Market Overview
Global airline industry
According to the IATA’s estimates, the global scheduled passenger traffic grew by 6.1% in 2018 to 4.3 billion people, with the global passenger turnover up 6.5%. The passenger load factor was 81.9%, up 0.4 p. p.
Asia-Pacific was the fastest growing market in 2018, with the passenger turnover up 8.5% year-on-year. Europe ranked second in terms of growth, with its passenger turnover growing by 6.4%. The passenger traffic in Latin and North America rose by 6.0% and 5.0%, respectively. The passenger turnover grew by 4.6% in the Middle East and by 3.6% in Africa.
According to the ICAO, low-cost airlines carried 1.3 billion passengers in 2018, or about 30% of the total global air passenger traffic. Low-cost carriers have strong positions on European market with combined market share of 36%. The segment market shares Latin America (including the Caribbean) North America and Asia-Pacific are 35%, 30% and 29% respectively.
The IATA pre-estimated an increase of 8.7% year-on-year in industry-wide revenue in 2018 to USD 821 billion. Passenger flights consistently account for the bulk of the industry’s revenue, their share standing at 68.7%.
(billion PAX)
Source: IATA.
Source: IATA.
(USD billion)
Source: IATA.
The industry’s costs went up by 9.8% to USD 765 billion, largely driven by the substantial increase of oil prices during the year. The average global price per barrel of jet fuel was up 31.3%, putting pressure on the EBIT margin, which was down 0.9 p. p. year-on-year to 6.8%. Profitability levels still vary by region, with the highest level of 9.8% in North America, 6.1% in Asia-Pacific, 6.0% in Europe, 5.6% in Latin America, 1.2% in the Middle East, and 0.6% in Africa. The EBIT margin declined year-on-year across all regions.
The IATA pre-estimated the 2018 industry net profits at USD 32.3 billion in 2018, or down from USD 37.7 billion last year. North America contributed almost half of the global net profits, while the Africa airline industry was loss-making.
Source: IATA.
Source: IATA.
Source: IATA.
(USD per barrel)
Source: IATA.
Note. Calculated based on data for regions with positive net
profits. Excluding Africa, which generated a net loss of USD 0.4
billion in 2018.
Source: IATA.
Russian airline industry
In 2018, the Russian civil aviation continued to build up its passenger traffic. The total size of the Russian market, including air transportation by foreign carriers from Russian airports, totalled 137.0 million passengers, up 10.7% year-on-year. Russian airlines carried 116.2 million passengers, with their total passenger turnover up 10.6% to 286.9 billion RPK.
Key growth drivers during the year included Russia’s economic growth, improved capacities of Russian and foreign carriers, and the growth in the low-cost segment and transfer traffic.
Stronger demand for air transportation during the 2018 World Cup in 11 Russian host cities was a major contribution to the growth of the Russian market. According to a Russian travel agency, the host cities were visited by 6.8 million fans and tourists, including 3.4 million foreigners. The tourist flow grew by about 40.0% in total. However, the number of “unique” tourists who received their FAN IDs was lower as only 1.8 million FAN IDs were issued. Although some fans also used other modes of transport, airports recorded an increase in passenger traffic during the World Cup. In particular, passenger numbers were up 13.8% year-on-year at Sheremetyevo airport, up 17.1% at Vnukovo airport, up 13.3% in Sochi, and up 11.1%–29.2% in other regions of Russia.
Sources: Transport Clearing House, Federal Air Transport Agency.
Sources: Transport Clearing House, Federal Air Transport Agency.
Source: Federal Air Transport Agency.
Source: Federal Air Transport Agency.
* Year-on-year change.
Sources: Transport Clearing House, Federal Air Transport Agency.
The impact by the championship was especially noticeable in the higher year-on-year growth rates of domestic passenger traffic recorded in June 2018 compared to growth rates in prior and subsequent periods.
68.1 million passengers were carried on international routes in 2018 (including by foreign airlines), up 11.5% year-on-year. The increase in the international traffic was heavily influenced by charter flights to Turkey and the Turkish aviation authorities and air carriers continuing to actively incentivise Russian customers. The average passenger load factor for Russian airlines on international routes was 84.6%, down 0.6 p. p. year-on-year.
In 2018, Russian airlines carried 68.8 million passengers in the domestic market, up 10.0% year-on-year. The average passenger load factor for domestic flights was 82.8%, up 2.1 p. p. year-on-year.
The Russian air passenger market is highly consolidated, with four largest players accounting for 64.6% of the total passenger traffic in 2018. The structure of the Russian market remained virtually unchanged year-on-year.
(billion RPK)
Source: Federal Air Transport Agency.
(billion ASK)
Source: Federal Air Transport Agency.
In 2018 Aeroflot Group’s market share amounted to 40.7% of the market measured by passenger traffic (40.5% in 2017). Aeroflot Group’s “net” market1 share was 38.4% in 2018.
Aeroflot Group’s closest competitors are S7 Group (11.7%), Ural Airlines (6.6%), and UTair Group (5.7%). The market shares of other Russian airlines and foreign carriers were 20.3% and 15.2%, respectively.
Overall, 2018 was a year characterised by intensified competition. Capacity build-up by foreign carriers had a significant impact on the industry. Foreign carriers started to increase flight frequencies and redeploy capacity previously pulled out of the Russian market as early as in 2017. Despite the market share of the foreigners remained more or less unchanged, market growth implied higher seat capacity and passenger traffic in the segment. Hence, in 2018, foreign airlines carried 20.8 million passengers in the Russian market (up 11.5% year-on-year), which is a material from a five-year low of 14.2 million passengers posted in 2016.
Sources: Transport Clearing House, Federal Air Transport Agency.
Sources: Transport Clearing House, Federal Air Transport Agency.
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| International traffic | 26.1 | 29.3 | 39.4 | 36.9 | 36.3 |
| Domestic traffic | 38.0 | 44.6 | 44.6 | 44.1 | 45.0 |
| Total | 31.0 | 36.8 | 42.3 | 40.5 | 40.7 |
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| International traffic | 22.6 | 24.1 | 33.9 | 31.7 | 31.2 |
| Domestic traffic | 38.0 | 44.6 | 44.6 | 44.1 | 45.0 |
| Total | 29.1 | 34.5 | 40.0 | 38.2 | 38.4 |
Air cargo market
According to the IATA, the global air cargo market totalled 63.7 million tonnes in 2018, up 3.6% year-on-year. The global cargo turnover increased by 4.1% with the industry’s cargo revenue up 14.5% to USD 109.8 billion.
The Russian air cargo market grew by 4.4% yearon- year in 2018 to 1.3 million tonnes, or about 1.9% of the global market. The international cargo traffic accounted for the bulk of the Russian market at 77.0%, having increased by 5.2% to 980.0 thousand tonnes. The domestic cargo traffic was up 1.6% to 292.6 thousand tonnes.
As at the year-end, Volga-Dnepr Group remained the air cargo market leader in Russia (47.6%). Aeroflot Group ranked second with 23.9% (22.4% in 2017). The four largest players account for 77.4% of the total cargo traffic in the Russian market.
Sources: Transport Clearing House, Federal Air Transport Agency.
(thousand tonnes)
Sources: Transport Clearing House, Federal Air Transport Agency.
1 “Net” market means the passenger traffic including foreign carriers, but excluding transfer passengers on international flights connecting in Moscow, which are not relevant for the Russian O&D market.
