Analysis Reports

Israel's airline capacity is back on a post-pandemic recovery path, after withstanding declines during the period of conflict following the Oct-2023 Hamas attacks. In mid Jan-2026, seat numbers are at 112% of the equivalent period of 2019.

El Al remains the biggest airline by seats in Israel, with a projected capacity share of 28% in the first six months of 2026. However, the return of international airlines means increased low cost competition.

Wizz Air Group is the largest non-local operator - and the largest low cost operator - in Israel, which is a profitable market for the ULCC. It is in talks with the Israeli government about establishing bases at Tel Aviv and Eilat. Subject to resolving regulatory and other issues, in particular safety and security requirements, Wizz Air hopes to implement these plans from Mar-2026.

Significant geopolitical risks continue to overhang Israel's aviation market and any return to conflict would likely interrupt its renewed growth path.

The decision by Allegiant Air to acquire Sun Country Airlines may have caught the US airline aviation industry off guard, but the more surprising aspect of that development is that those two airlines were the first to kick off consolidation in the country's low-cost sector.

At the end of 2025 most of the attention centred on off-again/on-again talks between Frontier Airlines and Spirit Airlines, which appeared to restart as the year came to a close.

Allegiant and Sun Country's plan to merge has received a nearly overwhelmingly positive response, and their proposed combination should easily gain requisite regulatory approvals.

Their decision to combine is also well timed, as their larger scale should give the airline more depth and breadth to target those customers left behind in the USA's K-shaped economy.

One key to the success of the planned merger is Allegiant and Sun Country executing their similar business strategies on a larger scale while staying out of the crosshairs of the largest US airlines - in other words, remaining in their lane.

For now, the airlines are showing no indications of deviating from what works.

The incidence of private sector engagement in the airport sector in the CIS countries in West Asia, the remnant of the old Soviet days in the region, is growing fast.

So far, Azerbaijan has not joined the party, although some preliminary talks are understood to have taken place with entities that could participate in PPP projects.

The country's main airport, at the capital Baku, is owned fully by the state and operated by the state-owned airline, AZAL.

It isn't "in a state"; in fact it has won Skytrax awards, the most recent one in 2024.

But Azerbaijan's president wants to double overseas tourist visits, and as part of that he is looking towards a new terminal building at Baku.

The country sits in a region where new terminals are increasingly commonplace, and many of them are funded by private concerns. Is now the time for Azerbaijan to join them?

There is also the question of how Baku might provide help with a sudden increase in travel to and from Iran if the regime there should fall. While relations have been strained in the past, Iranian aviation is not in a good place to pick up the threads quickly.

This report also chronicles the degree of airport privatisation in the CIS and neighbouring countries, with examples.

The Korean Air parent Hanjin Group is taking preparatory steps towards the integration of its LCC subsidiaries, a move that will shake up the South Korean LCC sector.

Hanjin Group now has three LCC holdings, after acquiring Air Busan and Air Seoul as part of its acquisition of Asiana Airlines. These three will be merged with Korean Air's LCC subsidiary, Jin Air.

The combined airline will operate under the Jin Air brand, and integration is expected to be completed by the first quarter of 2027.

By combining the fleets and networks, Jin Air will become South Korea's largest LCC.

There are currently eight South Korean-based LCCs, according to CAPA - Centre for Aviation: in addition to the Hanjin Group airlines, there are Jeju Air, Eastar Jet, T'Way, Aero K and the newcomer - Parata Air.

There are also 16 overseas-based LCCs serving South Korea.

LCCs made up 51.7% of domestic LCC seats in this market in 2025, and 41.9% of international seats - which represent relatively high levels.

The merger will undoubtedly make Jin Air a stronger player in the LCC sector. But the Korean LCC market is vibrant, and it will remain so after the integration of Jin Air, Air Busan and Air Seoul.

It could be argued that the LCC market in Korea was ripe for consolidation, and more mergers are not out of the question.

Airbus' 2025 delivery of 793 aircraft was almost one third more than Boeing's 600. Having held its guidance of 820 deliveries for 11 months, Airbus cut this to 790 in early Dec-2025, and then managed to beat the lower number.

The European OEM has now outsold its US rival for seven consecutive years.

Moreover, Airbus' installed fleet is 16% bigger than Boeing's, and its order backlog is 35% more than Boeing's.

At 2025 delivery rates, the global aerospace industry will need almost 14 years to clear the log jam of outstanding passenger aircraft orders.

This report presents data on passenger aircraft deliveries and the order backlog, both on a global scale and for the two leading manufacturers.

Aviation demand has rebounded faster and more structurally than many expected, yet the industry's ability to respond remains constrained by two stubborn bottlenecks: aircraft availability and infrastructure capacity.

This CAPA Airline Leader Summit - World session brought together senior leaders from airports, regulators, ANSPs, airlines, finance and advanced air mobility to examine how these imbalances can be addressed before they hard-wire inefficiency into the next growth cycle. The discussion ranged from OEM delivery delays and MRO capacity shortages to uneven airport investment and air traffic management fragility.

Aircraft supply remains constrained by ongoing supply chain disruptions, engine durability issues and production discipline challenges at the major manufacturers, leaving airlines unable to fully capitalise on strong passenger demand.

