rideshares in the sky by 2024: Joby Aviation bets big on air taxis

The world of air transport in 2019 //.

Despite the exceptional circumstances faced by the aviation industry and ICAO during the data collection and collation period, data officially provided by ICAO Member States reflects 97% of the data reported here, with the remainder calculated according to ICAO’s methodology.

According to ICAO’s preliminary compilation of annual global statistics, the total number of passengers carried on scheduled services rose to 4.5 billion in 2019, which is 3.6 per cent higher than the previous year, while the number of departures reached 38.3 million in 2019, a 1.7 per cent increase. Detailed air transport statistics appear on the Presentation of 2019 Air Transport Statistical Results page.

Total increase: 4.9 per cent, equating to 8 686 billion RPKs

More comprehensive air transport data are available at: http://data.icao.int/newdataplus

International scheduled passenger traffic

Total growth: 4.7 per cent in RPKs

Domestic scheduled passenger traffic

Total growth: 5.2 per cent in RPKs

Low-cost Carriers

Low-cost carriers carried an estimated 1.4 billion passengers in 2019, which was approximately 31 per cent of the world total scheduled passengers. This indicated a 5.3 per cent growth when compared to the number of passengers carried by low-cost carriers in 2018, around 1.5 times the rate of the world total average passenger growth.

Available seat-kilometres (ASK) capacity

Total Growth: 4.1 per cent, passenger load factor of 82.4 per cent

Freight traffic

Total tonnes carried: 57.6 million

Decline of total scheduled international freight traffic, expressed in terms of FTKs performed: -3.5 per cent

Scheduled international freight capacity in 2019, expressed in available freight tonne-kilometres, was approximately 391 billion, a 6.8 per cent growth compared to 2018. The scheduled international freight load factor declined at 50 per cent.

Operating profit of scheduled airlines of Member States

Estimated at about 5.3 per cent of operating revenues, operating profits are expected to be around USD 45.0 billion in 2019 based on operating revenues of USD 841 billion.

A detailed variance analysis of changes in operating profits appears in the Presentation of 2019 Air Transport Statistical Results, Table 9.

Long-term air traffic forecasts

The 4.5 billion scheduled passengers carried in 2019 are expected to grow to about 10.0 billion by 2040, and the number of departures is projected to rise to some 90 million in 2040.

The world’s major manufacturers delivered 1 234 new commercial aircraft in 2019 and recorded 822 new aircraft net orders.

Book-to-bill ratios for two of the largest aircraft manufacturers decreased to around 0.66 in 2019 from 1.02 in the previous year.

Aviation safety

There were 115 aircraft accidents for scheduled commercial air transport operations in 2019, compared to 98 accidents in 2018. This is according to an analysis of global accident data involving commercial air transport aircraft with a maximum certificated take-off mass of more than 5 700 kilograms. The number of fatalities in scheduled operations worldwide stood at 239, resulting from 6 fatal accidents. The global accident rate was 3.0 accidents per million scheduled departures, versus 2.6 accidents per million scheduled departures in 2018.

Unlawful Interference

47 acts of unlawful interference were recorded. These included:

2 attacks on aircraft in flight

10 attacks on airports or other aviation facility

2 attacks using aircraft as a weapon

5 cyber-attacks endangering aviation safety

3 unlawful seizures of aircraft

and 25 other attacks.

Details concerning all 2019 events are available in the Acts of Unlawful Interference Database, which is accessible through ICAO’s secure website.

1.1.1. The air transport industry plays a significant role in the global economy. Secure air transport service ... 1.2.2. The global nature of aviation means that States are dependent on the effectiveness of each other's ... 2-2 Global Aviation Security Plan 2.2.2. The Roadmap in Appendix A contains many tasks for States to implement and it ...

The air transport industry is not only a vital engine of global socio-economic growth but is also of vital importance as a catalyst for economic development, ... the development of civil aviation has been broadly impacted by several crises directly or indirectly related to aviation. The Asian crisis in 1998, the U.S. terrorist attack on 11 ...

The Aviation Market is expected to reach USD 333.96 billion in 2024 and grow at a CAGR of 2.87% to reach USD 396.15 billion by 2029. The Boeing Company, Airbus SE, Lockheed Martin Corporation, Textron Inc. and Embraer S.A. are the major companies operating in this market.

As the global economy is becoming more and more connected, the aviation industry is one of the fastest transportation sectors. The aviation industry provides a total of 87.7 million jobs worldwide.

GLOBAL AVIATION INDUSTRY 2.1 INTRODUCTION ... 2004:2.2-2). The focus of this study is placed on seven quantifiable market access features or provisions of the BASAs, which are briefly defined in this chapter and are comprehensively discussed in ... Given the restrictive nature of the bilaterals, the development of international air services ...

Although the temptation is to pin the blame solely on the pandemic-induced plunge in passenger traffic, that would be to ignore the airline industry's underlying and long-term health problems. This article, the first in a two-part series, provides an overview of global aviation's performance during the pandemic, by subsector.

Taking stock of the pandemic's impact on global aviation. There's no sugarcoating the diagnosis: airlines are the biggest destroyer of value among all aviation subsectors. McK

• The global economy is facing two simultaneous and wholly global systemic crises: climate change and the COVID-19 pandemic. On top of that, war in Europe adds to human suffering and economic challenges. These all constitute important headwinds for the global economy and for aviation. • Nevertheless, 2022 testifies to the resilience of the air

Aviation safety There were 115 aircraft accidents for scheduled commercial air transport operations in 2019, compared to 98 accidents in 2018. This is according to an analysis of global accident data involving commercial air transport aircraft with a maximum certificated take-off mass of more than 5 700 kilograms.

Aviation is one of the most energy-intense forms of consumption, and has in the past been characterized by strong growth, with estimates that emissions have increased by a factor 6.8 between 1960 and 2018 (Lee et al., 2020).Industry estimates prior to COVID-19 have suggested a further tripling between 2020 and 2050 (ICAO, 2016).By mid-2020, scheduled flights and revenue passenger kilometers ...

Transportation & Logistics ›