Sector Overview

Industry Developments and the Forecast for 2019

Thanks to the passenger demand growth starting from middle of 2017, airline companies’ load factor has increased and as a result, their profitability has affected positively. According to International Air Transport Association (IATA), it is expected that 1% of world Gross Domestic Product, corresponding 919 billion American Dollars, will be spent on air transport in 2019. This amount is 7.6% higher than expenditure on air transport in 2018.

Together with increasing volume of e-commerce, aviation sector has showed significant improvement not only on passenger side but also on cargo side as well. Airline industry makes a huge contribution to development of global economy due to the increasing number of connections and falling air transport cost. According to IATA, compared to 20 years ago, the number of unique city pair connections more than doubled by exceeding 21,000 and real air transport costs have been more than halved in 2018. Better performance of the industry provides substantial advantage to the companies within the sector and also the governments. In 2019, the tax revenue from the airline industry to the governments is expected to be 136 billion American Dollars.

In 2018, rise in jet fuel prices has increased fuel expenses, the biggest operational cost item in the airline industry, which reduced profitability. Airlines companies, which focused on fuel efficiency, has replaced the high fuel consuming old aircraft with the fuel-efficient new aircraft. In 2019, commercial airlines are expected to take delivery of 1,780 new aircraft. Around half of these deliveries will replace old aircraft. In the wake of these deliveries, sector fleet structure have become more fuel efficient and younger.

According to IATA data, as a result of passenger demand growth and developments within the industry, global aviation capacity is expected to increase by 5.8%, demand growth rate is expected to be 6.0% and passenger load factor is expected to reach 82.1% in 2019. In the industry, total passengers carried is expected to increase by 5.6%, reaching 4.6 billion while according to the General Directorate of State Airports Authority (DHMI), Turkish aviation market is expected to reach to 154 million total passengers in 2019 and 158 million in 2020.