North Atlantic aviation: UK is largest, but others are growing fast
The UK is by far the biggest European market by airline capacity to the USA, with more than twice as much as the number two, Germany. It is also more than the combined capacity to the USA from Germany and third placed France. These top three countries account for more than half of Europe-US seats, while 17 Western European countries account for 95% of Europe-US capacity.
This gives Iceland the fastest seat growth rate to the US from Europe this year and the second fastest over the past five years. Greece has grown most rapidly on a five year view, albeit from a very small base, driven by US airline expansion and Emirates' fifth freedom entry.
Growth from Portugal has also been strong, thanks to a resurgent TAP Air Portugal. The Scandinavian countries have experienced rapid capacity growth to the US as a result of Norwegian's 2013 entry and SAS' consequent decision to expand in response.
This report ranks the size and growth of the markets to the US from Western European countries.
- The UK accounts for more seats to the US than Germany and France combined. The top three account for more than half of Europe-US seats.
- The importance of the Netherlands, Ireland and Iceland on US routes outranks their overall size as aviation markets.
- Greece and Iceland have both grown seats to the US at more than 30% pa over the past five years. Growth from Portugal and Scandinavia has also been strong.
- US capacity from Netherlands, UK, France, Switzerland, Germany and Belgium has grown below market average rates.
According to data from OAG, the UK's 13.5 million seats to the US in the 52 week period combining winter 2017/2018 and summer 2018 gives it a significant lead over number two Germany and third placed France.
In the same period, airlines from Germany have 6.3 million seats to the US, while France-US capacity is 4.9 million seats. Together, Germany and France's combined 11.2 million seats are less than the UK total.
Western European countries: annual seats to USA, 2017/2018* and 2012/2013*
The importance of the Netherlands, Ireland and Iceland on US routes outranks their overall size as aviation markets
In fourth place is the Netherlands, with 3.5 million seats, punching above its weight given that the overall Dutch aviation market ranks as only Western Europe's seventh biggest market. This reflects the importance of sixth freedom traffic through KLM's Amsterdam hub.
Fifth placed Spain, sixth ranked Italy and Ireland, at number seven, all have between 2.2 and 2.5 million seats to the USA. Ireland is also placed higher on US capacity than its overall size would indicate (it is Western Europe's number 12 aviation market overall), thanks largely to connecting traffic carried by Aer Lingus.
Switzerland is ninth, with 1.5 million seats to the USA and more than twice the capacity of Portugal, which completes the top 10 with 0.7 million seats. Denmark, Belgium and Sweden all have between 0.5 million and 0.7 million seats to the USA, while Austria, Norway, Greece and Finland have between 0.2 million and 0.3 million.
(Note that while Greece is geographically part of Central/Eastern Europe, it is included in this analysis since it has always been considered to be part of Western Europe from a political standpoint).
Greece and Iceland have both had CAGR of more than 30% pa in seats to the US over the past five years
In the five years from 2012/2013 to 2017/2018 (again, these are 52 week periods combining the winter and summer seasons), the total number of seats between the 17 Western European countries and the USA has grown at a compound average growth rate of 6.2%.
Greece has been the fastest growing individual European market to the USA, with compound average growth of 34.7% pa, although it remains a very small market. This growth has been the result of United's entry in 2016 and Emirates' fifth freedom entry in 2017, in addition to expansion by Delta and American.
Iceland, with a CAGR of 32.1% pa, has enjoyed the second fastest growth over the past five years, mainly driven by Icelandair and WOW air's connecting strategies and also boosted by American and United's 2018 entry. Iceland is the fastest growing in 2017/2018 versus 2016/2017, with a 32.8% increase in US seats.
Portugal's five year CAGR is 21% pa; the Scandinavian countries have grown at 14%-16% pa
TAP Air Portugal's revival under new private sector ownership has been the main driver of a 21.1% CAGR in Portugal-USA capacity over the past five years. Portugal's second airline, SATA International, has also grown. From the US side, United has expanded significantly and Delta entered in 2017.
