The shape of air travel
markets over the next 20 years
Brian Pearce, Chief Economist
www.iata.org/pax-forecast
To represent, lead and serve the airline industry
IATA Economics www.iata.org/pax-forecast
2
Air travel likely to double over next 20 years
Outlook for worldwide O-D passenger trips, million
9,000
Liberal
policies
scenario
8,000
2014-2034
7,000
Current
policies
6,000
1.8-2.8x growth
2.3-5 billion
additional O-D
passenger trips
5,000
Closing
borders
scenario
4,000
3,000
2,000
2014
2019
2024
2029
2034
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
3
But growth differs widely by market
Additional million O-D passengers a year by 2034
900
800
700
600
500
400
300
200
100
0
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
4
Developing economies show fastest growth
% y/y
Drivers of passenger growth (2014-2034, %CAGR, selected countries)
8%
% y/y
8%
Living Standards
Population & Demographics
Travel cost
Overall growth
6%
6%
4%
4%
2%
2%
0%
0%
-2%
-2%
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
5
But US sees 2nd largest rise in numbers
Drivers of additional passenger numbers, million
900
800
900
Living standards
Demographics
Price and other
Overall growth
800
700
700
600
600
500
500
400
400
300
300
200
200
100
100
0
0
-100
-100
-200
-200
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
6
Living standards are important up to a point
10.00
Maldives
Bahamas
New Zealand
Hong Kong
Flights per capita* (2013, logarithmic scale)
Seychelles
Singapore
Iceland
Australia
UK
Switzerland
Norway
Luxembourg
Brazil
1.00
USA
Sweden
Qatar
Japan France
Russia
China
0.10
0.01
Uganda
0.00
0
10
20
40
50
60
70
80
GDP per capita (2013, US$ '000s)
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
30
90
100
110
120
7
They are certainly key for emerging markets
10.00
Maldives
Seychelles
Belize
Flights per capita* (2013, logarithmic scale)
1.00
Barbados
Malaysia
Indonesia
Russia
Uruguay
China
0.10
Brazil
Slovakia
Gabon
India
Swaziland
0.01
Uganda
High-income
Middle-income
Low-income
0.00
0
2
4
6
8
10
GDP per capita (2013, US$ '000s)
12
14
16
18
20
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
8
Countries becoming ‘middle’ or ‘high’ income
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
9
Frequency of trips rises disproportionately
Low-income
Middle-income
High-income
Below US$20K per person
Above US$20K per person
Trips/ Months
year/
before
person next trip
0.04
300
0.29
41
1.48
8
0.27
1.80
44
7
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
10
Demographic change dramatically different
Demographic change, 2014-2034
25%
Population change
20%
'Flying' population change
15%
% change 2014-2034
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
India
Indonesia Turkey
US
Brazil
France
China Germany Japan
Russia
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
11
Working-age population makes more trips
Ratio of air passengers by age group to population by age group compared to average
1.8
1.6
1.4
'Overrepresented'
age groups
1.2
1.0
0.8
'Underrepresented'
age groups
0.6
0.4
0.2
0.0
0 to 14
15 to 19 20 to 24 25 to 34 35 to 44 45 to 54 55 to 59 60 to 64 65 to 74
75+
Source: UK CAA
IATA Economics www.iata.org/pax-forecast
12
Emerging market population much younger
Old-age dependency ratio, %
(65+/15-64)
60
Japan
Germany
50
40
US
30
China
Brazil
20
Turkey
Indonesia
India
10
0
2014
2019
2024
2029
2034
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/economics
13
Trend in cost of travel is still downwards
Unit cost and the price of air transport, adjusted for inflation
1.5
1.4
2.6
1.3
2.4
1.2
2.2
Unit cost (US$/ATK)
1.1
2.0
1.0
1.8
Price (US$/RTK)
0.9
1.6
0.8
1.4
0.7
1.2
0.6
1.0
0.5
0.8
1970
1980
1990
2000
US$ in 2013 prices per tonne kilometer
US$ in 2013 prices to fly a tonne kilometer
2.8
2010
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
14
Scope for lower fares on a number of markets
Passenger yields and average trip length
0.19
Passenger yields, US$ per RPK
0.17
Within Africa
Within South America
Within East Asia
Within ASEAN
0.15
0.13
0.11
Within
Europe
0.09
North-South
America
ASEANE Asia
Pacific
Middle Eastrest of world
0.07
North
Atlantic
China-North America
ASEAN-North America
ASEAN-Africa
EuropeAustralia
ASEAN-Europe
0.05
0
2,000
4,000
6,000
8,000
10,000
12,000
Average trip length (kms)
14,000
16,000
18,000
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
15
Resulting in much change over next 20 years
Rank by size of O-D passenger flows in, out & within country
0 rank
2013
0
2034 rank
1
1
China
China
2
2
US
UK
3
3
India
Japan
4
4
UK
Germany 5
5
Brazil
Spain
6
6
Indonesia
France
7
7
Spain
Italy
8
8
Germany
India
9
9
Japan
Brazil
10
10
France
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
US
Source: IATA/Tourism Economics ‘Air Passenger Forecasts’
IATA Economics www.iata.org/pax-forecast
16
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IATA Economics www.iata.org/pax-forecast
17