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Special Report - Growing Up

Despite setbacks, the aviation sector continues to grow. The forecast expansion could change the industry landscape

In December 1903 the Wright brothers made a controlled, powered flight in a heavier-than-air machine. Yet just two years earlier Wilbur had told his brother Orville that he thought it would take humankind another 50 years to fly. “Ever since, I have distrusted myself and avoided all predictions,” Wilbur noted.

Guessing aviation’s future has been just as difficult ever since. Unpredictable one-off events such as the Icelandic volcano, as well as reversals in global economic conditions, can ruin the most calculated of forecast. But carriers can’t operate on a wing and a prayer. Aircraft and airports take time to build.

The latest IATA five-year forecast suggests that passenger growth will average 5.8% through 2014, meaning 3.3 billion people will be using the air transport system by then. That is 800 million more people than today, meaning significant changes and challenges to the industry.

Asia-Pacific, already the largest market, will add almost half of the new passengers, some 360 million extra people. China is the powerhouse. It will have 181 million more domestic passengers and 33 million more international passengers. Airports are being built but a lot of work remains to be done on air traffic management, especially in the critical Pearl River Delta region.

There could be seismic shifts elsewhere in the world. For a long time, Europe has been the stop-off point for Asia-United States travel. But the Middle East hubs and their home carriers are expanding rapidly. The growth in international travel in the Middle East will average more than 10% a year, giving a 2014 total of more than 80 million international travelers.

“The forecast takes into account two very different scenarios,” says Brian Pearce, IATA Chief Economist. “While emerging markets have returned to strong growth much faster than expected, mature Western markets are still suffering from a lack of consumer confidence driven by government austerity measures.”

Freight should be easier to predict, subject usually to more pedestrian trade winds than confidence-sapping consumer related events. Growth is expected to be 8.2% per year. The challenge here will be in formulating a strategy that accounts for severe imbalances on key trade routes. Far more comes out of Asia than goes in.

“The forecast indicates that the world will continue to become more mobile,” says Giovanni Bisignani, IATA Director General and CEO. “This creates enormous opportunities but also presents some challenges. In five years’ time we need to be able to handle 800 million more passengers and 12.5 million extra tonnes of international cargo.

“To realize the economic growth potential that this will bring, we will need even more efficient air traffic management, airport facilities, and security programs.”

Of course, the further into the future predictions go, the less reliable they become. But that’s not to say they are always wrong. Forecasts can be a valuable guide.

Next: Shifting sands

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