Flightlines 2: Airlines of the World
Exploring the scale of the global airline industry
The global airline industry has reached a scale that few other industries can match. In 2024, the International Air Transport Association (IATA) estimates there will be 4.964 billion scheduled passenger journeys worldwide. Over the next 20 years, passenger journeys are expected to increase by 3.8% annually, resulting in an additional 4 billion journeys by 2043. With thousands of aircraft taking off and landing each minute, this level of movement is nothing short of a modern marvel. But how many airlines are actually participating in this volume of traffic?
This week’s report will delve into the definition of an airline, explore the various types, and ultimately answer the question: How many airlines are there in the world?
What is an airline?
To determine how many airlines operate globally, we first need to define what constitutes an airline. Airlines are organizations that provide air transport services for passengers and freight, essentially moving people and cargo through the air. Passenger services focus on transporting individuals from one location to another, while cargo services handle the shipment of goods.
While many airlines operate flights on a set schedule with regular routes between destinations, this is not necessarily a defining feature of an airline. Charter services cater to specific groups or organizations, providing flights that are not part of a regular schedule. In its most general definition, an airline is an organization authorized to operate aircraft for commercial purposes.
Airlines must adhere to national and international aviation regulations, obtaining necessary licenses and certifications such as an Air Operator's Certificate (AOC). These regulations ensure that airlines maintain high safety and maintenance standards. The International Civil Aviation Organization (ICAO), the Federal Aviation Administration (FAA) in the United States, and the European Union Aviation Safety Agency (EASA) in Europe provide guidelines and definitions that establish what constitutes an airline. While their definitions are not much more specific than the common definition, there are a few core differences that these regulatory bodies describe—namely whether the carrier operates on a set schedule or not.
For example, the FAA defines an airline through its regulations and certification processes with two levels of classification: an air carrier, defined as “a person who undertakes directly by lease, or other arrangement, to engage in air transportation” (FAA 14 CFR), and a subset of this group, an airline, which is an air carrier that provides scheduled and/or charter passenger and cargo services.
The EASA and ICAO provide a very similar definition of an airline with one additional key attribute—remuneration. The ICAO defines an air carrier as “an entity that engages in the transport of passengers, cargo, and mail by air for remuneration or hire.”
Combining these requisite attributes, an airline is essentially any organization that offers commercial services for transporting passengers or cargo. Are they moving passengers or cargo? Are they doing so with an aircraft? Do they have the necessary regulatory certifications and compliance? And, are their services compensated? Answering yes to these questions means we are likely dealing with an airline.
Types of airlines
The global airline industry is a complex and dynamic network of carriers operating across various regions. There are different types of airlines, each serving unique roles:
Major Airlines: Airlines like American Airlines and Lufthansa operate extensive networks with both domestic and international routes.
Regional Airlines: Airlines such as SkyWest Airlines serve specific regions and often connect passengers to major airlines' networks.
Low-Cost Carriers: Airlines like Spirit and Frontier offer budget-friendly fares by focusing on cost efficiency and providing fewer amenities.
Charter Airlines: Airlines including TUI Airways offer specialized flights for specific purposes.
Cargo Airlines: Airlines such as FedEx Express specialize in transporting goods rather than passengers.
These classifications have largely emerged from patterns in consumer behavior, and it is reasonable to assume that further classification differences will evolve over time, such as airlines providing last-mile vertical take off and landing (VTOL) travel, supersonic travel, and even space travel.
State of the industry
A brief survey of the current landscape of the airline industry underscores its complexity and significance. Major airlines like American Airlines, Delta Air Lines, and United Airlines dominate the North American market with extensive route networks and large fleets. In Europe, legacy carriers such as British Airways and Lufthansa coexist with successful low-cost airlines like Ryanair and Wizz Air.
The Asia-Pacific region is the fastest growing market, seeing new entrants almost monthly, with significant incumbents such as China Southern Airlines and ANA expanding their reach. According to the IATA, the Asia-Pacific region is anticipated to contribute more than half of the net increase in global passenger numbers by 2043, with an expected 5.3% CAGR, equating to 2.75 billion additional passengers. For context, the industry as a whole expects a 3.8% CAGR through 2043.
Other rapidly expanding markets include the Middle East, Africa, and Latin America, with expected growth rates of 3.9%, 3.7%, and 2.9%, respectively. This translates to an additional 179 million passengers for Africa, 282 million for the Middle East, and 311 million for Latin America and the Caribbean by 2043. In the Middle East, hub carriers like Emirates, Qatar Airways, and Etihad Airways play a pivotal role in connecting different parts of the world. Africa, though an emerging market, also shows growth potential with airlines like Ethiopian Airlines and South African Airways. Latin America continues to grow, with groups like LATAM Airlines and Avianca providing significant coverage.
The number of airlines
As of the latest data, there are over 5,000 reported airlines operating globally. This number is a round ball-park figure, but it helps us understand the scale of the industry. Each day, these airlines collectively operate tens of thousands of flights, connecting cities across continents. Of the various airline types, there are approximately 200 major airlines, several hundred regional airlines, over 100 low-cost carriers, numerous charter airlines, and around 200 cargo airlines.
While consumer demand most directly shapes the airline landscape, several other factors influence the number of airlines operating globally. Macroeconomic conditions are the primary driver of change. During periods of economic growth, the demand for air travel increases, prompting existing airlines to expand their fleets and routes while encouraging new entrants to the market. Conversely, economic recessions can lead to financial difficulties for airlines, resulting in bankruptcies, mergers, and acquisitions.
Operational costs are another significant factor. Fuel prices, one of the largest expenses for airlines, can fluctuate dramatically, impacting profitability and capacity. Labor costs, including salaries and benefits for pilots and crew, also constitute a major portion of an airline's budget. Additionally, regular maintenance of aircraft and investments in airport infrastructure are essential but costly, influencing the operational viability of an airline.
Government subsidies and financial support can help new airlines enter the market and support existing ones during tough times, influencing the overall number of airlines. While international aviation regulations, established by organizations like the ICAO, set global standards for aviation safety, security, and efficiency, and though compliance with these standards is mandatory for airlines operating internationally, it is typically domestic policies that have the biggest effect on the operations of an airline. The FAA in the US and EASA in Europe regulate airlines within their jurisdictions, affecting market entry, competition, and consumer protection.
Domestic politics and policies significantly shape the airlines within an individual country. National governments set regulations that determine how airlines operate, who can enter the market, and under what conditions. One recent example, the cancellation of the JetBlue-Spirit merger by the U.S. Department of Justice illustrates this influence. The merger was blocked to maintain market competition and protect consumer interests, though there is skepticism about the effectiveness of such interventions. Critics argue that while these actions aim to prevent monopolies, they might not always lead to lower prices or better services for consumers in the long run.
With these hurdles, the industry faces significant challenges, including financial instability, environmental concerns, and operational complexities. However, it is also witnessing promising trends such as technological innovations, sustainability initiatives, and adaptations to post-pandemic conditions. These trends are shaping the future of air travel, making it more efficient, sustainable, and customer focused.
As airlines navigate these complex challenges and embrace emerging trends, they continue to connect the world, making air travel an indispensable part of modern life. Understanding these dynamics not only provides insight into the current state of the industry but also highlights pathways for future growth and development. In a future report, we will attempt to more accurately define the number of airlines in the world. This will involve further debate around rules, regulations, and definitions that bound airlines.
Well organized and insightful overview of the airline industry. Good read!