Present trends in air transport suggest passenger numbers could double to 8.2 billion in 2037, reports the International Air Trans-port Association (IATA) in a forecast released this week.
IATA says that the “increasing shift Eastwards in the center of gravity of the industry” is behind the continued strong growth. Over the next two decades, the 20-year forecast anticipates a 3.5% compound annual growth rate (CAGR), leading to a doubling in passenger numbers from today’s levels.
Eastward shift in aviation
Not surprisingly, the Asia-Pacific region will drive the biggest growth. More than half the total number of new passengers over the next 20 years will come from these markets, says IATA, where growth is being driven by robust economic growth, improvements in house-hold incomes and favorable population and demographic profiles.
More specifically, IATA forecasts that:
- 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 could reduce aviation’s benefits
Despite the strong projections, the Association warned that growth prospects for air transport could be curtailed if protectionist measures are implemented by governments. IATA’s Director General and CEO Alexandre de Juniac says IATA foresees a significant negative impact on the growth and benefits of aviation if tough and restrictive protectionist measures are implemented.
The 3.5% CAGR to 2037 assumes an unchanged policy framework over that period. Policy shifts are likely over time, however.
Should protectionism continue to expand in a “reverse globalization” scenario, aviation would continue to grow, but at a slower pace and deliver fewer economic and social benefits. Under a liberalized environment connectivity would generate significantly more jobs and GDP growth, says IATA.
Infrastructure and sustainability
No matter which growth scenario comes to pass, IATA says that aviation faces an infrastructure crisis. Governments must work closely with the industry, says de Juniac, to develop efficient infrastructure, fit for purpose, and offering value for money.
“… at this rate, airports and air traffic control will not be able to handle demand. Governments and infrastructure operators must strategically plan for the future.”
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: 414m new passengers for a total of 572m
Indonesia: 282m new passengers for a total of 411m
Thailand: 116m new passengers for a total of 214m
FOR REGIONAL GROWTH
Routes to, from and within Asia-Pacific will see an extra 2.35bn annual passengers by 2037, for a total market size of 3.9bn passengers. Its CAGR of 4.8% is the highest, followed by Africa and the Middle East.
North America will grow by a CAGR of 2.4% annually and in 2037 will carry a total of 1.4 bn passengers, an additional 527m.
Europe will grow at a CAGR of 2.0%, and will see an additional 611m passengers. The total market will be 1.9 bn passengers.
Latin American markets will grow by a CAGR of 3.6%, serving a total of 731n passengers, an additional 371m passengers annually compared to today.
The Middle East will grow strongly with a CAGR of 4.4% and will see an extra 290m passengers on routes to, from and within the region by 2037. The total market size will be 501m passengers.
Africa will grow by a CAGR of 4.6%. By 2037 it will see an extra 199m passengers for a total market of 334m passengers.