When you have the whole world to look at - and masses of data at your fingertips on the OAG data platform - it’s easy to gravitate toward the larger markets of North America, Europe, and Asia where there are plenty of stories to be written every week! Stepping back from the numbers, we have examined some of the smaller IATA defined regions of the world, where we have noticed some interesting changes taking place in both the structure of the market and available capacity - with Central Asia looking amongst the most interesting.
Growth Is All Relative
The first thing to say is that, of course, the smaller regional markets of the world are just that - small. However, in percentage terms, their growth is both important to them and, perhaps, the future expansion of global capacity from the world’s larger regions (as we will highlight later).
The table below shows airline capacity by all regions of the world for 2019 versus 2022, ranked by percentage growth. Central Asia ranks as the second fastest growth market, however, we should also point out that it ranks as the smallest region in the world from a capacity perspective – although in distance terms it’s vast, covering four million Km2 which is twice as large as Western Europe.
Another factor impacting the respective size of Central Asia is that there are only four major country markets covered, whereas in many other regions there are multiple country markets covered; Western Europe, for instance, covers twenty-seven countries ranging from the United Kingdom to the Faroe Islands.
The rate of capacity growth is impressive, evident by comparing scheduled airline capacity for summer 2019 against this year (summer 2023) with Tajikistan seeing a near doubling (+97%) of capacity - although it still ranks third of the four country markets. Breaking through the eight million seat mark this summer season is Kazakhstan; an impressive 38% growth against the 2019 level.
Airlines Increasingly Attracted to Central Asia
There are currently forty-seven scheduled airlines operating in Central Asia, a very similar number to that operating in the summer of 2019, although there have been some notable changes in those airlines through the pandemic. The top ten airlines include locally based carriers and some major inbound operators, Air Astana are the largest operator with nearly 5 million scheduled seats planned for the summer season, a staggering 71% increase on their summer 2019 production.
Increased airline capacity growth from locally based carriers is obviously a sign of confidence in the market and is, in most cases, a reflection of the growing economic trade and wealth in these countries - as a combination of trade, tourism and increased political stability have encouraged investment into the region. Perhaps an even greater sign of the growing confidence is the capacity growth from overseas carriers into the region; Turkish Airlines have added 68% more capacity and are now the 5th largest carrier in the region, whilst FlyDubai with a 74% increase in capacity are increasingly building a network.
Below the top largest airlines several new carriers have entered the market in the last four years. Wizzair Abu Dhabi have recently launched services and are on record as saying that their A320NEO’s will be operating from Central Europe to Central Asia soon. Jazeera Airways, Lufthansa, Qatar Airways and Air Arabia are all new entrants to the region. And Saudi Arabian airlines are likely to be granted access to overfly Iranian air space in the next few months, so carriers such as FlyNas, and even Saudia, can be expected to increase capacity to serve the year-round religious traffic flows from the region. So, competition appears to be growing and with that competition is a changing balance of service offering.
With the launch of services from a range of Middle East low-cost airlines over the last four years, the share of low-cost capacity has nearly doubled, and this sector now accounts for 6.4% of all seats on sale. However, in comparison the global average of all seats this summer being operated by LCCs is 32% - so there is significant room for growth in this sector across Central Asia.
What’s Driving the Growth?
Rapid capacity growth happens for a reason and in most cases multiple reasons. Certainly, Russia’s invasion of Ukraine has heightened the profile of the region with large flows of Russian nationals crossing the various border points and building new lives in a part of the world where Russian is widely spoken. Prior to the war, global connectivity tended to flow through Moscow to points such as North America and Europe, but those flows have stopped and are being replaced by routings through points such as Istanbul and the Middle East; hence the interest of Turkish Airlines and Fly Dubai.
However, various other factors are also contributing to the region’s growth. The ancient “silk route” is beginning to flourish with increased trade passing through the area. Religious tourism to the region is being heavily promoted with many “must visit” locations on the list. Supporting infrastructures such as new hotels, road access and high-speed train networks have also been developed to meet the growing demand. Rumours continue to circulate about both new local airlines and interest from other overseas carriers, with air service agreements constantly being expanded to accommodate this interest.
Overlay those factors with both an increasing GDP per capita, higher disposable income, and a young population base curious to travel and Central Asia suddenly looks like a region where we can expect more growth in the coming years. Catching up with other regions of the world will take a long time, but it certainly seems on that road to catch up.