On December 10 the International Air Transport Association (IATA) released its Airline Industry Forecast 2013-2017 showing that airlines expect to see a 31% increase in passenger numbers between 2012 and 2017. By 2017 total passenger numbers are expected to rise to 3.91 billion—an increase of 930 million passengers over the 2.98 billion carried in 2012.
The IATA Airline Industry Forecast 2013-2017 is a consensus outlook for system-wide passenger growth. Demand is expected to expand by an average of 5.4% compound annual growth rate (CAGR) between 2013 and 2017. By comparison, global passenger growth expanded by 4.3% CAGR between 2008 and 2012, largely reflecting the negative impact of the 2008 global financial crisis and recession. Of the new passengers, approximately 292 million will be carried on international routes and 638 million on domestic routes.
The emerging economies of the Middle East and Asia-Pacific will see the strongest international passenger growth with CAGR of 6.3% and 5.7%, followed by Africa and Latin America with CAGR of 5.3% and 4.5%.
Routes within or connected to China will be the single largest driver of growth, accounting for 24% of new passengers during the forecast period. Of the anticipated 227.4 million additional passengers, 195 million will be domestic and 32.4 million will be international.
The Asia-Pacific region (including China) is expected to add around 300 million additional passengers by the end of the current forecast horizon. Of these, around 225 million or 75% are expected to be domestic passengers.
With 677.8 million domestic passengers in 2017, the United States will continue to be the largest single market for domestic passengers, although it will add only 70 million passengers over the forecast period (2.2% CAGR). This reflects the market’s maturity. China is firmly established in second place (487.9 million passengers in 2017, 10.2% CAGR.). The US also will reclaim the top spot from Germany for international passengers by the end of the forecast period. Germany will add 27.2 million passengers to the 149.4 million in 2012 (3.4% CAGR.), while the US will add 28.2 million international passengers, rising from 149.3 million in 2012 to 177.5 million (3.5% CAGR) in 2017.
“The fact that the Asia-Pacific region –led by China–and the Middle East will deliver the strongest growth over the forecast period is not surprising. Governments in both areas recognize the value of the connectivity provided by aviation to drive global trade and development. Similar opportunities exist for developing regions in Africa and Latin America. To reap the benefit, governments in those regions will need to change their view of aviation from a luxury cash cow to a utilitarian powerful draft horse to pull the economy forward,” said Tony Tyler, IATA’s Director General and CEO. Globally, aviation supports some 57 million jobs and $2.2 trillion in economic activity.
International Passenger Development
- International passenger numbers are expected to rise by 25% from 1.2 billion in 2012 to 1.5 billion in 2017, bringing 292 million additional passengers (4.6% CAGR).
- Uzbekistan (10.3% CAGR) has displaced Kazakhstan (9.0% CAGR) as the fastest growing market for international passenger traffic. The remaining eight are Russia (7.7% CAGR), Turkey (7.6% CAGR), Oman (7.5% CAGR), China (7.1% CAGR), Vietnam (6.9%CAGR), Saudi Arabia (6.9%), Azerbaijan (6.8% CAGR), and Pakistan (6.7% CAGR). No Latin American or African countries are among the fastest growing markets.
- United Arab Emirates will add 29.2 million passengers (6.6% CAGR) over the forecast period, nearly as many as China. For international traffic, routes between the Middle East and Asia-Pacific will see the strongest growth.
Domestic Passenger Development
- Domestic passenger numbers are expected to rise from 1.82 billion in 2012 to 2.46 billion in 2017, an increase of 639 million reflecting a CAGR of 6.2% over the period.
- Brazil will firmly establish itself as the third-largest domestic market after the US and China, with 122.4 million passengers in 2017, an increase of 32 million passengers from the 90 million 2012 (6.3% CAGR).
- Turkey enters the Top 10 largest markets with 26.3 million passengers and is expected to add 17.2 million more (10.6% CAGR) over the forecast period. It is also the second fastest growing domestic market.
- Of the Top 10 Fastest growing countries by domestic passengers, the bottom five are all in Latin America: Brazil, Peru, Colombia, Mexico and Ecuador.
Regional Outlook over the 2013-2017 forecast period
- Asia-Pacific passenger traffic is forecast to grow at 5.7% CAGR. Traffic within the Asia-Pacific region will represent 31.7% of global passengers in 2017, up from 28.2% in 2012. North America and Europe will continue to see their share decline, from 26%, and 24%, respectively, to 24% and 23%.
- The Middle East will report the strongest international passenger growth with 6.3% CAGR.
- Europe will see international passenger demand growth of 3.9% CAGR.
- North America will record the slowest international passenger demand growth—3.6% CAGR.
- Latin America will see international passenger demand grow 4.5% CAGR.
The aviation industry understands that environmental responsibility is a critical component of its license to grow. Aviation was the first sector in the world to agree upon an ambitious set of global CO2 emissions-reduction targets, which include carbon neutral growth from 2020 (CNG2020) and a 50% reduction in net CO2 emissions by 2050 compared to 2005 levels. Aviation stakeholders have committed to achieve these through a four-pillar strategy including improved technology, more efficient infrastructure, and better operations. They have also agreed on an approach to the fourth pillar, market based measures (MBMs), which will be needed to fill any gap until the other elements of the strategy achieve their full potential.
At the 38th Assembly of the United Nations International Civil Aviation Organization (ICAO) reached a landmark agreement on Climate Change that commits ICAO to developing a global MBM, with a detailed proposal to be presented at the 39th Assembly in 2016. “The aviation industry strongly welcomes this agreement and stands ready to fully support ICAO in this effort,” said Mr Tyler.