The three Scandinavian countries have enjoyed compound average growth rates in the mid teens in seat capacity to the USA over the past five years. Sweden's five year CAGR is 16.3% pa, Norway's is 16.1% pa and Denmark's is 14.1% pa. Growth has levelled off in 2017/2018 versus 2016/2017.
For Ireland, growth has mainly been driven by Aer Lingus and its strategy of connecting points in the UK and other European countries to US destinations. This has been boosted by the expansion of American, United and Delta, Norwegian's entry in 2017 and the fifth freedom entry of Ethiopian Airlines in 2015.
The growth in Austria-US capacity over the past five years is all due to the sole operator Austrian Airlines, which expanded significantly in 2014, but which is contracting slightly on US routes in summer 2018.
See related report: Italy-USA aviation market: Milan the rising star
Spain's 9.7% pa growth in seats to the US over the past five years is due to significant expansion from a small base by United and Air Europa, steady growth by Iberia and American Airlines, and Norwegian's entry in 2017 (growth this year is also 16%).
US capacity from Netherlands, UK, France, Switzerland, Germany and Belgium has grown below market average rates
The remaining six countries have grown more slowly than the total market in their seat capacity to the US over the past five years. Perhaps not surprisingly, these include the four biggest markets.
The Netherlands' CAGR in seats to the US is 5.5% pa, with most of the growth coming from KLM in 2013 and 2014 and a small amount of growth from market leader Delta. American has grown more rapidly, but from a very small base. Norwegian entered in May-2018 but remains very small in this market.
Growth from the UK to the US has averaged 4.9% pa, but this is still a reasonably healthy growth rate given the size of this market. There has been growth from British Airways, Virgin Atlantic (mainly in 2015), American Airlines and, in particular, Norwegian (which entered in 2014) and Thomas Cook Airlines. Primera Air's 2018 entry has also made a small contribution. However, United has reduced capacity since 2013 and Delta has reduced since 2014.
Capacity from France to the US has grown at an average of 4.8% pa. Air France has only grown very cautiously, reflecting Air France-KLM's reluctance to invest in its growth while its financial results are weak.
Its SkyTeam partner Delta has grown steadily and United grew in 2014-2016, before cutting in 2017 and growing again in 2018. Norwegian entered in 2016, and the 2018 entries of Primera Air and Level are making a small contribution. American has reduced France-US capacity in 2018.
Average growth from Switzerland to the US has been 2.7% pa. Leader SWISS and its Star Alliance partner United have expanded, while Delta has kept capacity flat and American has reduced capacity since 2016.
Capacity from Germany has grown at an average of just 0.9% pa. Lufthansa and its Star partner United have grown modestly, as has Delta; Condor has grown more rapidly from a small base over the past five years and Eurowings has grown even faster from a smaller base since entering US markets in 2016.
American has cut Germany-US capacity a little, but airberlin's demise explains the slow overall growth since 2013. Airberlin grew rapidly in 2016 and 2017 in a last throw of the dice before collapsing at the end of summer 2017. Its capacity has not been replaced, and Germany-US capacity has been reduced by 8% year-on-year in 2017/2018.
Western European countries: growth in annual seats to USA, 2017/2018 vs 2016/2017* and compound average growth 2017/2018 vs 2012/2013*
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This report gives a top down overview of markets to the US from Western European countries ranked by seat capacity and growth rates. It highlights the concentration of the Europe-US market on the big three nations UK, Germany and France.
It also demonstrates the ability of some smaller countries that have benefitted from their airlines' connecting strategies to build significant positions in this market.
Furthermore, this analysis illustrates the growing importance of new/disruptive competitors in Europe-US markets. LCCs, particularly Norwegian (and also WOW air, Primera Air and Eurowings), are boosting growth in capacity to the US from a number of European countries.
See related report: North Atlantic aviation market: LCCs grow market share
Western Europe-US is a market that has benefitted from a liberal bilateral agreement. Not unsurprisingly, smaller European countries have largely grown more rapidly to the US than their larger counterparts. The biggest market of them all, UK-US, faces a challenge to retain its importance post-Brexit. There could be surprises ahead in Europe-US markets.
See related report: US-UK bilateral aviation talks could provoke post-Brexit rethink