IATA Director General and CEO Alexandre de Juniac: “We are seeing a geographical reshuffling of world air traffic to the east.”

INTERNATIONAL. Global passenger traffic could double to 8.2 billion in 2037, according to the International Air Transport Association’s (IATA) latest forecasts.

An increasing shift eastwards in the “centre of gravity” of the industry is behind the continued strong growth, according to IATA’s latest 20-Year Air Passenger Forecast.

A +3.5% compound annual growth rate (CAGR) is forecasted over the next two decades, leading to a doubling in passenger numbers from today’s levels.

Asia Pacific will drive the biggest growth with more than half the total number of new passengers over the next 20 years coming from the region. Growth is being driven by a combination of continued robust economic growth, improvements in household incomes and favourable population and demographic profiles, IATA said.

China will displace the USA as the world’s largest aviation market (defined as traffic to, from and within the country) in the mid-2020s, according to the report. “The rebalancing of China’s economy towards consumption will support strong passenger demand over the long term,” IATA commented.

India will surpass the UK to become the third largest aviation market around 2024. Indonesia is expected to climb from tenth in 2017 to fourth by 2030. Thailand is expected to enter the top 10 markets in 2030, replacing Italy, which will drop out of the ranking.

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IATA warned 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,” said IATA Director General and CEO Alexandre de Juniac.

“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.”

IATA warned that if protectionism continued to expand in a “reverse globalisation” scenario, aviation would continue to grow, but at a slower pace and deliver fewer economic and social benefits. Under a liberalised environment connectivity would generate significantly more jobs and GDP growth, it said.

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“Global prosperity depends on air connectivity. Aviation is sensitive to policies that either support or undermine growth. And these seem to be pointing in the wrong direction,” said de Juniac.

“Dampening demand for air connectivity risks high quality jobs, and economic activity dependent on global mobility. This forecast is a cautionary warning to governments. First, the industry will grow but they must clear the infrastructure bottlenecks to bring that growth to their home markets. And secondly, governments must understand that globalisation has made our world more socially and economically prosperous. Inhibiting globalisation with protectionism will see opportunities lost.”

IATA also noted the infrastructure crisis facing aviation and urged governments to work closely with the industry. “Decisions made now will have an impact on the value created by aviation for their regions,” said de Juniac.

Regional growth

IATA’s 20-Year Air Passenger Forecast states that under its ‘constant policies’ scenario, 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 among world regions, 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.

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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, IATA said.

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.