Aviation Market Size: Growth Resumes, Backlogs Stretch Into 2030s

Market snapshot and 2025 outlook

In the Aviation sector, After a turbulent recovery, commercial aviation’s market size has stabilized on a higher trajectory. Industry revenues are approaching the trillion-dollar threshold, with airlines’ aggregate top line nearing $1 trillion and profitability returning to pre-pandemic norms, according to IATA’s latest industry economics. While yields have softened from 2023 peaks, load factors remain elevated, underpinning a resilient revenue base into 2025.

Structural demand for capacity is equally strong. Over the next two decades, the sector is forecast to absorb tens of thousands of new aircraft as carriers refresh fleets and add growth lift. Boeing’s 2024 Commercial Market Outlook estimates roughly $8 trillion in new aircraft demand through the forecast horizon, reflecting sustained passenger growth, rising urbanization, and airline fleet modernization.

The passenger base continues to broaden, supported by demographic trends and expanding middle-class travel in large emerging markets. Long-term traffic projections point to aviation’s scale roughly doubling by the 2040s, with airports and airspace systems preparing for higher throughput and increased network complexity, as outlined in ACI World’s traffic forecasts.

Demand drivers: leisure resilience and corporate normalization

Leisure travel has been the backbone of the recovery, with international tourism normalizing and short-haul routes maintaining high occupancy. Pricing power has moderated as capacity returns, but demand remains robust in core holiday markets and increasingly in premium leisure segments. The rebalancing of itinerary mix is helping carriers defend yields even as competition intensifies across key city pairs.

Corporate travel, while lagging leisure, is steadily normalizing as global conferences, client engagement, and field operations resume. Regional differences persist—North America and parts of Europe show stronger corporate rebound than some Asia-Pacific markets—but overall business travel is contributing more consistently to revenue mix, supporting network breadth and premium cabins.

Cargo, which provided a critical revenue hedge during the downturn, has re-centered as belly capacity returned on passenger flights. While dedicated freighter utilization has eased from 2021 highs, e-commerce dynamics and supply-chain recalibration continue to support structurally higher air freight participation than pre-pandemic baselines, complementing passenger-led expansion in the overall market size.

Supply constraints: OEM backlogs, deliveries, and the MRO tailwind

Supply-side constraints are the aviation market’s defining characteristic in this cycle. Engine and component bottlenecks, labor shortages, and certification timelines have kept delivery targets in check, extending replacement cycles and elevating the value of available lift. Airbus and Boeing both report multi-year backlogs—measured in thousands of units—anchoring price discipline and locking in long-dated growth, with demand patterns consistent with the Airbus Global Market Forecast and comparable OEM outlooks.

This environment is catalyzing the maintenance, repair, and overhaul (MRO) segment. As aircraft stay in service longer and utilization stays high, maintenance spend rises. The MRO market is estimated at about $100 billion today and projected to grow steadily over the next decade, according to Oliver Wyman’s Global Fleet & MRO Forecast. Engine shop capacity, component repairs, and line maintenance are experiencing elevated demand, with airlines and lessors revisiting power-by-the-hour agreements and inventory strategies to mitigate turnaround times.

Fleet strategy is evolving accordingly. Carriers are balancing narrowbody orders for high-frequency short-haul growth with widebody investments for long-haul network profitability. Against a constrained supply backdrop, order diversification across OEMs and engine families, coupled with life-extension programs for existing assets, is becoming the norm—reinforcing predictable, annuity-like cash flows across the aviation value chain.

Regional dynamics and investment implications

Asia-Pacific remains the fastest-growing passenger market, led by India’s double-digit capacity expansion and Southeast Asia’s tourism rebound. China’s domestic recovery has stabilized, with international connectivity rebuilding more gradually; nonetheless, the region’s long-term share of global traffic continues to rise, strengthening the case for sustained aircraft orders and airport investments. The Middle East carriers are leaning into hub-and-spoke scale, while North America and Europe focus on incremental efficiency gains and fleet renewal.

For investors, aviation’s market size expansion is manifesting across multiple profit pools: airlines’ revenue resilience, OEMs’ long-dated backlogs, lessors’ elevated lease-rate factors, and MRO providers’ utilization-driven growth. Key watch items for 2025 include yield normalization pace, fuel-price volatility, certification and delivery cadence, and sustainability-linked costs—particularly around SAF adoption and infrastructure upgrades. With demand anchored and supply disciplined, the sector’s operating leverage remains attractive, even as execution risk on production and maintenance capacity requires active management.

Bottom line: The aviation market is entering a period of measured, supply-constrained growth. That dynamic is keeping pricing power intact, supporting diversified revenue streams across airlines, manufacturers, and service providers, and reinforcing a multi-year investment thesis grounded in durable demand and improving capital efficiency.