Thank you for joining me on the call today.

We have two reports that we are releasing today:

  • One on the 20-year forecast for passenger growth
  • The other is a report on the potential impact of Brexit on airlines in a no-deal scenario

You have seen the releases in advance. Before I take your questions, I would like to make a few high-level comments.

20-Year Forecast

Aviation is a growing industry. Passenger demand for the year-to-date is growing at 6.8% and in August we hit an all-time record load factor of 85.3%.

The strong demand for air transport is good news—although the connection between strong demand and profitability is not always assured in this business. And often our ability to meet the needs of consumers and businesses is limited by the failure of governments to provide the infrastructure capacity required.

The IATA 20-Year Passenger Forecast shows that the pressure on infrastructure to meet the demand for connectivity is not likely to end soon.

This year we expect some 4.1 billion people to travel. In 2037—at the end of the forecast period—we expect 3.5% average annual growth to take us to 8.2 billion travelers annually (origin, destination and connecting passengers). That will grow the number of jobs associated with air transport from 65.5 million today to around 100 million. And the overall economic impact of aviation will rise from $2.7 trillion to $5.5 trillion.

Much of this growth is being driven by strong growth in Asia-Pacific, which is set to add 2.35 billion annual passengers over the next 20 years - more than half the total number of new passengers over the forecast period. Continued economic growth, rising household incomes and growing populations are behind this Asian success story. Here are some of the highlights:

  • China will be the world’s largest aviation market by 2025. And by 2037 it will have to accommodate 1.6 billion travelers—1 billion more than today.
  • India will become the third largest market in 2024 with 572 million travelers in 2037—414 million more than today, and
  • Indonesia will become the fourth largest market in 2030. By 2037 it will have 411 million travelers—some 282 million more than today.

And we should not count out the developed markets:

  • North America will add 527 million more passengers over the next two decades
  • And over the same period Europe will add 611 million.

But we must add a health warning to these predictions. Our numbers are based on a constant policy scenario. But, there is much uncertainty in the future direction of global politics—which will have an impact on aviation demand.

The forces of economic protectionism are casting a shadow over world trade. And if the world proceeds on this “reverse globalization” course, passengers numbers will still grow, but more slowly – perhaps only by 2.4% annually.

The future is brighter, however, if globalization wins the day and we see continuous liberalization and the opening of borders to people and trade. In that case we see the potential for 5.5% average annual growth.

1. My first point is to remind you that aviation is the business of freedom. It is a vector for globalization that has lifted a billion people from poverty since 1990. So, I will confidently reiterate the call for borders that are open to people and trade.

2. The second point is that all scenarios see the demand for air transport growing. That will put pressure on already strained infrastructure. So, we need governments to work closely with the industry to build the infrastructure that will be needed to meet tomorrow’s demand.

3. The third point is that aviation is determined to grow sustainably. From 2020 we are committed to carbon-neutral growth. And by 2050 we are determined to cut our net emissions to half of 2005 levels.

You can read more details of the forecast in the press release. And our Chief Economist Brian Pearce is joining us for the Q&A session in a few moments.


Our second report today concerns Brexit. Given the increasing risk of a no-deal “hard Brexit” we must spell out some of the risks that could face air transport in March 2019.

We commissioned Taylor Airey and Frontier Economics to map the most important issues taking into consideration their impact on connectivity and the level of clarity we currently have.

It is a detailed report that will be posted on our website and sent to key stakeholders in the Brexit process. Today I will share with you the issues that the report has identified as needing the most urgent attention:

Connectivity: The first is to ensure connectivity so that aircraft will still be permitted to take off and land between the UK and the EU after March. It is vital that the UK and EU agree a comprehensive air services agreement. If this is not agreed, then the only contingency is the so-called ‘bare bones’ arrangement, which we are told is under discussion. Unfortunately, the industry is not being consulted or included in these discussions. We urgently require transparency so we can plan for after March 2019.

Safety and Security: The second point is to emphasize that safety and security are too important to be left to political games. It is obvious that the UK needs to be a third country member of EASA. And we need to ensure that the mutual recognition of safety standards, licenses, materials etc. are agreed as soon as possible.

The same is true for security. Reciprocity and harmonization are the order of the day. No-one doubts that both the EU and UK will maintain the highest security standards post-Brexit, so it would remove a level of uncertainty to confirm as soon as possible that these standards will be recognized by all parties.

Border Management: Finally, post-Brexit border management must be well thought through in advance. And resources need to be allocated accordingly, so that passengers can travel efficiently and supply chains are not interrupted. For passengers, some sort of third lane seems the most sensible solution, but that requires the UK to invest in new people and infrastructure at airports.

It may seem a short list, but each entails a huge amount of work. A transition period of two years would be a challenging time frame to sort it out. But if the UK leaves the EU with a ‘’hard Brexit’’ in March 2019 then it is hard to see how all this work can be achieved. The inevitable consequence will be chaos.

These warnings are not influenced by any political view. It is not for us to comment on the merits of a “hard” or “soft” Brexit for the UK and EU. Our interest is in ensuring safe, efficient and reliable air connectivity. The report is a straightforward, factual account of what needs to be done to achieve that.

Thank you. Now, I will be happy to take your questions.

Press releases: