ZERO EMISSION AIRCRAFT MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024 - 2031)

Market Size and Trends

The zero emission aircraft market is estimated to be valued at USD 7.68 billion in 2024 and is expected to reach USD 22.1 billion by 2031, growing at a compound annual growth rate (CAGR) of 16.3% from 2024 to 2031.

The zero emission aircraft market is expected to witness significant growth over the forecast period. The increasing concerns regarding carbon emissions from air travel along with stringent environmental regulations are expected to drive the demand for zero emission aircraft.

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Major aircraft manufacturers like Airbus and Boeing are investing heavily in the development of electric and hydrogen-powered aircraft. The development of advanced battery technologies suitable for aviation and increasing range of electric aircraft are further expected to promote adoption of zero emission aircraft. Rising fossil fuel costs and need to reduce dependency are also favoring the market growth. However, factors such as lack of required infrastructure and high development costs of these aircraft, may hinder the market growth in the coming years.

Environmental Concerns

There is growing concern among governments and the public about the environmental impact of aircraft emissions. The aviation industry is under increasing pressure to reduce its carbon footprint and find ways to cut emissions that contribute to global warming. Commercial aviation accounts for roughly 2-3% of total carbon emissions globally. With air travel continuing to grow in the coming years due to rising incomes and globalization, aviation emissions are expected to increase substantially if no action is taken. Zero emission aircraft have the potential to address this issue by eliminating local air pollutants and CO2 emissions completely. This would help the aviation industry transition to more sustainable operations and comply with tightening environmental regulations. More countries and municipalities are expected to introduce legislation that incentivizes the deployment of zero emission aircraft, especially for short-haul flights. This is likely to become a major driver of demand over the long run as consumers and corporations become increasingly environmentally conscious.

As the second-largest carbon dioxide emitter globally, after China, the United States faces significant air pollution challenges. In 2021, the country emitted approximately 67 million tons of pollutants, primarily from transportation and electric power sectors. According to the US Energy Information Administration (EIA), emissions from coal in the power sector increased for the first time since 2014. A recent study by the American Lung Association revealed that 4 out of 10 people, roughly 135 million individuals, live in areas with unhealthy air quality. Fossil fuel combustion is the primary cause, while climate change-induced events like wildfires and longer pollen seasons worsen air quality.

Market Concentration and Competitive Landscape

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The aviation industry is heavily dependent on jet fuel to power aircraft and this accounts for a significant portion of operating costs for airlines. Over the past decade, fuel prices have witnessed high volatility driven by geopolitical uncertainty in West Asia and other factors influencing global crude oil markets. In some years, fuel costs alone have wiped out airline profits. The unpredictability of fuel prices poses major challenges for business planning and price competitiveness. Zero emission aircraft powered by hydrogen fuel cells or electric batteries promise to insulate the industry from these fuel market fluctuations. While hydrogen and electricity will have their own production and distribution costs, they are likely to be more stable over time in comparison to jet fuel whose prices are tied directly to global crude oil markets. By diversifying their energy sources, airlines can achieve greater budgeting certainty and better manage operating risks. This is attractive from a financial standpoint and could influence investment decisions on new aircraft fleets. As fuel economies continue to improve, total cost of ownership might favor hydrogen and electric options over conventional fueled aircraft.

Higher international refined fuel prices, driven by OPEC cuts and global demand, coupled with a weaker Australian dollar, raised petrol prices in Australia's major cities to 195.6 cpl in the September quarter, up by 12.7 cpl from the previous quarter. ACCC's report highlights the impact of these factors on prices. The increase was primarily due to higher international petrol prices and currency exchange rates. While prices reached record nominal levels, they were lower in real terms compared to previous years. Smaller capital cities saw relatively smaller price hikes, with Hobart at 198.5 cpl, Canberra at 197.4 cpl, and Darwin at 192.6 cpl.

