The domestic aviation industry involves airlines that provide scheduled air transport services for passengers and cargo between destinations within the same country or geographic region without crossing international borders. Domestic airlines generally operate smaller aircraft suitable for short-haul flights and often work in codeshare agreements with regional partners to feed passengers from smaller cities to main hubs. Major domestic carriers focus on providing frequent services between major domestic routes as well as providing connectivity to international destinations through their hubs. Air travel has become essential for both business and leisure purposes in most countries. The global domestic aviation market is estimated to be valued at US$ 10.89 Bn in 2023 and is expected to exhibit a CAGR of 2.8% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
The growing middle-class population across developing nations is driving increased demand for air travel within major domestic routes. As per the World Bank, over 3 billion people are expected to enter the global middle class by 2030, with over 90% of this increase coming from Asia and Africa. This expanding consumer base has more discretionary income to spend on air travel for both business and leisure purposes. The spending power of the rising middle class is encouraging domestic airlines to expand their fleet sizes as well as route networks to new emerging cities and boost their market presence.
Market Dynamics:
The “Domestic Aviation Market” is expected to be flourished by the growing middle-class population as highlighted in the heading. The rising affordability of air travel has also emerged as a major driver for increased domestic air traffic in recent years. Domestic carriers have adopted several strategies like offering discounted fares and bundled packages to pass on the benefits of reduced operating costs to customers. Low-cost carriers particularly focus on price-sensitive passengers by minimizing additional charges. This has made flying more accessible for common people and encouraged leisure travel within countries. While one driver mentioned in the heading is the growing middle-class population, another major driver has been the rising affordability of air travel. These factors have collectively increased demand for domestic air travel and strengthened the market dynamics.
Segment Analysis
The domestic aviation market can be segmented by airline type, aircraft type, destination and purpose of travel. The private carriers segment dominates the market currently owing to the growing preference for luxury air travel among high net worth individuals. The chartered flights segment is also gaining traction due to rising demand from sports teams, film production houses and large corporate groups for travelling together in large groups.
PEST Analysis
Political: The domestic aviation sector is regulated by laws related to air tickets, passenger rights, airport operations etc. formulated by the Ministry of Civil Aviation. Favorable government policies to promote regional connectivity and lower tax rates help drive growth.
Economic: A growing economy, rising income levels and expanding middle class are increasing demand for domestic air travel in the country. Higher gross domestic product and disposable incomes spur greater leisure and business travel.
Social: Changing lifestyle trends like increased mobility, developing infrastructure and higher education levels are social factors bolstering the adoption of air travel. Young working professionals prefer flying to save time for work and other engagements.
Technological: Airlines aiming to enhance customer experience are focusing on digital technologies like biometrics, AI, block chain and advanced loyalty programs. Aircraft OEMs are also developing new fuel-efficient models to help airlines lower costs and drive sustainability.
Key Takeaways
The Global Domestic Aviation Market Size is expected to witness high growth over the forecast period supported by rising economies, expanding middle class and greater integration of technologies. Regional analysis suggests that the Asia Pacific region currently dominates owing to large population catchment and high economic growth in countries like India and China driving greater passenger traffic volumes. Key players like Singapore Airlines, Air New Zealand, Qatar Airways are focusing on codeshare partnerships and fleet modernization initiatives to strengthen their service offerings and network presence across major domestic routes.
The domestic aviation market in India in particular is forecasted to grow at a rapid pace. factors like the government’s Ude Desh Ka Aam Naagrik (UDAN) scheme to improve regional air connectivity, expansion of airports & flight routes and lower GST rates on airfares are propelling traffic. Leading carriers such as Spicejet and Indigo are bolstering their fleet sizes and frequencies on trunk routes as well as tier-II and III cities to capture the growing demand.
Key players operating in the domestic aviation market are Singapore Airlines, Air New Zealand, Qatar Airways, Virgin Australia, Emirates, All Nippon Airways, EVA Air, American Airline, Spicejet, The Boeing Company, Airbus SE, Lockheed Martin Corporation, Textron Inc, Embraer S.A. The Boeing Company and Airbus SE are focusing on new technology aircraft like 737 MAX and A320neo to improve fuel-efficiency for airlines.
