The commercial aircraft market is estimated to be valued at US$ 158.83 billion in 2024, growing at a CAGR of 6.4% over the forecast period (2024-2031). The market is anticipated to grow owing to increasing air passenger traffic globally and rising demand for newer and technologically advanced aircraft models. Furthermore, the market players are investing significantly in the development and production of fuel-efficient aircraft to cater to the changing market trends.
Market Dynamics:
Rising air traffic has been a key driver propelling the growth of the commercial aircraft market. The growing middle-class population and increased disposable income in developing countries have augmented the demand for air travel over the past few years. Additionally, low airfare rates offered by various airlines have made air travel more affordable for the general population. According to International Air Transport Association (IATA), the number of air passengers is expected to reach 8.2 billion by 2037 from 4.6 billion in 2021.
Increased emphasis on international commuting is another factor stimulating the market growth. The considerable reduction in travel time coupled with enhanced connectivity on international routes has boosted global tourism and commerce. Moreover, several countries have signed bilateral air service agreements to improve international air links, presenting lucrative opportunities for commercial aircraft manufacturers.
Market Drivers: Increasing Passenger Traffic Driving the Demand for New Aircraft
According to the International Air Transport Association (IATA), the number of passengers traveling by air increased by 6.5% in 2017 to over 4 billion. This strong growth in demand is putting pressure on existing fleets of many airlines and prompting them to invest in newer, more fuel-efficient aircraft. As passenger numbers are projected to double over the next 20 years, aircraft manufacturers stand to benefit from this need to expand fleets.
Market Drivers: Favorable Government Policies and Subsidies Supporting Development
Government support through favorable aviation policies and subsidies is another major market driver. Many countries provide funding and tax incentives to boost their domestic commercial aerospace industry as it generates significant exports and high-paying manufacturing jobs. For example, the U.S. government assists Boeing through research grants and export financing while Airbus receives launch aid from European governments. These initiatives encourage innovation and new product development. Military conversions of aircraft designs into commercial versions are also subsidized. Such governmental backing fuels competition and rapid innovation in the industry.
Market Restraints: High Development Costs Act as Barrier to Entry
One of the key restraints in the commercial aircraft industry is the enormous costs associated with designing and developing new planes. Developing a brand new aircraft model requires billions of dollars in investment and can take 5-7 years to complete. The high barriers to entry deter all but the largest manufacturers from competing independently in this market. Even for established players like Boeing and Airbus, every new program is a major financial undertaking that comes with technology and execution risks. This concentration of the industry in a few major producers limits opportunities for new entrants.
Market Restraints: Regulatory Hurdles Delay the Certification Process
Strict regulatory requirements imposed by aviation safety agencies also pose challenges. Obtaining design certifications from bodies like the Federal Aviation Administration (FAA) and European Union Aviation Safety Agency (EASA) is a long, costly process involving comprehensive testing and documentation. Any delays in the certification schedule due to technical or paperwork issues can significantly push out a plane's entry-into-service date. Meeting constantly evolving regulations on noise levels, emissions standards, etc. further increases costs. The cumbersome compliance process acts as a drag on the ability to quickly introduce new models.
Market Opportunities: Demand in Fast Growing Emerging Markets
One promising opportunity lies in expanding markets in developing economies like India, China, Latin America, and Southeast Asia. These regions are expected to account for over 40% of the rise in passenger traffic over the next 20 years as incomes rise and air travel becomes more accessible. Catering aircraft to the specific operating environments and budgets of low-cost carriers in these markets opens up a large customer base. Gaining a foothold early allows manufacturers to benefit as air transport takes off across the developing world.
Market Opportunities: New Aircraft Configurations and Technologies
More electric or hybrid-electric propulsion systems, use of composite materials, alternative fuels, and advanced aerodynamics promise lower emissions and operating costs. Niche segments like small regional jets and freighters are also growing. The development of disruptive configurations such as flying taxis and passenger drones presents emerging opportunities. By investing in innovative solutions, manufacturers can enhance their competitiveness and access new revenue streams.
*Link: https://www.coherentmarketinsights.com/market-insight/commercial-aircraft-market-5304
Key Developments:
- In 2022, Tata Sons is the parent company of the Tata Group took ownership of a revamped Air India (AI) and is now finalizing a substantial aircraft order for approximately 500 planes. AI intends to acquire 100 twin-aisle aircraft and 400 single-aisle jetliners, potentially including Airbus A350s and Boeing 787/777 twin-aisle planes. The total value of the deal is estimated at US$100 billion. The actual number of aircraft ordered may change due to options that could be exercised later. These orders may consist of firm orders as well as options.
- In 2022, United Airlines is a major American airline headquartered in Chicago U.S. placed a significant order for at least 200 Boeing aircraft, dividing between the 737 Max and the 787 Dreamliner models
- In the same year, Boeing invested US$5 million in a St. Louis center dedicated to advanced manufacturing innovation. Furthermore, Qantas is the flag carrier airline of Australia. and Airbus is a European multinational aerospace corporation that specializes in designing and manufacturing commercial aircraft jointly invested up to US$200 million to support a sustainable aviation fuel (SAF) business in 2022.
Key Players:
Boeing Company, Airbus SE, Embraer S.A., Bombardier Inc., Lockheed Martin Corporation, General Dynamics Corporation, United Technologies Corporation, Rolls-Royce Holdings plc, Honeywell International Inc., Safran SA, Thales Group, and Raytheon Technology