Economic Outlook n° 1188 | Special Report | Transport: a two-speedworld
Euler Hermes
Legacy airline companies, a fragmented world
The air transportation,whichsymbolizes the globalization, presents distinct realities inthe different regions
Concentration and activity range of the local players… …make the regions distinct World
United States “The private garden” Concentratedmarket
Mainly domestic activity
Europe “Under fire”
MarFragmentedmarket International activity is preponderant
Middle East
“Call of the wild” Limitedmarket
International activity is preponderant
Asia (ex China) “A sense of balance”
Fragmentedmarket More diversified activity and nearly
equally balanced between « regional » and international
China
“The private garden” part 2 Concentratedmarket
Domestic activity is preponderant
▶ Althoughitmay seemparadoxical, since air transport is the embodiment ofglobalization, the overallmarket is characterizedby a fragmentationinto regionalmarkets. Thus theU.S. traditional carriers rely ona vast domesticmarket,whichaccounts for two-thirds of their business volume,withahigh concentrationamong the companies. That stands insharp contrast to thehighly fragmented Europeanmarket,whichis fiercely competitive andwhere the legacy carriers aremuchmore present oninternational routes.And if geographical proximity is also takeninto consideration, thenthis characteristic,whichEurope shareswiththeMiddle East, explains the rivalry betweenthe zones. InAsia, theChinese traditional carriers are taking advantage of a steadily growing and concentrated domesticmarket,while otherAsiantraditional carriershave amore balanced profile,withnear parity between“domestic” and international flights and amore diversified activity (more than20%of their revenues are generated by cargo).