China to overtake US as world’s largest passenger market by 2030
Geneva – the International Air Transport Association (IATA) on Thursday released its first 20-year passenger growth forecast, projecting that passenger numbers are expected to reach 7.3 billion by 2034. That represents a 4.1 per cent average annual growth in demand for air connectivity that will result in more than a doubling of the 3.3 billion passengers expected to travel this year.
Among the highlights of the report is the expectation that China will overtake the United States as the world’s largest passenger market (defined by traffic to, from and within) by 2030. Both markets, however, are expected to remain the largest by a wide margin, the association said in a media announcement.
In 2034 flights to, from and within China will account for some 1.3 billion passengers, 856 million more than 2014 with an average annual growth rate of 5.5 per cent. Traffic to, from and within the US is expected to grow at an average annual growth rate of 3.2 per cent that will see 1.2 billion passengers by 2034 (559 million more than 2014).
The report, the first from the new IATA Passenger Forecasting service, produced in association with Tourism Economics, analyzes passenger flows across 4,000 country pairs for the next 20 years, forecasting passenger numbers by way of three key demand drivers: living standards, population and demographics, and price and availability.
Future trends
By 2034 the five fastest-increasing markets in terms of additional passengers per year will be China (856 million new passengers per year), the US (559 million), India (266 million), Indonesia (183 million) and Brazil (170 million).
Eight of the 10 fastest-growing markets in percentage terms will be in Africa with Central African Republic, Madagascar, Tanzania, Burundi and Kuwait making up the five fastest-growing markets, the IATA said.
In terms of country-pairs, Asian and South American destinations will see the fastest growth, reflecting economic and demographic growth in those markets. Intra-Pakistan, Kuwait-Thailand, United Arab Emirates (UAE)-Ethiopia, Colombia-Ecuador and intra-Honduras travel will all grow by at least 9.5 per cent on average for the next 20 years, while Indonesia-East Timor will be the fastest growing pair of all, at 14.9 per cent.
“It is an exciting prospect to think that in the next 20 years more than twice as many passengers as today will have the chance to fly. Air connectivity on this scale will help transform economic opportunities for millions of people. At present, aviation helps sustain 58 million jobs and US$2.4 trillion in economic activity. In 20 years’ time we can expect aviation to be supporting around 105 million jobs and $6 trillion in GDP,” said Tony Tyler, IATA’s Director General and CEO.
While improving living standards, population and demographics, and price and availability create the conditions for improved demand, there is potential for policy-induced obstacles to hinder the development of connectivity. “Meeting the potential demand will require government policies that support the economic benefits that growing connectivity makes possible. Airlines can only fly where there is infrastructure to accommodate them. People can only fly as long as ticket taxes don’t price them out of their seats. And air connectivity can only thrive when nations open their skies and their markets. It’s a virtuous circle. Growing connectivity stimulates economies. And healthy economies demand greater connectivity. The message of this forecast is that there is great potential if all aviation stakeholders—including governments—play their role,” said Mr. Tyler.
US to drop to number 2
The US will remain the largest air passenger market until around 2030, when it will drop to number 2, behind China. Cumulatively over the next 20 years the US will carry 18.3 billion more passengers and China 16.9 billion.
Currently the ninth largest market, India will see a total of 367 million passengers by 2034, an extra 266 million annual passengers compared to today. It will overtake the United Kingdom (148 million extra passengers, total market 337 million) to become the 3rd largest market around 2031.
Reflecting a declining and ageing population, Japanese air passenger numbers will grow just 1.3 per cent per year and decline from the 4th largest market in 2014 to the 9th largest by 2033.
Germany and Spain will decline from 5th and 6th position in 2014 to be the 8th and 7th largest markets respectively. France will fall from 7th to 10th while Italy will fall out of the top 10 altogether in around 2019, the announcement said.
Brazil will increase passenger numbers by 170 million and rise from 10th to 5th. Its total market will be 272 million passengers.
Indonesia will enter the top ten around 2020 and attain 6th place by 2029. By 2034 it will be a market of 270 million passengers.
Explanation of demand drivers
The Global Passenger Forecast Report explains future trends in passenger numbers by means of three key demand drivers: living standards, population and demographics, and price and availability.
Living standards have a known effect on the propensity to fly. Countries on a growth curve up to approximately $20,000 per capita see correspondingly faster increases in the number of flights taken per person per year.
Population and demographics reflects not just population trends over the next 20 years but also measures such as the old-age dependency ratio. On these measures, countries such as Japan, Russia, and Ukraine are expected to undergo significant population decline. African nations, on the other hand, are set for rapid population growth. Typically, the nations with growing populations also have younger populations, and working-age groups are more likely to fly than over-65s.
Price and availability looks to predict future trends of the price of air travel and the extent of future air connectivity. The unit cost of air transport has fallen by a factor of four since 1950. However, the past decade has seen prices bottom out, largely due to the increased cost of oil. In the coming two decades, the downward trend in the real cost of air travel is expected to resume, at a rate of around 1 – 1.5 per cent per year. Air connectivity is expected to increase with the addition of new longer-range mid-size aircraft. Greater liberalization of air markets has the potential to increase global air traffic growth by over 1 percentage point per year.