Study on the economic developments of the EU Air Transport Market

A viable economic landscape for European aviation
Between 2016 and 2019 – before the COVID-19 pandemic – the number of air passenger movements at EU+ airports increased by 17 percent from 1.6 billion to 1.9 billion. Low cost carriers were responsible for 72 percent of the EU+ passenger traffic growth. Air cargo volumes increased by 6 percent. Air connectivity levels have been rising, and airlines have opened a large number of new routes, particularly within the EU+. Competition between airlines decreased between 2016 and 2019, mainly due to airline bankruptcies.

The study
SEO Amsterdam Economics and EGIS conducted a study for the European Commission on the economic developments of the EU Aviation Market, serving as a supporting document of the new Aviation Policy pursued in the European Union. The goals of the study were to (i) provide a detailed overview of the EU air transport market between 2016 and 2019, (ii) Assessment of the impact of the Aviation Strategy launched by the Commission in December 2015 on the market (iii) Identification of market trends up to 2025 and highlighting the factors that could have an impact on this trend.

Method used
Air transport market trends were assessed in terms of developments in passengers, cargo volumes, financial profitability of airports and airlines, air connectivity, route openings and closures, and airport and airline competition. Both EU-wide and country level trends were identified, and compared to trends and developments in other world regions. These trends and developments were linked to the four priority areas in the EC’s Aviation Strategy launched in December 2015.

The study identified various trends in terms of environmental policy, aviation agreements, trends at airports, airline strategies, connectivity for remote regions, multimodality and digitalisation. These trends were based on the market trends identified in the first research steps, and further developed through internal workshops and brainstorm sessions. As a last step, the PESTEL and Porter’s 5+1 forces model were used to respectively identify external and internal factors affecting the European air transport market, providing a strategic overview of the identified trends.