The International Air Transport Association (IATA) revealed that present trends in air transport suggest passenger numbers could double to 8.2 billion in 2037.
The latest update to IATA’s 20-Year Air Passenger Forecast, shows that an increasing shift Eastwards in the center of gravity of the industry is behind the continued strong growth. Over the next two decades, the forecast anticipates a 3.5% compound annual growth rate (CAGR), leading to a doubling in passenger numbers from today’s levels.
The Association warned, however, that growth prospects for air transport, and the economic benefits driven by aviation, could be curtailed if protectionist measures are implemented by governments.
“Aviation is growing, and that is generating huge benefits for the world. A doubling of air passengers in the next 20 years could support 100 million jobs globally. There are two important things that stand out about this year’s forecast. Firstly, we are seeing a geographical reshuffling of world air traffic to the East. And secondly, we foresee a significant negative impact on the growth and benefits of aviation if tough and restrictive protectionist measures are implemented,” said Alexandre de Juniac, IATA’s Director General and CEO.
CHINA SET TO TOP THE RANKINGS AS AVIATION SHIFTS EAST
The Asia-Pacific region will drive the biggest growth with more than half the total number of new passengers over the next 20 years coming from these markets. Growth in this market is being driven by a combination of continued robust economic growth, improvements in household incomes and favorable population and demographic profiles.
- China will displace the United States as the world’s largest aviation market (defined as traffic to, from and within the country) in the mid-2020s. The rebalancing of China’s economy towards consumption will support strong passenger demand over the long term.
- India will take 3rd place after the US, surpassing the UK around 2024.
- Indonesia is forecast to be a standout performer—climbing from the world’s 10th largest aviation market in 2017 to the 4th largest by 2030.
- Thailand is expected to enter the top 10 markets in 2030, replacing Italy which drops out of the ranking.
PROTECTIONISM A THREAT TO GROWTH
The forecasts were based on a 3.5 per cent compound annual growth rate (CAGR) and assumed an unchanged policy framework over the next 20 years.
However, de Juniac said the recent rise in economic protectionism in several markets – particularly the use of trade tariffs – had cast a shadow over world trade and prompted IATA to trim its previous CAGR estimates.
“When we looked at the forecasts eight months ago it was based on a growth rate of 3.6 per cent for the next 20 years,” de Juniac explained.
“And the forecast we have now is based on 3.5 per cent. The difference is essentially due to protectionist measures and the consequences of protectionist policy on air traffic.
“It is still small, 0.1 per cent, but you must know that 0.1 per cent on 20 years means 60 million passengers less in 20 years than the other scenario.”
Further, de Juniac said the forces of economic protectionism were “casting a shadow over world trade” and risked the further slowing of passenger growth to as little as 2.4 per cent annually.
Fastest growing aviation markets in terms of annual additional O-D passengers from 2017 to 2037 (constant policies scenario):
- China: 1 billion new passengers for a total of 1.6 billion
- US: 481 million new passengers for a total of 1.3 billion
- India: 414 million new passengers for a total of 572 million
- Indonesia: 282 million new passengers for a total of 411 million
- Thailand: 116 million new passengers for a total of 214 million
REGIONAL GROWTH (CONSTANT POLICIES SCENARIO) IN 2037
- Routes to, from and within Asia-Pacific will see an extra 2.35 billion annual passengers by 2037, for a total market size of 3.9 billion passengers. Its CAGR of 4.8% is the highest, followed by Africa and the Middle East.
- The North American region will grow by a CAGR of 2.4% annually and in 2037 will carry a total of 1.4 billion passengers, an additional 527 million passengers.
- Europe will grow at a CAGR of 2.0%, and will see an additional 611 million passengers. The total market will be 1.9 billion passengers.
- Latin American markets will grow by a CAGR of 3.6%, serving a total of 731 million passengers, an additional 371 million passengers annually compared to today.
- The Middle East will grow strongly with a CAGR of 4.4% and will see an extra 290 million passengers on routes to, from and within the region by 2037. The total market size will be 501 million passengers.
- Africa will grow by a CAGR of 4.6%. By 2037 it will see an extra 199 million passengers for a total market of 334 million passengers.