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The aviation industry is heavily dependent on jet fuel to power aircraft and this accounts for a significant portion of operating costs for airlines. Over the past decade, fuel prices have witnessed high volatility driven by geopolitical uncertainty in West Asia and other factors influencing global crude oil markets. In some years, fuel costs alone have wiped out airline profits. The unpredictability of fuel prices poses major challenges for business planning and price competitiveness. Zero emission aircraft powered by hydrogen fuel cells or electric batteries promise to insulate the industry from these fuel market fluctuations. While hydrogen and electricity will have their own production and distribution costs, they are likely to be more stable over time in comparison to jet fuel whose prices are tied directly to global crude oil markets. By diversifying their energy sources, airlines can achieve greater budgeting certainty and better manage operating risks. This is attractive from a financial standpoint and could influence investment decisions on new aircraft fleets. As fuel economies continue to improve, total cost of ownership might favor hydrogen and electric options over conventional fueled aircraft.

Higher international refined fuel prices, driven by OPEC cuts and global demand, coupled with a weaker Australian dollar, raised petrol prices in Australia's major cities to 195.6 cpl in the September quarter, up by 12.7 cpl from the previous quarter. ACCC's report highlights the impact of these factors on prices. The increase was primarily due to higher international petrol prices and currency exchange rates. While prices reached record nominal levels, they were lower in real terms compared to previous years. Smaller capital cities saw relatively smaller price hikes, with Hobart at 198.5 cpl, Canberra at 197.4 cpl, and Darwin at 192.6 cpl.

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In terms of aircraft type, eVTOL aircraft is expected to contribute the highest share of 87.1% in 2024, owing to rapid advancements in electric aircraft technologies. eVTOL aircraft or electric vertical take-off and landing aircraft are ideal for short-haul flights and urban air mobility as they can take-off and land vertically like a helicopter but have better cruise efficiency of a fixed-wing aircraft. Recent technology breakthroughs such as improved battery energy densities, lightweight electric motors and advanced autonomous flight capabilities are making eVTOL aircraft much more viable for commercial applications. Several startups are developing innovative eVTOL designs with multiple rotors and propellers for VTOL operations as well as fixed wings for powered cruise flight. Successful certification of these new designs by aviation regulators will further spur their adoption over the forecast period. Additionally, investments from automotive and technology giants into urban air mobility startups will help drive the commercial development of eVTOL aircraft for passenger and cargo transportation within cities and metropolitan areas. 

Insights, By Range- Short-Haul Flights Drive Demand for Zero Emission Aircraft

In terms of range, short-haul is expected to contribute the highest share of 86.38% in 2024, owing to rising environmental consciousness and congestion on short routes are boosting the demand for zero emission aircraft technology. Air travel accounts for a sizable portion of greenhouse gas emissions globally, with short-haul flights within continents being a major contributor. Strict emissions regulations for conventional aircraft and the need to reduce carbon footprint is prompting airlines as well as business and private jet operators to adopt hybrid, electric and hydrogen aircraft replacements for short-haul routes. Zero operating cost benefits and technological improvements will make electric aircraft an economically viable alternative within ranges of up to 500 km over the next decade. This makes short-haul flights an early proliferation area for zero emission aircraft while long-range battery and fuel-cell aircraft technologies continue to advance.

Insights, By Application - Growing Air Travel and Urbanization Drive the Passenger Transportation Segment

In terms of application, passenger transportation is expected to contribute the highest share of 82.16% in 2024, due to economic growth, rising living standards, and rapid urbanization, thus increasing the demand for air travel, especially locally within major city clusters. While domestic and regional passenger traffic within countries and continents have been rising steadily worldwide, ground transportation infrastructure has not kept pace with increasing congestion levels. This is opening up opportunities for electric and hybrid-electric aircraft to provide zero-emission options for passenger point-to-point trips between busy metropolitan areas and business hubs that are 200-500 km apart. Major passenger carriers, flying taxis, and eVTOL startups are developing vertiports and establishing routes to capitalize on this lucrative short-haul transportation market driven by increasing travel and the need to reduce emissions as well as traffic from personal vehicles.

Regional Insights

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North America is expected to dominate the zero-emission aircraft market and hold the largest market share of 38.3% in 2024. This can be attributed to strong government support and initiatives in the region for developing and testing electric and hydrogen powered aircraft prototypes. Many key aircraft manufacturers and startup companies involved in electric propulsion technologies are based in the U.S. and Canada. States like California have ambitious targets for transitioning general aviation to lower emission alternatives. This has accelerated investment in developing scalable technologies required for electric vertical takeoff and landing (eVTOL) aircraft and hybrid electric aircraft designs.

