Get Ready: Airlines Expect Sharp Rise in Passenger Demand

airlineThe worlds' airlines expect to see a 31 percent increase in passenger numbers between 2012 and 2017, the International Air Transport Association (IATA) reports in its Airline Industry Forecast. 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, IATA says. 

The new forecast comes at the end of a strong year for air travel demand. In 2013, the airline industry will carry more than 3 billion passengers in a year for the first time.

RELATED: IATA: Airlines Will Carry 3 Billion Passengers in 2013

2013 also saw soaring ancillary revenue for airlines. Airline ancillary revenue will reach $42.6 billion worldwide in 2013, according to a new study by IdeaWorksCompany, a research firm, and CarTrawler, an online car rental distribution system. The CarTrawler Worldwide Estimate of Ancillary Revenue represents a massive increase of 89 percent from the 2010 estimate of $22.6 billion, the firms note.

RELATED: Airline Ancillary Revenue to Reach $42.6 Billion

The emerging economies of the Middle East and Asia-Pacific will see the strongest international passenger growth, with compound annual growth rate (CAGR)  of 6.3 percent and 5.7 percent, followed by Africa and Latin America with CAGR of 5.3 percent and 4.5 percent.

Routes within or connected to China will be the single largest driver of growth, accounting for 24 percent 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 percent 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), IATA says. 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, IATA said.

The IATA Airline Industry Forecast 2013-2017 is a consensus outlook for system-wide passenger growth, IATA notes. Demand is expected to expand by an average of 5.4 percent compound annual growth rate (CAGR) between 2013 and 2017. By comparison, global passenger growth expanded by 4.3 percent 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, IATA says.