Domestic aviation: Spain-to-Spain is W Europe's largest market
Spain is Western Europe's biggest domestic airline market by seats, with more than a quarter more capacity than number two Italy. Spain's domestic market has also experienced fairly healthy growth over the past year and over the past five years, when compared with other leading European countries.
Unlike the international market, where Ryanair is the leading airline and airlines from outside Spain have a majority share of seats, Spain's domestic market is dominated by local operators. Spanish airlines have 84% of domestic seats, led by Vueling, Iberia and Air Europa. The two IAG airlines have a 58% seat share between them.
Iberia's capacity is unchanged this year whereas Vueling is growing, with a number of route launches and increased frequencies. The regional airline CanaryFly's capacity is also stable, while Norwegian is shrinking. Other leading airlines in domestic Spain are expanding this year, with the LCC Volotea being growing fastest.
- Spain is Western Europe's biggest domestic market. Among the top 10 domestic markets only Italy, Germany and Greece are growing faster this year.
- Vueling and Iberia lead in domestic Spain, where eight airlines have almost all capacity. LCCs have 48.0% of seats, less than on international routes.
- IAG's two airlines have more than half of domestic seats.
- Iberia's and CanaryFly's capacity is stable, whereas Norwegian is shrinking. Other leading airlines are growing in the domestic market, led by Volotea.
Seat numbers for the year to Sep-2019 are up by 34.0% versus five years ago, which is a compound average growth rate of 6.1% pa. Compared with the year to Sep-2018, growth is a little slower, at 5.1%.
Among the top 10 Western European domestic markets, only Italy, Germany and Greece are growing faster this year and only Greece and Portugal have grown faster over the past five years (see chart below).
Western Europe's top 10 domestic markets by seats: 2014, 2018 and 2019*
…and Spain has shown steady growth since 2014
Spain's domestic market has enjoyed a steady increase in seat capacity in both winter and summer schedules since 2014. This has reversed a declining trend in 2012 and 2013.
That mini slump coincided with economic recession in Spain and was mainly the result of Spanair's bankruptcy in Jan-2012, NIKI's departure from the market in late 2011, and Islas Airways' Oct-2012 collapse.
Based on calendar years, domestic seat numbers fell by 14.1% in 2013 and grew by only 1.8% in 2014. Since 2015, annual growth has mainly been in the range of 6.5% to 8.5% (with the exception of 2016, when it was a still healthy 4.8%). Growth was 8.4% in 2018.
Spain: weekly domestic seat capacity, 19-Sep-2011 to 9-Sep-2019
There are eight airlines in Spain's domestic market that operate 99.6% of seats between them. The top five have a 95.0% seat share.
Spain: leading airlines in the domestic market by seat capacity, 52 weeks to Sep-2019
LCCs have 48.0% of seats
This is lower than on international routes to/from Spain, where LCCs have had a seat share in the mid-50s percent for several years.
IAG's two airlines have more than half of domestic seats
From IAG's point of view, this just keeps the combined capacity of the group's two Spanish airlines significantly ahead of all other airlines in the domestic market.
Based on the year to Sep-2019, number two ranked Iberia's 2019 capacity will grow by only 0.5% (although it has grown at an average of only 2.5% pa over the past five years).
Norwegian is number six in this market by seats, having entered domestic Spain only in Oct-2015, but is cutting capacity by a quarter this year. This reflects the closure of bases in Spain as part of a restructuring programme to restore profitability, continuing a downward trend in its capacity in the domestic market over the past couple of years.
Spain: rolling 52 week domestic seat capacity by airline, 19-Sep-2011 to 9-Sep-2019
Other leading airlines are growing in the domestic market, led by Volotea
All other airlines in the top eight in Spain's domestic market are growing this year.
Eighth ranked Volotea is the fastest growing leading airline this year, increasing seat numbers by 18.8%, although this is a deceleration from its five-year CAGR of 39.4% pa.
Market leader Vueling is increasing capacity by 9.7% this year, consistent with its five-year average growth rate of 9.3% pa. It has a number of new routes between the Canary Islands and airports on the mainland.
Third placed Air Europa is growing at a similar rate this year, 9.9%, accelerating from its 5.3% pa five-year CAGR.
BinterCanarias is growing by 3.6% this year, compared with a five-year CAGR of 5.9% pa.
Airlines outside the leading group of eight airlines are outpacing overall market growth, with a collective increase in seats of 36.9% this year. However, they only have 0.4% of seats in the year to Sep-2019.
Airberlin's exit was more than offset by the growth of others
Airberlin was once the sixth biggest airline in the Spanish domestic market.
It left this market in May-2016 in one of its many unsuccessful attempts to restructure, some 17 months before its eventual bankruptcy. Its exit was more than offset by the growth of Norwegian, CanaryFly and then Vueling.
Spain is set to remain Western Europe's leading domestic market
The pre-eminence of Spain's domestic aviation market is due to a number of factors.
- Spain's population is relatively thinly spread around a large geographical area.
- This is compounded significantly by the existence of its many islands, particularly the Balearics and the Canaries, which account for approximately 30% of passenger traffic.
- Spain also has an extensive airport network (although there is a growing high speed rail network).
- In IAG's Iberia and Vueling, supported by Air Europa, it also has airlines with strong financial backing and focused management.