Europe is expected to emerge as the fastest growing regional market for zero emission aircraft with CAGR of 20.61% in 2024. Strong policy push for sustainable aviation coupled with focus on emerging technologies under the Clean Aviation partnership is driving the market growth. Countries like Germany and France are at the forefront with testing of various electric aircraft platforms. For instance, Eviation Aircraft collaborated with Lithuanian companies to flight test its nine-passenger Alice ePlane. EasyJet also partnered with Wright Electric to introduce battery-electric aircraft in its regional fleet by 2030. The growing cross-border collaborations highlight Europe's focus on local manufacturing and building export capabilities in electric aviation systems.

Industry stakeholders expect the Asia Pacific region especially China to play a dominant role in the future. The country has showed keen interest in the indigenous development of electric aircraft prototypes. State-owned companies, such as China Aviation Industry Corporation (AVIC), are working to accelerate product certification. Localization of supply chains is a key priority to make electric aircraft affordable. This includes establishing a strong base of cell manufacturers and component engineering talent in the region. Aircraft leasing companies from Singapore have signed agreements with startups working on hybrid aircraft, which is a positive sign for the adoption of sustainable technologies in cargo and commercial transport applications.

The regional analysis highlights key aspects facilitating the development and adoption of zero emission aircraft solutions. Initiatives by governments and strategic partnerships across Asia Pacific, Europe, and North America will determine future market shares in this emerging transportation segment.

Market Report Scope

Key Developments

• In May 2023, Alaska Airlines partnered with ZeroAvia to work on developing the world's largest zero-emission aircraft. This project aims to change regional air travel by introducing hydrogen-electric propulsion technology, which could significantly reduce carbon emissions in the aviation industry and promote the growth of sustainable, zero-emission aircraft.
• In 2021, a U.K.-based Electric Vertical Take-off and Landing (eVTOL) aircraft manufacturer, Vertical Aerospace, merged with Special Purpose Acquisition Company (SPAC), Broadstone Acquisition Corp. This merger was intended to provide Vertical Aerospace with the necessary funding to build and market its eVTOL aircraft.
• Also in 2021, U.S.-based eVTOL aircraft producer, Archer Aviation, announced a merger with Atlas Crest Investment Corp. This merger was aimed at accelerating the development and production of Archer Aviation's eVTOL aircraft and transitioning the company into a publicly traded entity.
• In 2020, a Germany-based aviation company, Lilium, and SPAC Qell Acquisition Corp announced a merger agreement. The purpose of this merger was to give Lilium access to additional funding, enabling it to ramp up production of its electric vertical take-off and landing (eVTOL) aircraft and expand its market presence.

*Definition: The zero emission aircraft market consists of aircraft and component manufacturers focused on developing innovative aircraft technologies that can greatly reduce or completely eliminate aircraft emissions and carbon footprint. It involves research and development of electric and hybrid-electric aircraft powered by batteries, hydrogen fuel cells, or sustainable alternative fuels that produce near-zero or zero emissions. The goal of this emerging market is to commercialize environment-friendly aircraft solutions that can help decarbonize the aviation sector in the coming decades.

Market Segmentation

• Aircraft Type Insights (Revenue, USD Bn, 2019 - 2031)
• • eVTOL Aircraft
  • Electric & Hybrid Electric
  • Hydrogen Powered
•  Range Insights (Revenue, USD Bn, 2019 - 2031)
• • Short-Haul
  • Medium-Haul
  • Long-Haul
•  Application Insights (Revenue, USD Bn, 2019 - 2031)
• • Passenger Transportation
  • Cargo and Freight
  • Military and Defense
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
• • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • South Africa
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • AeroDelft
  • Airbus S.A.S.
  • Ampaire Inc.
  • Avinor AS
  • BETA Technologies, Inc.
  • Bye Aerospace
  • Equator Aircraft AS
  • Evektor, spol. s r. o.
  • Eviation Aircraft
  • Heart Aerospace
  • HES Energy Systems
  • Joby Aero, Inc.
  • Lilium GmbH
  • NASA
  • Pipistrel d.o.o
  • Rolls-Royce plc
  • Wright Electric
  • ZeroAvia, Inc.