Market Trends of france aviation Industry
Increased demand from domestic travelers is driving the air passenger traffic
- Europe is the biggest market for passenger flows to and from France, followed by Africa and North America. About 58.3 million passengers traveled from Europe (71.3% of the total), 9.7 million passengers reached France from Africa (11.8%), and 4.9 million passengers arrived from North America (5.9%). The contribution of the overall air transportation and its allied industries, such as airlines, to the French GDP, is around USD 87 billion.
- Air passenger numbers in France increased by 0.02% in 2022. Longer flights will cause an increase in fuel consumption and can result in a sharp increase in operating costs for certain routes. The increasing fuel costs will particularly impact airlines, therefore resulting in increased costs to passengers through higher ticket prices. Re-routing and longer flights may also cause inconvenience for air passengers, with an increased risk of flights being canceled completely and may decrease passenger confidence. The unpredictability of the situation in Ukraine is likely to be a major challenge for airlines in France and further delay the recovery in air passenger numbers.
- In 2021, the airport had a passenger movement of around 482,676 p.a. Similarly, another major airport in France had a drop of over 68% in passenger traffic during 2020. The recovery in passenger traffic with ease in travel restrictions was witnessed by the major French airlines. In 2021, around 35.8 million passengers were carried by Air France-KLM. The overall air passenger traffic is anticipated to surge during the forecast period.
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Geopolitical threats are the driving factor for rising defense expenditure
- The country's defense expenditure surged by 0.6% from 2021 to 2022, with USD 53.6 billion in 2022. The defense expenditure of the country was 1.9% of the GDP. In 2022, France was the third-largest country in terms of defense expenditure in Europe after Germany. During 2017-2022, the country's defense expenditure surged by around 9%.
- Despite the French economy being impacted by the pandemic, which led to reduced economic activities due to imposed lockdowns and travel restrictions, the French government surged its defense expenditure in 2021 to ensure its security capabilities. The Military Programming Law 2019-2025, known as LPM in France, defines the defense policy guidelines and the resources for the country. It includes an increase in France's defense budget by around USD 1.47 billion by 2022, followed by an increase of USD 3.39 billion by 2023. The LPM has allotted a total of USD 334 billion to defense expenditures between 2019 and 2025.
- France's defense spending has surged by 14.5% since 2000 compared to the defense expenditures of other European nations and major military powers. For instance, Germany’s defense expenditure has surged by 21.6% since then. The United Kingdom's defense expenditure surged by 20%, China's by 495%, Russia's by 183%, and the United States' by 61%. The French defense expenditure emphasizes the modernization of the armed forces by procurement of newer arms and equipment and the upgradation of the existing ones. The French government is allocating funds for two major programs, namely, the Franco-German-Spanish Future Combat Air System or FCAS (around USD 325.22 million) and the Main Ground Combat System, or MGCS, a next-generation tank program (USD 65.67 million).
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Rapid expansion of the e-commerce industry is driving the French air-freight market
- High disposable income leads to more demand for air travel
- Increased budget on defense will help to procure more aircraft
- The economy of France is second largest in Europe
- High inflation is impacting the country's economic growth
