With the top U.S. and Gulf airline carriers continuing to debate unfair competition, government subsidies and open skies agreements, OAG, the market leader in aviation intelligence, today released a new research report that uncovers the underlining market dynamics causing a ripple effect across the international airline industry.
The report – The Fight for Global Markets: Is three the Magic Number? – provides detailed analysis on the uncertain international growth picture facing U.S. airlines today, the current open skies and fair market argument, the growth and decline of regional aviation markets and the evolving roles of low cost carriers. The report also explores how dominant airlines have come to power and considers the academic label ‘Rule of Three’ – where an industry is dominated by three large players competing alongside smaller market specialists – and how that dynamic could play out in a future, consolidated global aviation market.
Select findings from OAG’s analysis include:
- Gulf carriers continue to experience rapid growth: The Middle East has seen the greatest increase in airline seat capacity over the past two decades, and is now 3 times larger than it was in 1996.
- U.S. faces rising pressure from China: In the past 5 years, Chinese carriers have increased seat capacity 140% to the U.S. (in a typical week), compared to 80% growth by U.S. airlines.
- U.S. airlines see declining international market share: While U.S. carriers still own the largest share of the international aviation market, U.S. airlines’ share of global seat capacity has fallen 4% from 2010.
- Recent U.S. consolidation creates ‘big three’: Two thirds of domestic capacity in the U.S. is provided by the ‘big three’ US carriers – American, Delta and United – which together operate 59% of all U.S. seat capacity, up from 37% nearly 20 years ago.
- Global consolidation could be in the future: In each of the top 10 commercial air transport markets today, the top 3 airline groups own 50% – 82% of all seats.
“The global aviation outlook is transforming and evolving before our eyes. The evolution is affecting everything — from historical business structures and government regulations to the growth and profitability of the key players in the market,” said John Grant, OAG’s EVP of Data and Market Intelligence. “There are currently more airlines than can realistically exist in a truly global market where barriers are eased. Our analysis shows that in time, it’s reasonable to expect a major consolidation of airline carriers globally.”
OAG will launch and its considerations for future international strategies at CAPA’s Americas Aviation Summit in Las Vegas (April 27-28, 2015). For more insight and analysis, the full report, ‘The Fight for Global Markets – Is Three the Magic Number?’ can be downloaded here.