Based on the latest analysis of scheduled data from OAG, global scheduled airline capacity between January and September is expected to be 5% higher in 2011 compared to the same period in 2010 and stronger than the underlying global growth rate of 4% over the last 10 years.

Intra-regional seat capacity has recovered and now exceeds the pre-recession levels experienced in 2008.

Source - OAG

All regions have experience growth to a greater or lesser degree.  Intra-Asian capacity development is leading the way by growing 7 % this year, in line with historic trends for the region. North American capacity development remains sluggish at 2% reflecting continued concerns about the state of the US economy. Europe and the Middle East’s growth rates, whilst up, are below their long term averages.

Source - OAG

Although International seat capacity between regions is a third of the size of intra-regional capacity, over the last decade this international segment has been growing at twice the rate of intra-regional capacity. (6% compared to 3%). Between January and September 2011, international seat capacity grew by 6% per annum compared to 2010.

Source - OAG

By region, Europe remains the largest source of international seat capacity, followed by the United States. With the exception of Central and South America, international seat capacity from all regions grew in the first 9 months of 2011 compared to 2010. The Middle East and Asia registered the strongest growth rates, up by 11% and 10% respectively, close to or exceeding the historic averages for the regions. North America by contrast, grew only by a modest 3%, paralleling the modest and cautious trend seen in intra-regional growth for the region.

Source - OAG

Low Cost

This month’s FACTS report focuses on capacity developments in the low cost sector of the market around the world

Intra-regional capacity provided by the low cost market segment now accounts for 27% of total intra-regional capacity for the January to September period of 2011. Comparing 2011 to 2010, the low cost segment grew by 9% compared to legacy carriers growing at 5%.

To place this into context, low cost capacity development has averaged an annual growth rate of 15% per annum compared to a mere 3% for legacy carriers over the last 10 years. Therefore 2011 has been a relatively cautious period of development in the low cost sector and a relatively aggressive one for legacy carriers, in the intra-regional market.

Source - OAG

In the international market segment, low cost representation is still modest, accounting for only 8% of total international capacity in the period January to September 2011. This penetration is likely to rise in the next few years, with the introduction of more inter-regional services by the likes of Air Asia X and other emergent long haul “low cost” brands

Source - OAG

Between January and September 2011, 36% of intra-regional capacity in Europe was generated by the low cost sector. Similar levels of market penetration are evident in the Central and South American market (32%) and North America (30%). Low cost representation in other regional markets is significantly lower. China, which dominates seat capacity in Asia, has yet to see the establishment of the equivalent of an Air Asia or similar low cost brand in its market.

In Africa, low cost carrier presence is still for the most part concentrated in South Africa and in the Middle East, the low cost carriers are still relatively small in the scale of operation compared the incumbent national legacy carriers.

Source - OAG

Comparing this year to last, seat capacity growth in the low sector in Europe was only 7% compared to the decade average of 25%. North America grew by 7% compared to its historic average of 6%. Asia, Central and South America and Africa, all registered double digit growth. The Middle East however registered a 2% decline in low capacity. This is a result of a 37% decline in low cost capacity in the Saudi Arabian domestic market.

Source - OAG

Looking at international low cost capacity development in Europe by country, there is some noticeable variance. The UK market is the largest source of international low cost capacity in Europe, but only grew by 4% year on year compared to 2010. In comparison, Spain, the second largest market saw capacity increased by 10%. Markets, such as Germany, Poland, Ireland and Denmark saw capacity actually decline, whilst others such as the Netherlands, Turkey, Greece and Cyprus have seen growth rates of 20%+. Such variance can be explained in part by the perceived economic health of certain country markets, the imposition of passenger “environmental” charges and the evolving strategy of the principal low cost carriers in Europe.

The decline in the German market can be explained by its government’s decision to impose an environmental tax on passengers, which prompted low cost carriers to reduce capacity or move it across the border to the Netherlands (resulting in the 20% increase in capacity this year to date). Poland has continued to see low cost capacity decline as a consequence of weaker demand from Polish guest workers working elsewhere within the European Union. Ireland’s economic problems are well documented.

Source - OAG

The growth in evident in markets such as Greece, Turkey and Cyprus, reflects the movement of low cost  carriers into markets that have up to now, been the relative safe haven of  inclusive tour operators and charter operators.

International low cost capacity on the principal markets outside of Europe have continued to grow strongly in 2011, with Malaysia and the expansion Air Asia brand in to the fore. The only market to have experienced decline in 2011 has been Morocco (-3%) which has been indirectly impacted by the political instability in the rest of North Africa.

Source - OAG

OAG FACTS uses interactive graphs to display a 10-year visual trend of the performance of a specific airport, route, country or region. It is updated monthly.

Printer friendly version:   OAG FACTS Executive Summary September 2011