At the same time, airports and ATC systems are diverging sharply: while markets such as the Middle East, India and parts of Southeast Asia are expanding aggressively, others in Europe and mature economies are grappling with runway limits, staffing shortages, regulatory complexity and political resistance to growth.

Panellists highlighted that the issue is no longer simply one of funding, but of governance, regulation and strategic alignment.

The session underscored the need for cost-effective infrastructure, smarter regulation, realistic sustainability pathways and closer coordination across the aviation ecosystem.

With demand expected to remain resilient through the second half of the decade, the debate made clear that without decisive action, capacity constraints risk becoming a permanent drag on economic and aviation growth.

The difficulties that the operators of African airports (usually governments) have in attracting foreign investment are well documented. They range from inadequate route networks, to poor airline business type mixes, to lack of non-aeronautical revenue streams, to lack of transparency, to trade union opposition to corruption.

Occasionally an opportunity arises that bucks the trend of such negativity, and even offers the prospect of being a tipping point beyond which African airports can be taken seriously by western investors.

One of them has been the new Bugesera Airport, a facility to serve Kigali, the Rwandan capital, but that is taking a long time to build.

Now it looks as certain as anything can be in Africa that the Abusera/Bishoftu airport will be built near Addis Ababa. Groundbreaking took place on 10-Jan-2026, marking the beginning of the first phase of development.

It will complement the existing Bole airport, which was the third busiest in Africa in 2025.

While not intended to replace Bole, its price tag of USD10 billion-12.5 billion (as much as the new Mexico City airport would have cost, had it been completed) suggests that it will do that eventually.

Ethiopian Airlines believes Bole has become too small and overcrowded, that it has been expanding the airport for several decades, but it has reached the point where further upgrades are impossible.

Now the search is on for funding, to ensure that it does not meet the same fate as the Mexico airport. That funding could come in the form of debt, equity and loans and numerous promises have been made already.

A road show held in Morocco in Dec-2025 garnered some positive feedback and interest. But so did one for the Bugesera greenfield airport in Rwanda in 2016, and that isn't finished yet, a decade later.

What it needs is a cornerstone investor to be installed rapidly, but such entities usually want a slice of the action in the form of a large slug of the equity.

The UK-Pakistan air travel market looks to be moving into a new era of dynamism after struggling with post-pandemic capacity well down on 2019 levels.

Pakistan International Airlines (PIA) is to recommence an Islamabad-London Heathrow service on 29-Mar-2026. This will be its second UK service since the end of a five-year ban led to the relaunch of its Islamabad-Manchester flights in Oct-2025.

The only other UK-Pakistan operator currently is British Airways, which switched its Islamabad-London service from Heathrow to Gatwick in 2024.

However, Norse Atlantic UK has now been given approval to serve Islamabad from the UK.

This should act as an additional stimulant to the market's revival.

Viva and Volaris' proposed merger marks a potentially transformative moment for Mexico's aviation market, one shaped decisively by low-cost carriers over the past two decades.

Together, the two airlines have played a central role in expanding access to air travel, helping grow Mexico's passenger numbers from fewer than 50 million in 2009 to nearly 120 million in 2024.

Their tie-up aims to create scale in an increasingly constrained global aviation environment, with both carriers arguing that a combined fleet of more than 250 Airbus A320-family aircraft would materially reduce aircraft ownership costs - the single largest expense category for airlines in the region.

The proposal, however, raises unavoidable questions around market concentration. Viva and Volaris together account for roughly three-quarters of Mexico's domestic departing seats, far eclipsing flag carrier Aeromexico.

Regulators will need to weigh those figures carefully against the airlines' contention that the merger will ultimately benefit consumers through lower costs, greater network resilience, and sustained capacity growth.

Encouragingly for the carriers, early signals from Mexico's government - including supportive remarks from President Claudia Sheinbaum - suggest a pragmatic view that prioritises investment, tourism, and competitiveness.

The transaction also reflects a broader Latin American trend toward consolidation, echoing earlier integrations such as at LATAM Airlines, Avianca, and more recent developments within the Abra Group.

Whether or not the Viva-Volaris deal clears regulatory hurdles, it has already reframed the debate around competition, affordability, and scale in Mexico.

The country's aviation market stands on the cusp of a pivotal period during 2026, with the outcome likely to shape its structure for years to come.

Governments are often no friend of the air transport business, and especially so of the airport sector.

In the UK the current government has approved multiple airport expansion projects during the past year or so, including the third runway at London Heathrow Airport (a project that is as old as time).

But then it revises the rating system for businesses of all shapes and sizes, relieving them of support based on the impact of the COVID-19 pandemic, which all but saw off the industry.

The consequence is that all of these airport expansion and refurbishment projects will have to be re-examined in the light of these valuations, which will add millions of pounds to bills.

Regional airports, in particular, will be especially impacted, and costs will rise all the way down to the passenger.

This while the government is trying to identify and promote the UK as a global aviation hub.

There is a light at the end of the tunnel.

The government consistently flip-flops all over the place and already seems set to backtrack on rate rises for some High Street businesses, with more to follow.

Will that have a result of a similar reappraisal for the airports though, or will their bills go up even more?