Brazil, Russia, India and China (BRIC) are no longer the fastest growing group of countries in terms of seat capacity, having been overtaken by Turkey, Indonesia, Mexico and the Philippines (TIMP), according to OAG, the market leader in aviation intelligence.
The OAG FACTS (Frequency and Capacity Trend Statistics) report for June shows that in the last five years, the TIMP countries have seen a combined average annual growth in domestic capacity of 16%, compared to 10% for the BRIC nations.
The TIMPs have been grouped together due to their high levels of economic growth and favourable demographics. In fact, the International Monetary Fund forecasts increases in gross domestic product this year of 3.5% for Turkey and Mexico, 4.8% for the Philippines and 6.3% for Indonesia.
In the last decade, China and India have averaged 12% annual growth in their domestic markets, while Brazil and Russia have experienced average annual growth rates of 9% and 8% respectively. However, these growth rates are usurped by both Turkey and Indonesia, which recorded average annual increases in domestic capacity of 21% and 14% respectively during the same period.
International seat capacity growth has also been stronger for the TIMP countries in the last five years, having recorded average growth of 10% annually, compared to 8% for the BRICs.
John Grant, executive vice president, OAG, says: “While the four BRIC countries account for nearly a quarter of the world’s total economic output, the TIMP countries are all experiencing strong levels of economic growth and this is reflected in the significant expansion of capacity in each of their aviation markets.
“One of the biggest contributors to this capacity growth is the geographical positioning of each of the countries. Turkey and Mexico undoubtedly benefit from their locations at the mid-point of key trade routes – Europe to Asia and North America to South America – while Indonesia is also very well positioned to take advantage of the ASEAN-China Free Trade Area, which came into force in 2010.”
The LCC effect
Of the four TIMP countries, three of the domestic markets – with the Philippines being the exception – have seen double-digit growth in domestic seat capacity in the first six months of 2013 versus the same period last year.
Domestic seats in Indonesia have increased by 20% year-on-year during the first half of 2013. Turkey’s domestic seats have increased by 18% during the same period and Mexico has seen the number of domestic seats rise by 14%.
According to Grant, these increases can largely be attributed to the rapid expansion of low-cost carriers (LCCs). He says: “In Indonesia, Lion Air has 52% of domestic capacity and for the year-to-date has added 5.2 million seats compared to 2012. In the last year, Indonesia AirAsia has increased its seat capacity by 62% and has added a further 2 million seats so far in 2013. In Mexico, low-cost carriers have added 1.8 million seats so far in 2013, with the vast majority coming from Volaris and Vivaaerobus, while low-cost airline Pegasus has added nearly 1 million domestic seats in Turkey so far in 2013 compared to 2012.
“In the Philippines, however, it is a different story. The withdrawal of Philippine Airlines from the low-cost sector – in the guise of AirPhil Express, which was absorbed into full-service carrier PAL Express earlier this year – has seen domestic capacity growth stall.”
The increasing role of LCCs in the overall growth in seat capacity in the TIMP countries is further highlighted by the share of seats between LCCs and full-service carriers. In the Philippines, 86% of all intra-regional seats are provided by LCCs, while the figure stands at 63% for Indonesia. Mexico and Turkey follow a similar theme with LCCs offering 59% and 53% of all intra-regional seats respectively.
The OAG FACTS June report shows that airlines worldwide will see an increase of 1% in flights in June 2013 versus June 2012, while the total number of seats will increase by 4%. This means carriers will operate 13.4 million more seats, equivalent to 447,000 additional seats every day compared to June 2012. The fastest growing intra-regional market is the Asia-Pacific market, which will record an increase of 7% in flights and 8% in seats. The Middle East is the fastest growing to/from market with 8% more flights and 10% more seats in June 2013 versus June 2012.
An executive summary of the OAG FACTS June report is available here.